The Australian Securities and Investments Commission (ASIC) has identified deficiencies in three audit engagements conducted by EY and PwC, involving A$80 billion in unlisted investments held by Australian superannuation funds.
In its 14 October 2026 report, ASIC found that auditors had failed to obtain sufficient appropriate audit evidence to support investment valuations, including valuations provided by external fund managers.
The findings emerged from a review of 42 superannuation financial reports and six audits across five accounting firms: BDO, Deloitte, EY, KPMG and PwC.
Of the six audits examined, ASIC identified valuation-related deficiencies in two EY engagements and one PwC engagement. It reported no findings for Deloitte and KPMG, while BDO received a documentation-only finding.
The A$80 billion represented 29% of the A$275 billion in investments covered by ASIC's six audit surveillances, according to the regulator.
The findings concern the adequacy of audit evidence, rather than establishing that the investments themselves were incorrectly valued.
Auditors failed to adequately challenge valuations
According to ASIC’s October 2026 report, the valuation-related deficiencies involved:
A$67 billion in externally managed unlisted investments, including A$6 billion in private credit, where auditors did not adequately test the reliability of prices supplied by external fund managers or the assumptions and data underlying those valuations.
A$13 billion in internally managed investments, where auditors failed to obtain sufficient appropriate evidence supporting valuations.
ASIC identified several weaknesses in audit procedures, including reliance on confirmations from fund managers without adequate testing of their underlying calculations, comparisons with financial information that was six to twelve months old, and benchmark analyses that were not sufficiently linked to the assets being valued.
For internally managed investments, the regulator found instances where auditors had not sufficiently challenged long-term cash flow forecasts and valuation assumptions, despite reviewing reports prepared by independent valuers.
Concerns persist despite earlier warnings
The latest findings follow similar concerns raised in ASIC’s 2025 review of superannuation financial reporting and audits.
Although the regulator acknowledged improvements in some audit procedures, it expressed disappointment that weaknesses in auditing unlisted investments persisted.
The consequences extend beyond financial reporting. Australia had nearly A$4.8 trillion in superannuation assets at June 2026, and investment valuations directly affect members’ account balances, reported returns and fees.
ASIC also found that four superannuation entities had not adjusted member liabilities promptly following significant investment write-downs.
ASIC warns of further regulatory action
Following its audit reviews, ASIC issued four comment forms to auditors from three firms. Although some auditors disagreed with the findings, all proposed remedial actions.
ASIC intends to monitor their progress and may issue audit deficiency reports or consider enforcement action where warranted.
In announcing the findings, Commissioner Kate O’Rourke emphasised that trustees remain responsible for the reliability of investment valuations, even when they rely on external managers.
For auditors, the central issue is whether they obtain sufficiently persuasive, independent evidence to challenge valuations involving significant judgement, rather than relying on information supplied by those responsible for preparing them.
ASIC will continue its surveillance in 2026–27, expanding its review to managed investment schemes as well as superannuation funds.
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About the author: Claudine Cassar is the founder and editor of Big4News, covering audit, consulting, regulation and governance across Deloitte, PwC, EY and KPMG.