ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2026/183

ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2026/183 provides class order relief from the requirement under Parts 2M.3 and 7.8 of the Corporations Act 2001 that amounts in financial reports, directors’ reports, and certain licensee financial statements be stated exactly. It permits eligible entities to round monetary amounts in those reports according to a set of prescribed rounding factors. The instrument also exempts entities from including line items where the amount would be nil, both as a result of rounding and otherwise.

Mechanically, the instrument replaces the earlier ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, which is repealed by Schedule 1. The new instrument expands the rounding factor tiers to include $100,000 and $1,000,000 for the largest entities (those with total assets exceeding $10 billion) and introduces an “alternative rounding factor” concept that permits entities to round to a finer unit than the otherwise applicable factor, provided consistency is maintained. A specific presentation requirement is imposed for amounts rounded to the nearest $100,000: they must be expressed as a whole number of millions with one decimal place, with a clear indication that amounts are in millions of dollars.

The instrument commences on the later of the day after its registration on the Federal Register of Legislation and 1 April 2026. It applies to eligible reports for financial years or half-years ending on or after 30 June 2026, while the 2016 instrument continues to apply to reports for periods ending before that date. The instrument itself is automatically repealed on 1 April 2031.

The practical effect is that entities with significant assets can reduce the volume of digits in their reports, saving on printing and increasing readability, but also potentially reducing the precision available to users. The cost of this convenience is a compliance burden to verify that rounding does not adversely affect resource allocation decisions by users or the discharge of accountability by directors and managers.

Eligible report covers financial reports, directors’ reports under sections 298 or 302, and profit and loss statements and balance sheets under section 989B of the Act. It thus applies to both general purpose financial reports under Chapter 2M and the less common licensee statements under Chapter 7.

Entity is defined to include a company, registered scheme, disclosing entity, financial services licensee, retail CCIV in relation to a sub-fund, and a registrable superannuation entity. This is broader than “company” alone and captures most reporting entities under the Corporations Act.

Rounding factor is the core mechanism. It varies depending on the type of amount disclosed and the entity’s total assets as shown in its consolidated balance sheet (or its own balance sheet if no consolidated is prepared) at the end of the relevant period. There are separate rounding factors for:

• Remuneration of key management personnel, related party transactions, auditor remuneration, and share-based payment disclosures (items tied to specific sections of the Act and accounting standards);
• Earnings per share (required under AASB 133), which must be rounded to 1/10th of 1 cent;
• Certain share-based payment amounts under AASB 2 and AASB 1060, plus specific statutory remuneration items, which are rounded to 1 cent;
• All other purposes, which are tiered by total asset size: below $10 million → $1; $10 million to $1 billion → $1,000; $1 billion to $10 billion → $100,000; above $10 billion → $1,000,000.

The instrument also introduces an alternative rounding factor, which is any factor smaller than the base rounding factor. For example, an entity with $2 billion in assets could choose to round to $1,000 instead of the default $100,000. However, where the alternative is used for any amount, it must be used for every amount in the report for which the base rounding factor is relevant. This prevents cherry-picking finer rounding for some items while coarsely rounding others.

Rounding is subject to conventional rules: amounts exactly half the factor or less become nil; amounts above half are rounded up or down to the nearest multiple. Comparative figures must be rounded in the same manner.

Condition (e) is crucial: the rounding must not have the potential to adversely affect decisions about the allocation of scarce resources by users of the financial report, or the discharge of accountability by management, directors, or auditors. This is a subjective, forward-looking judgement that directors must make, and it gates the entire relief. Failure to meet this condition means the exemption does not apply, and amounts must be stated exactly.

The instrument directly affects any entity required to prepare a financial report or directors’ report under the Corporations Act or a profit and loss statement under section 989B. That includes all companies (large, small, listed, unlisted), managed investment schemes, disclosing entities (including many listed entities and entities issuing enhanced disclosure securities), financial services licensees who must lodge audited financial statements, retail corporate collective investment vehicles (CCIVs) and their sub-funds, and registrable superannuation entities (RSE licensees). In practice, the entities most likely to use the rounding relief are those with substantial assets, because the rounding factors for “all other purposes” are larger for larger entities. A company with $9 billion in assets can round all non-specific amounts to $100,000; a company with $11 billion can round to $1 million.

Indirectly, the instrument affects users of those reports: investors, analysts, creditors, auditors, regulators, and journalists. When amounts are rounded to $1 million, small but significant movements in a balance sheet line item may be obscured. The condition (e) is supposed to guard against that, but it places the onus on the entity to assess materiality from the user’s perspective, which introduces subjectivity and potential divergence between preparer judgement and user expectation.

Auditors are also affected because they must evaluate whether the entity has properly applied the instrument and, in particular, whether the condition (e) judgement is reasonable. If an auditor disagrees, it may lead to a modified audit opinion.

Employees whose remuneration includes equity-based compensation are indirectly affected: rounding of share-based payment amounts to 1 cent may be sufficiently fine not to matter, but rounding of related party transactions to large amounts could reduce transparency for minority shareholders.

The instrument also affects competitors and other market participants who rely on financial reports for benchmarking. Heavily rounded reports reduce the comparability of peer analysis.

The instrument does not impose affirmative duties beyond those already in the Corporations Act; rather, it grants a right to depart from the exact statement requirement, subject to conditions. The key duties are conditions that must be met for the exemption to apply.

Duty to round correctly: Under section 7(2)(a), amounts must be substituted according to a specific rule: if the amount is half or less than the rounding factor (or alternative), it becomes nil; otherwise it is rounded to the nearest whole multiple of the factor. This is a mathematical duty, but it applies to every amount in the eligible report, not just selected items.

Duty of consistency when using alternative rounding factor: If an entity opts to use an alternative rounding factor (e.g., $1,000 instead of the default $100,000), it must apply that same alternative factor to every amount for which the base rounding factor is relevant (section 7(2)(b)). The entity cannot use a finer factor for some items and the base factor for others within the same category.

Duty to round comparative figures consistently: Section 7(2)(c) requires that corresponding amounts for the prior year also be shown in the rounded form. This ensures comparability across periods.

Duty to present $100,000-rounding in millions with one decimal: Section 7(2)(d) requires that amounts rounded to the nearest $100,000 be presented as a whole number of millions plus one decimal place representing hundred-thousands, with a clear indication (e.g., “$12.3 million”). This overrides any general practice of showing raw digits.

Duty to assess no adverse effect: Section 7(2)(e) imposes a duty on the entity to ensure that the rounding does not have the potential to adversely affect decisions about scarce resource allocation by users, or the discharge of accountability by management, directors, or auditors. This is a continuing judgement that must be true at the time the report is prepared. It is not a safe harbour; if the condition later proves to have been false, the exemption is lost retroactively for that report.

Duty to disclose rounding in the report: Section 7(2)(f) requires a statement that the entity is an entity to which the section applies and that amounts have been rounded in accordance with it. Section 7(2)(g) requires each page where amounts are rounded to clearly state the extent of rounding (e.g., “rounded to the nearest $1,000”).

The instrument itself is a legislative instrument made under sections 341(1) and 992B(1) of the Act. It does not create any civil or criminal penalty provisions. Instead, it provides an exemption from compliance with Parts 2M.3 and 7.8. If an entity fails to satisfy any condition of the exemption, the exemption is not available, and the entity must state amounts exactly as required by the Act. Non-compliance with the Act then exposes the entity to the usual penalties.

For a company, failure to lodge a financial report that complies with the Act (including proper rounding) can lead to infringement notices, civil penalties under section 1317E, or criminal penalties under section 1311. For individuals, including directors, section 344 imposes civil penalties for a director’s failure to take reasonable steps to ensure compliance. If rounding is applied but condition (e) is later found to be false (e.g., because rounding obscured a significant trend that affected a user’s decision), the entity may be treated as having never complied. This creates material litigation risk.

The instrument does not require ASIC to pre-approve rounding. It is self executing. However, ASIC may review reports and challenge the application of the exemption. If ASIC considers that the condition (e) was not met, it may take enforcement action, including seeking orders for corrected reports or penalties. Directors who make the condition (e) judgement without a reasonable basis could face liability for breach of their duties of care and diligence under section 180.

Auditors also have a role: if they identify that rounding is applied without meeting the conditions (e.g., rounding used despite known user reliance on precision), they must consider whether the report is true and fair. This could lead to qualified opinions or adverse findings.

The sunset provision in section 10 means the instrument automatically repeals on 1 April 2031. After that, entities must revert to the 2016 instrument, unless a new instrument is made. The transitional period provides some regulatory certainty, but the mandatory repeal creates pressure for renewal and possible amendment.

The instrument sits underneath the Corporations Act 2001, modifying the operation of Parts 2M.3 (financial reporting) and 7.8 (obligations of financial services licensees). It does not override other provisions of the Act, such as the requirement for true and fair view in section 297 or the directors’ report content requirements in sections 298 302. The rounding relief applies only to the numerical statement of amounts; it does not exempt the entity from disclosing the narrative or qualitative aspects of those reports.

Interaction with accounting standards is explicit. The definition of “rounding factor” cross-references specific paragraphs in AASB 2 (Share based Payment), AASB 1060 (Simplified Disclosures for Tier 2), AASB 124 (Related Party Disclosures), and AASB 133 (Earnings per Share). For those paragraphs, the rounding factor is fixed (1/10th of 1 cent for EPS, 1 cent for share based payments and certain statutory items). This pre-empts the tiered rounding factors for those specific disclosures. For all other accounting standard requirements, the tiered factors apply.

The instrument also interacts with the concept of materiality under accounting standards. AASB 101 and AASB 108 allow omission or aggregation of immaterial items. The instrument goes further by permitting rounding even of material items, subject to condition (e). If rounding would make a material item misleading, condition (e) forbids it. Therefore, the instrument does not override materiality; it incorporates it indirectly.

The repeal of the 2016 instrument and the savings provision mean that reports for periods ending before 30 June 2026 are governed by the old instrument, and reports for periods ending on or after that date are governed by the new one. For a company with a 30 June 2026 year end, the 2016 instrument applies to the half year ended 31 December 2025 (if they prepare a half year report), because that half year ends before 30 June 2026. This dual regime complicates comparison within the same annual report if the half yearly was prepared under the old instrument and the full year under the new. The instrument provides no relief from that mismatch.

The instrument also interacts with licensing requirements. A financial services licensee that lodges financial statements under section 989B is covered. Those statements are often used by ASIC to assess compliance with net tangible asset requirements or audit conditions. Rounding large amounts could obscure breaches of minimum capital requirements, so the condition (e) is especially important for licensees with thin capital margins.

This instrument is new as at March 2026. It replaces the earlier ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, which was the first ASIC instrument of this type. The 2016 instrument had been amended over time by ASIC Corporations (Amendment) Instruments to update cross references to accounting standards and broaden the entity coverage (e.g., to include retail CCIVs). This 2026 instrument consolidates and updates those amendments.

The key differences from the 2016 instrument, as evident from the text, are:

• Addition of two higher rounding factor tiers: $100,000 for entities with total assets over $1 billion but not more than $10 billion, and $1,000,000 for entities with total assets over $10 billion. The 2016 instrument only had $1,000 as the highest factor for “all other purposes”.
• Introduction of the “alternative rounding factor” concept, allowing entities to round to a finer factor if they choose, with a consistency condition. The 2016 instrument did not have this flexibility; entities had to use the specified factor for their asset size.
• Specific presentation requirement for amounts rounded to $100,000 (whole millions with one decimal). This is new.
• Updated references to accounting standards, including AASB 1060 (which was new in the 2016 era) and AASB 2.
• The commencement date is 1 April 2026, whereas the 2016 instrument commenced later in 2016.
• Automatic repeal provision (section 10) sets a five year life, ending 1 April 2031. The 2016 instrument had no such sunset, or perhaps a later one not relevant.

There are no amendments to this instrument yet, as it has just been made. Future amendments are possible before the 2031 sunset, particularly if accounting standards change or if ASIC identifies problems with the condition (e) judgement.

There is no reported litigation directly concerning the ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 or the 2026 instrument. The instrument itself has not been tested in court. However, the underlying legal issue - whether rounding amounts in financial reports breaches the Corporations Act - could arise in the context of a dispute over the true and fair view, misleading or deceptive conduct, or misleading statements in a prospectus or continuous disclosure notice.

If an entity rounds an amount to, say, $1 million when the precise figure is $1.3 million, and that rounding causes a user to make a different investment decision, the user may argue that the report is misleading. The instrument provides a defence only if all conditions are met, including that the rounding did not have the potential to adversely affect resource allocation decisions. That judgement is subjective. A court would likely examine what the preparer knew or ought to have known about the user’s reliance.

In the context of director liability, the condition (e) duty is analogous to the duty of care and diligence. A director who signs off on rounding without considering the impact on users may be in breach. There are no specific cases on this instrument, but general principles from cases on misleading financial reports (e.g., ASIC v Healey (2011) or ASIC v Newcrest Mining (2014)) are relevant: directors must understand the numbers and ensure they are not misleading. Rounding that masks a trend or risk could be characterised as misleading.

The nil exemption under section 8 is unlikely to attract litigation because omitting a truly nil item is uncontroversial. But if an item is omitted because it was rounded to nil (e.g., a $500,000 item rounded to nil under $1 million rounding), a user might argue that the item should have been shown, because the condition (e) was not satisfied. Again, the factual question would be whether the $500,000 item was material.

In summary, litigation risk is low for entities that apply the instrument cautiously, but it is real for entities that mechanically round without testing condition (e). The instrument does not provide blanket immunity.

Condition (e) is a trap for the unwary. It requires that rounding not have the potential to adversely affect decisions about scarce resource allocation or accountability. This is a counter factual, forward looking test. Even if no actual harm occurs, if a court or ASIC later finds that a hypothetical reasonable user could have made a different decision if precise figures were available, the exemption is invalidated for that report. Directors should document the basis for concluding that rounding is appropriate, including an analysis of user needs, materiality, and any known uses of the report (e.g., for loan covenants, capital calculation). Without documentation, enforcement action is easier.

Alternative rounding factor consistency requirement is strict. If an entity with $2 billion in assets chooses to round to $1,000 instead of $100,000 for executive remuneration disclosures, it must also round every other “all other purposes” amount to $1,000. That means the balance sheet and profit and loss would also be rounded to $1,000, not $100,000. This could produce an odd mix: very fine rounding for the balance sheet while the default factor would have been coarse. The entity must ensure the chosen alternative is consistent across all relevant amounts, and that it does not trigger adverse effect under condition (e). Changing the alternative factor between reporting periods is not prohibited but could confuse users if not disclosed.

Rounding of comparative figures is mandatory and must be consistent with the current period’s rounding factor, not the factor that applied in the earlier period. For example, if an entity moves from $1 billion to $2 billion in assets between periods, the rounding factor for “all other purposes” changes from $1,000 to $100,000. For the current year, it must round the prior year comparative to $100,000 (or an alternative chosen for the current year). The prior year amounts, which were originally reported to $1,000, will be replaced. Users comparing the newly rounded comparatives against the originally filed report could see apparent discrepancies. The instrument permits this.

The nil omission provision in section 8 says “or otherwise” - this could be read to allow omission of any item where the amount is nil for any reason, not just rounding. However, that would conflict with accounting standards that require presentation of line items even if nil (for consistency of format). The better view is that “or otherwise” covers items that are naturally nil (e.g., no discontinued operations) but the entity should still apply its accounting policy and disclosure requirements. Overuse of nil omission could lead to an incomplete financial picture, and condition (e) still applies to the overall effect.

The following steps are recommended for any entity intending to rely on the rounding relief.

Step 1: Determine entity type and total assets. Confirm the entity falls within the definition (company, registered scheme, disclosing entity, etc.). Obtain the total assets figure from the consolidated balance sheet (or entity only if no consolidated) at the end of the current reporting period. Use this to identify the applicable rounding factor from section 6, distinguishing between specific disclosure items (remuneration, related party, EPS, etc.) and “all other purposes”. Note that for EPS and certain share based payment items, rounding factors are fixed regardless of asset size.

Step 2: Decide whether to use an alternative rounding factor. The default factor for “all other purposes” may be too coarse for the entity’s user base. If a finer factor is desired, select one of the alternative amounts (1/10th cent, 1 cent, $1, $1,000, $100,000) that is less than the default factor. Remember that once chosen, it must be applied consistently across all amounts for which that default factor is relevant. Document the rationale.

Step 3: Form the judgement under condition (e). Assess whether the rounding (using the chosen factor) has the potential to adversely affect decisions about scarce resource allocation by users, or the discharge of accountability. Consider known users (e.g., analysts, lenders, regulators), the entity’s capital structure, any debt covenants that rely on precise figures, and whether rounding would obscure trends or minimum thresholds. If the risk is non trivial, consider using a finer factor or not rounding at all. Document the assessment in board minutes. This is the highest risk step.

Step 4: Apply rounding to all amounts in the eligible report. For each amount, determine if it is half or less than the rounding factor. If so, substitute nil. Otherwise, round to the nearest multiple of the factor. Apply the same process to comparative figures. Ensure EPS figures are rounded to nearest 1/10th of 1 cent. Ensure share based payment amounts under AASB 2 paragraphs 44 and 46 are rounded to nearest 1 cent.

Step 5: Format amounts rounded to $100,000 correctly. If using the $100,000 factor (or any alternative that results in $100,000 increments), present amounts as a whole number of millions with one decimal place, and label accordingly (e.g., column heading “$ million” or place “million” after number). For other rounding factors, standard presentation is acceptable.