Article by Steve Watson, Managing Director, National Audits Group.
Over the past 12 months, we’ve followed recent trends in auditing and worked closely with audit clients to ensure that they are prepared for the challenges in relation to governance and reporting activities. It’s clear that with more accounting firms outsourcing auditing services to specialist providers such as the National Audits Group, the need for strong proactive communication with audit clients has never been stronger.
Some of the key areas of current focus for the team at National Audits Group in our work with audit clients are outlined below:
1. Mandatory sustainability disclosures (AASB S1 and S2)
One of the most significant recent trends in auditing is the transition to mandatory climate-related financial disclosures under AASB S1 and S2. This represents a major shift in reporting expectations for large entities, with broader application expected over time.
Even where reporting is not yet mandatory, stakeholders, including lenders, regulators and investors, are increasingly demanding ESG transparency. This requires organisations to move beyond high-level disclosures and ensure that sustainability data is accurate, consistent and capable of audit verification.
For audit clients, this means strengthening systems and controls around non-financial data. Internal processes must support reliable measurement, documentation and reporting, aligning with the same level of rigour applied to financial statements. This shift is a key component of the broader 7 key auditing trends shaping the profession.
2. Related party disclosures
AASB 124 is of specific relevance to charities that undertake transactions with related people or organisations. It is important for charities to carefully manage these transactions, ensure that they are transparent and that the details of them are recorded appropriately.
It’s clear that many NFP entities need assistance in establishing internal procedures to ensure that they document these disclosures. The NSW Department of Treasury has prepared a ‘best practice’ guide on AASB 124, which is available online.
3. Continued focus on General Purpose by the Australian Taxation Office
The AASB (Australian Accounting Standards Board) is continuing to work with advisors, auditors and clients in relation to special purpose financial statements. Focus at present is on the conceptual framework for ‘for-profit’ private sector publicly accountable entities and those who voluntarily state IFRS compliance.
Our experience is that many of our clients are still unclear on the practical application of these requirements and what steps are needed to remain compliant. In addition, smaller accounting firms are generally struggling with the transition to general-purpose financial statements. The simplest solution is generally for the accounts to be prepared to the trial balance stage and then outsourced to a specialist audit firm for completion.
4. The move to audit-ready digital environments
The shift towards technology-enabled audits has made continuous audit readiness a practical requirement rather than a year-end exercise. Regulators such as the ATO and ASIC are increasingly using data-matching and analytics tools, reducing tolerance for incomplete or inconsistent records.
As a result, the “shoebox” approach to record-keeping is no longer viable. Audit clients must ensure that their financial systems are structured, accurate and accessible at all times.
This includes:
- Clean and consistent data migration processes
- Reliable cloud-based accounting systems
- Clear audit trails across all transactions
- Regular reconciliation and validation procedures
5. Cyber resilience and solvency
Cyber risk has become a material financial consideration within recent trends in auditing. A significant cyber incident can disrupt operations, compromise financial data and impact an organisation’s ability to meet its obligations.
Audit focus has expanded to assess how organisations manage this risk, including:
- The financial impact of potential system downtime
- The adequacy of cyber insurance coverage
- Controls over data access and system security
- Governance frameworks for managing cyber incidents
This reflects a broader shift where cyber resilience is assessed alongside traditional financial risks. A technology-enabled auditing approach increasingly incorporates these considerations to provide a more complete view of organisational risk.
For organisations with limited internal capability, working with specialist audit providers can help ensure these emerging risks are properly assessed and managed.
6. Ongoing ASIC focus on financial reporting and audit
In the meantime, ASIC is continuing to focus on the following key areas:
- New requirements that can materially affect reported assets, liabilities and profits
- The roles of directors and management
- Operating and financial reviews
- Material disclosures
- Large proprietary companies (non-lodgement)
7. From data analytics to AI-driven auditing
Audit methodologies continue to evolve, moving from traditional sampling towards full-population analysis. One of the more advanced developments in the 7 key auditing trends is the use of AI-driven tools to assess large datasets.
Rather than reviewing a subset of transactions, auditors are now able to analyse entire populations to identify anomalies, patterns and potential risks. This improves both the accuracy and efficiency of audit procedures.
AI-supported approaches can assist in:
- Detecting unusual transaction patterns
- Identifying potential fraud indicators
- Highlighting inconsistencies in financial data
- Supporting more targeted audit testing
While these tools enhance capability, they also require careful oversight. Auditors must ensure that outputs are interpreted correctly and supported by appropriate evidence. A technology-enabled audit remains dependent on professional judgement, even as automation increases.
What is your firm’s auditor doing to prepare clients for these changes?
Ongoing education of clients is essential, not only from a regulatory perspective, but also in relation to value-added activities such as real-time reporting that can help business leaders and owners make the right decisions for their firm and their shareholders.
The National Audits Group continues to evolve
The National Audits Group continues to evolve as an audit-only firm with a strong national presence and capabilities in relation to financial statement audits, compliance and regulatory audits, internal and IT audits and SMSF audits.
We’re always on the lookout for like-minded firms working in the audit, tax or business services arenas on a regional or national level.
As the regulatory environment continues to shift, our focus remains on supporting firms and their clients through practical, high-quality audit solutions. This includes helping navigate increasingly complex reporting requirements, strengthening governance frameworks and ensuring audit processes remain efficient and compliant.
Call Steven Watson or Stephen Prowse on 1300 734 707 if you’d like to discuss your future audit needs.
Disclaimer: This article provides general information on recent trends in auditing. It does not constitute professional advice. Readers should seek independent advice to ensure compliance with relevant standards and regulatory requirements.