A quick recap of the major developments that shaped Australia's finance and accounting industry FY 25-26
While May and June have been the peak workload period for the finance and accounting space in Australia, July is still not a slowing-down period, as lodgment of tax returns, financial return preparation, updating clients on new tax rules and implementing any budget changes keep accounting firms busy.
This period is also the right time to rethink whether you really worked smarter this EOFY or felt overburdened.
While you are still reflecting on this year’s EOFY experience, here’s a quick recap of key updates that defined the finance and accounting space in FY 25-26.
- Mandatory climate-related financial disclosures
The reporting on climate-related disclosures was not mandatory in the past. A company can do this on an interest basis. But under the new Australian Sustainability Reporting Standards (ASRS), they must disclose climate-related information in their annual reports. Although this came into effect on January 1 2025, the rule applied to businesses throughout the year.
- Tightening the financial reporting requirements
Each reporting season, ASIC identifies areas where companies make errors and implements practices to reduce them. During FY 25-26, ASIC focused on asset valuations and impairment, revenue recognition, expected credit losses, provisions and estimates, and climate-related disclosures. This ensured that the organisations provided high-quality financial reports that investors and stakeholders could rely on.
- AI adoption
AI and automation were embedded in routine finance processes to improve their efficiency and accuracy. Processing invoices, automating bank reconciliations, generating financial reports, assisting with tax research, reviewing contracts and financial documents, and forecasting and budgeting were tasks that leveraged AI’s value and efficiency.
In FY 25-26, AI adoption moved from experimentation to implementation.
- Digital tax and ATO compliance
With the introduction of new digital and compliance initiatives, ATO continued to strengthen reconciliations, GST, reporting, lodgement and record-keeping processes.
Let’s understand what the ATO exactly did.
Advanced data matching: Comparing the data from banks, employers and other financial institutions with the reporting numbers of taxpayers.
Increased scrutiny of GST and income tax reporting: The ATO increasingly monitored GST and income tax reporting, particularly where returns remained inconsistent.
Digital reporting: Initiatives like Single Touch Payroll (STP) allowed the payroll information to be prepared electronically in each pay cycle.
Digital lodgment and bookkeeping: ATO encouraged companies and businesses to adopt cloud accounting software and maintain accurate digital records.
- Talent shortages
Though this didn’t happen overnight, the talent shortage has been a pressing challenge for finance and accounting in Australia for years. Growing demand for professionals, an ageing workforce, and the need for skilled talent and professionals with expertise in AI and automation were among the many reasons that led to a shortage of talent in this space.
Longer hiring cycles, high costs, increased workload on existing teams, and team unreliability during peak season were the impacts of the talent shortage on firms.
- Increased demand for outsourcing finance and accounting services
The key updates in FY 25-26 themselves speak about the demand for outsourcing finance and accounting services. From increased compliance requirements and advances in AI and technology to growing talent shortages and a focus on strategic finance and staying scalable as work increases, accounting firms and businesses are choosing an outsourcing operating model that is reliable, technology-driven, and scalable.
