The 2025-26 financial year brings significant changes for Australia’s aged care sector, with new audit, financial reporting and governance requirements creating additional responsibilities for providers and their governing bodies.
With the first reporting deadline approaching, understanding the new requirements and preparing early will be the key to a smooth audit process.
Allen Audit & Advisory Partner Katrina McPhee breaks down what has changed, the new audit and assurance obligations providers need to be aware of, and the steps they can take now to prepare for the 2025–26 reporting year.
Understanding the new aged care audit requirements
One of the most significant changes to audit and financial reporting requirements for aged care providers is the introduction of the Care Minutes Performance Statement (CMPS).
The new requirement applies to residential aged care providers who must prepare and submit a CMPS, audited by a registered company auditor, as part of their Aged Care Financial Report.
The CMPS applies to residential aged care services; providers that deliver home or community-based aged care services only are not subject to this requirement.
“For the first time, providers must prepare an audited formal annual statement covering care minutes delivered, registered nurse coverage, occupied bed days, and related labour costs,” Katrina says.
The change also introduces a new level of independent assurance over information that providers have previously reported through existing regulatory processes.
“Previously, these figures were reported through existing regulatory reporting processes but were not subject to a standalone annual external audit,” Katrina says.
What providers need to know about the Care Minutes Performance Statement
The CMPS provides an annual record of a residential aged care provider’s care minute performance for the financial year.
As the requirement commenced on 1 November 2025, the first statement will cover care minutes and associated expenses for quarters 3 and 4 of 2025–26, and registered nurse coverage from November 2025.
Auditors will typically examine:
- Direct care labour hours
- Direct care labour costs
- Registered nurse coverage
- Occupied bed days
- Care minutes delivered
- Supporting payroll records
- Rostering systems
- Occupancy records
- Management calculations and reconciliations
“The audit involves tracing reported information back to the source and testing the accuracy and completeness of the calculations used to prepare the statement,” Katrina says.
Greater responsibility for financial governance
Katrina says the new standards require providers and governing bodies to take a more structured approach to financial governance, liquidity and investment oversight.
“Boards are expected to actively monitor financial risks, ensure minimum liquidity requirements are met, and maintain documented financial prudential management systems,” she says.
“Auditors will place greater emphasis on governance documentation, financial monitoring processes and compliance with prudential obligations when planning and performing assurance work.”
Understanding your audit and assurance obligations
Katrina says many aged care providers understand the need for a financial statement audit but are less aware that additional assurance obligations may apply.
She suggests that, for the 2025-26 reporting year, providers should carefully consider whether they require:
- An audit of the General Purpose Financial Statements (where applicable);
- An audit of the Annual Prudential Compliance Statement (APCS), where required; and
- The new externally audited Care Minutes Performance Statement (CMPS).
“One misunderstanding we are already seeing is providers assuming the CMPS can be lodged using management-prepared calculations alone,” she says.
“The statement itself must be independently audited before submission.”
Preparing your systems and records for audit
Katrina suggests providers ensure they can clearly demonstrate how reported figures are prepared and reconciled throughout the financial year.
They should maintain:
- Reliable payroll systems
- Accurate rostering records
- Occupancy and resident management reports
- Staff classifications and role descriptions
- Documented care minute calculations
- Reconciliations between source systems and reporting outputs
- Management review procedures
- Appropriate audit trails for manual spreadsheet adjustments
“The stronger the underlying records and reconciliation processes, the smoother the audit is likely to be,” Katrina says.
As providers navigate the requirements for the first time, Katrina says several areas are likely to present challenges. She says the best thing they can do is prepare as early as possible.
“Common difficulties include incomplete documentation supporting care minute calculations, differences between payroll records and reported care minutes, and reconciliation differences between quarterly reporting and the annual CMPS,” Katrina says.
“For many providers, the issue won’t be generating numbers. It will be demonstrating how those numbers were derived and providing sufficient evidence to support them.”
Key reporting deadlines for 2025-26
For providers reporting on the standard financial year ending 30 June, the audited CMPS forms part of the 2025–26 Aged Care Financial Report and must be submitted by 31 October 2026.
“Where reporting is incomplete, inaccurate or unsupported, providers may face regulatory scrutiny and may be required to provide additional supporting information,” Katrina says.
Why providers should start preparing now
Katrina recommends aged care providers engage their auditor early instead of waiting until October.
“To prepare for the new requirements, providers should confirm what data will be required, review payroll, rostering and occupancy records throughout the year, perform internal reconciliations, and identify potential data gaps early,” she says.
“They should also schedule planning discussions with their auditor well before reporting deadlines.
“The providers that experience the smoothest audits will be those who treat this as an ongoing compliance process rather than a year-end exercise.”
If you’re an Australian aged care provider seeking specialised audit and advisory services, please contact Allen Audit & Advisory on 07 5503 1709 or email info@allenaudit.com.au.
