Is your employees employed on a package basis? If so then yes it needs to be included as it gets paid out at the package rate whether taken or on termination regardless
As for the auditors, the correct process would be to historically show some basis of how much annual leave is paid out and how much is taken at termination and apply that percentage with the super amount, leaving the portion you expect to pay out on termination without a super accrual. Hit the auditors for a six and ask them how much do they believe should be accrued as non current liability, very few of them ever get this part right either