The Financial Reporting Council (FRC) oversees the effectiveness of Australia’s financial reporting framework, standard setting processes for accounting and auditing standards and audit quality. It also supports alignment with international standards and regulatory developments to promote trust and transparency in financial reporting.
This strategic plan is intended to cover the FRC’s priorities for the remainder of 2026, recognising that External Reporting Australia (ERA) will replace the FRC, the Australian Accounting Standards Board (AASB) and the Auditing and Assurance Standards Board (AUASB) from 1 December 2026. Under the legislation establishing ERA, the FRC will support the transition to ERA by exercising certain transitional powers to establish and make appointments to the standard‑setting boards of ERA.
Purpose and objectives
The FRC operates under Part 12 of the Australian Securities and Investments Commission Act 2001 (ASIC Act). The FRC’s functions and powers are set out in section 225 of the ASIC Act. Broadly, the FRC is responsible for:
- Providing oversight of the accounting and auditing standard‑setting processes in Australia.
- Monitoring and promoting audit quality to maintain confidence in financial reporting.
- Advising the government on matters relating to accounting standards.
- Advising the government on matters relating to auditing and accounting standards.
- Supporting the effective implementation of Australian‑specific sustainability standards and international alignment.
- Engaging with stakeholders, including regulators and standard setters, to enhance governance and accountability.
- Encouraging continuous improvement in financial reporting to meet the needs of evolving domestic and international markets, and regulatory expectations.
Additional functions and powers are conferred on the FRC under sections 349, 350 and 352 of the Treasury Laws Amendment (Financial Reporting System Reform) Act 2026 (merger legislation) to support the establishment of ERA.
Environmental analysis
| Global | Australia |
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- The global economy is impacted by inflationary pressures arising from the energy sector, ongoing and nascent geopolitical uncertainties, and evolving investor expectations.
| - Consistent with global economic uncertainty, there is a greater emphasis on regulatory reform, this will require stakeholder engagement and implementation strategies.
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- There is a focus on the rollout and rightsizing of sustainability reporting.
| - The adoption of global sustainability standards will play a key role in shaping corporate accountability and investor confidence. At the same time, the Government has indicated a willingness to improve the efficiency of climate‑related financial disclosures.
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- Advancements in AI are impacting reporting entities’ outlook and opportunities, their internal tools and data analytics.
- AI tools are also being adopted within auditing practices with uncertain long‑term impacts.
| - Australia is adapting to shifts in regulatory changes and advancements in the use of AI tools across different contexts.
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- International standard‑setting bodies continue to refine and enhance financial reporting, sustainability, and audit standards to promote transparency and trust.
| - Australian standard setters proactively engage in international forums to ensure that global standards reflect domestic needs and regulatory objectives.
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Strategic priorities
The FRC’s strategic priorities for 2026–27 focus on supporting the merger of financial reporting bodies, strengthening financial reporting, responding to regulatory and market developments, and enhancing international collaboration.
| Strategic Priority | Key Actions |
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| Transitional functions relating to External Reporting Australia | - Assisting in the facilitation of the merger of financial reporting bodies in Australia, ensuring continued stakeholder engagement and a smooth transition to the new body throughout the transitional period.
- Establish the standard‑setting boards and determine the governance arrangements necessary for the effective operation of ERA from commencement.
- Identify suitable candidates and appoint members and Chairs to ERA's standard‑setting boards in a manner that supports the effective performance of those boards from commencement.
- Collaborate with the AASB and AUASB and staff to support implementation activities necessary to facilitate the commencement of ERA.
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| Accounting, Auditing and Assurance Standards | - Overseeing the development and implementation of Australian‑specific standards:
- Monitor the AASB and the AUASB consistently with the FRC’s oversight areas under legislation, and offer guidance in the development of educational initiatives to support the external reporting framework.
- Encouraging and supporting continuous improvement in financial and sustainability reporting by promoting transparency and accountability:
- Support the adoption of digital reporting and identify opportunities for other regulatory reform.
- Promoting alignment with IFRS1, IAASB2, IASB3, ISSB4 and other international standard setters to enhance consistency and comparability across jurisdictions:
- Influence key international standard setters by demonstrating leadership in Australian financial and sustainability reporting frameworks and enhancing international relationships.
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| Strengthening Audit Quality | - Supporting the AUASB to develop and implement guidance to enhance transparency and audit quality.
- Promoting continuous improvements in audit quality.
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| Sustainability Standards | - Supporting the adoption and integration of sustainability reporting standards.
- Promoting international alignment to ensure comparability and consistency.
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| Regulatory Developments | - Monitoring and responding to policy developments impacting the audit and accounting professions, including evolving expectations on audit and assurance.
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| Stakeholder Engagement | - Engaging with stakeholders, including regulators, organisations, and standard setters in Australia to discuss and obtain insights on current challenges, objectives and possible improvements in relation to the financial and sustainability reporting frameworks.
- Influencing international standards and guidance by enhancing relationships with key international standard setters:
- Support the nomination of suitable Australian candidates for key international positions.
- Encourage alignment between Australian‑specific and international financial and sustainability reporting and assurance standards.
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The FRC remains committed to upholding trust in financial reporting and audit quality while supporting government policy and responding to emerging challenges in the accounting and auditing professions. The FRC continues to promote confidence and best practices in financial governance in Australia through strategic oversight and proactive engagement with stakeholders.
1 International Financial Reporting Standards
2 International Auditing and Assurance Standards Board
3 International Accounting Standards Board
4 International Sustainability Standards Board
