EY, PwC ticked off $80b in private assets without enough proof: ASIC

Oct 14, 2026

Auditors from big four consulting firms EY and PwC signed off on $80 billion in unlisted superannuation investments despite scant evidence to back up the lofty valuations, a scathing review by the corporate regulator found.

The Australian Securities and Investments Commission said auditors from the firms “had not obtained sufficient appropriate audit evidence to support the valuations” in its second such assessment of the $4.8 trillion pension sector’s treatment of their huge unlisted asset portfolios.

ASIC also took aim at certain funds which, although they did write down the value of the private assets if required, did not make corresponding changes to member balances.

This had led to members paying more in fees than they should have and gave them false impressions about their fund’s performance, said the watchdog.

The regulator is already investigating troubled super trustee Diversa over this conduct, a parliamentary hearing last month revealed. Commissioner Kate O’Rourke said ASIC was questioning four funds about the problems.

“You’re relying on the trustee to discharge their duties and you’re relying on the auditor, who has looked as the independent professional checker of the valuations, to have confidence that the numbers are reliable,” said O’Rourke.

“For a member, it matters because it goes to their balance, the fees that they are charged and the performance of their fund.”

ASIC reviewed more than 40 superannuation trustees and six audit reports by Deloitte, KPMG, BDO, EY and PwC. Private assets include infrastructure, real estate and private credit investments.

The valuations held by superannuation funds are crucial for the financial system as members can buy in or sell out of their funds at any time, based on unit prices that reflect the value of these assets.

However, after ASIC warned firms last year to better verify private asset values, it said it still observed similar issues.

“[Auditors] did not sufficiently address the valuation risk associated with unlisted investments and were not adequate to obtain sufficient appropriate audit evidence to support the year-end valuations,” said the report, released on Wednesday.

ASIC raised specific concerns over audits conducted by PwC and EY, which certified the value of $80 billion of private investments without the required evidence.

This represented about 29 per cent of the $275 billion in assets reviewed in the relevant audit reports, with $67 billion of the problematic valuations tied to externally managed assets, including private credit loans.

O’Rourke said this pointed to the significance of ASIC’s continuing scrutiny of the $200 billion private credit market, where it has repeatedly called out lenders for refusing to cut the value of distressed loans to inflate fees for investors.

ASIC previously warned superannuation trustees and institutional investors not to “treat private credit as an easy, high-yielding substitute for traditional fixed-income investments while accepting manager marks at face value”.

An EY spokesman said the firm stood by the quality of its work and followed EY’s global audit methodology when reviewing valuations.

“We nevertheless acknowledge ASIC’s increased expectations for evidence in supporting asset valuations,” said the spokesman.

“EY is working with clients to obtain such additional evidence where it is available, including information from external fund managers, custodians, underlying investment entities or their auditors.

“EY remains committed to engaging constructively with ASIC and other regulators to raise standards of audit quality, ensuring strong governance among registrable superannuation entities.”

Warning on private credit

PwC Australia said it would work with ASIC to enhance audit quality.

“Maintaining confidence in the integrity of financial reporting for superannuation members and stakeholders is critical, and the audit industry plays an important role,” said PwC.

At an annual meeting this year, hosted by The Australian Financial Review and Visy chairman Anthony Pratt, Westpac chief executive Anthony Miller urged super funds not to rush into private corporate lending because this risked exposing their members to a sharp downturn.

“We have not had a good, old-fashioned credit meltdown for a very long time,” said Miller. “We’re not match fit on what happens when you have serious levels of defaults.”

Miller also said super funds, unlike banks, had limited experience in dealing with challenges associated with liquidity, in which assets had to be sold on short notice to meet obligations to members requiring access to their savings.

“They’re not equipped to deal with it in the same way the banks are, and that’s the catch-up that needs to be worked on,” he said.

ASIC said superannuation funds too often relied on external managers to provide fair valuations for assets, “which may limit their ability to review and challenge significant valuation assumptions and estimates”.

“Trustees and [super fund] auditors need to work together to improve audit quality, address practical challenges in accessing underlying asset information, and support auditors in obtaining sufficient appropriate audit evidence to form opinions on investment valuations,” said the regulator.

It also said auditors must develop game plans for when a super fund or external manager was not forthcoming with the information required to properly value an asset, or its access to such data was denied on “legal, contractual or confidentiality” grounds.

[Australian Financial Review]