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Balancing urgency and effectiveness in international sustainability assurance standards

Jun 08, 2022

On June 8, 2022, the International Audit Assurance and Standards Board (IAASB) released a statement by Tom Seidenstein, IAASB Chair, on how the IAASB is taking the next steps for new standards for ESG assurance.

With global assets in sustainability and ESG-related investment vehicles due to surpass $53 trillion by 2025, the need for reliable, neutral, and comprehensive frameworks for reporting sustainability information is evident. And policymakers and regulatory bodies have taken note. The European Union (EU) continues to negotiate terms for its Corporate Sustainability Reporting Directive. This past March, the U.S. Securities and Exchange Commission proposed new rules regarding disclosure of climate-related risks. The newly formed International Sustainability Standards Board (ISSB), which has support of the G20 and others, issued their exposure drafts for sustainability reporting for public comment. The International Organization of Securities Commissions and Financial Stability Board weighed in on climate-related disclosures as well.

Review the press release on the IAASB's website.

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Canadian Consultation: Climate-related Disclosures Exposure Draft

Jun 01, 2022

Financial Reporting & Assurance Standards (FRAS) Canada is embarking on a consultation project to solicit feedback from Canadians on the International Sustainability Standards Board’s (ISSB) Exposure Draft IFRS S2 “Climate-related Disclosures.”

The objective of [Draft] IFRS S2 “Climate-related Disclosures” is to require an entity to disclose information about its exposure to significant climate-related risks and opportunities, enabling users of an entity’s general purpose financial reporting:

  1. to assess the effects of significant climate-related risks and opportunities on the entity’s enterprise value;
  2. to understand how the entity’s use of resources and corresponding inputs, activities, outputs, and outcomes support the entity’s response to and strategy for managing its significant climate-related risks and opportunities; and
  3. to evaluate the entity’s ability to adapt its planning, business model, and operations to significant climate-related risks and opportunities.

Review the exposure draft on FRAS Canada's website.

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Updated IASB and ISSB work plan — Analysis (May 2022)

May 30, 2022

On May 30, 2022, the In­ter­na­tional Ac­count­ing Stan­dards Board (IASB) up­dated its work plan fol­low­ing its May 2022 meet­ing. The work plan now also lists the pro­jects of the ISSB.

Be­low is an analy­sis of all changes made to the work plan since our last analy­sis on April 29, 2022.

Standard-setting projects

Maintenance projects

  • Lack of exchangeability — A decision on the project direction is planned but there is no specified date (previously July 2022).

Research projects

  • Extractive activities — A decision on the project direction is now expected in July 2022 (previously Q3 2022)

Other projects

  • IFRS Sustainability Disclosure Taxonomy — A project newly added to the work plan; feedback on the staff request for feedback will be discussed in H2 2022
  • Research program — This entry provided a history of research projects; it has been removed from the work plan
  • Third agenda consultation — A feedback statement is now expected in July 2022 (previously Q3 2022)

The above is a faithful comparison of the IASB and ISSB work plan at April 29, 2022 and May 30, 2022.

The re­vised IASB work plan is avail­able on the Board's web­site.


Canadian AcSB Chair Linda Mezon-Hutter appointed to International Accounting Standards Board

May 26, 2022

On May 26, 2022, the Trustees of the IFRS Foundation announced the appointment of Linda Mezon-Hutter and Robert Uhl as IASB Board members. Their appointments are for a five-year term starting in September 2022. In addition, three Board members have been reappointed for a second three-year term.

Ms. Mezon-Hutter has served as a member, Vice-Chair and ultimately Chair of the Canadian Accounting Standards Board (AcSB). She has also served on the IASB’s Accounting Standards Advisory Forum. Before joining the AcSB, Mezon-Hutter served as the Chief Accountant at Royal Bank of Canada.

Mr. Uhl has served as a Partner and National Director for Accounting Standards at Deloitte in the United States. He was also a member of the IFRS Interpretations Committee and the US Financial Accounting Standards Board’s (FASB) Emerging Issues Task Force. In addition, he has served as a Professional Accounting Fellow at the Office of the Chief Accountant at the US Securities and Exchange Commission.

Nick Anderson, Jianqiao Lu and Ann Tarca have been reappointed to serve a second, three-year term. Mr. Anderson's and Mr. Lu’s second terms start September 1, 2022, whereas Ms. Tarca’s second term starts on July 1, 2022.

Review the press release on the IFRS Foundation's website also notes that Mary Tokar’s second term has been extended from June 30 to August 31, 2022.


IASB and ISSB outline future plans for the use of the integrated reporting framework and the integrated thinking principles

May 25, 2022

On May 25, 2022, the Chairs of the International Accounting Standards Board (IASB) and the International Sustainability Standards Board (ISSB) communicated plans for the future role, governance and development of the Value Reporting Foundation’s integrated reporting framework and integrated thinking principles as the VRF is being consolidated into the IFRS Foundation.

The statement notes that IASB and ISSB are convinced that the integrated reporting framework drives high-quality corporate reporting and connectivity between financial statements and sustainability-related financial disclosures. They therefore strongly encourage continued use of the framework and the principles underpinning it.

The joint statement explains that the framework and the principles will become part of the materials of the IFRS Foundation and the IASB and the ISSB will assume responsibility for their future use and development. The Chairs and Vice-Chair(s) of the IASB and the ISSB undertake that the boards will work together to agree on how to build on and integrate the framework into their standard-setting projects and requirements. The IASB and ISSB will utilize principles and concepts from the framework in their standard-setting work. The Chairs of the IASB and ISSB also commit to a long-term role for a corporate reporting framework, incorporating principles and concepts from the current framework. Such a framework would enable connected, holistic and cohesive corporate reporting.

Review the full statement on the IFRS Foundation's website.


Staff seeks feedback on future on a future IFRS sustainability disclosure taxonomy for digital reporting

May 25, 2022

On May 25, 2022, the staff of the International Sustainability Standards Board (ISSB) is looking for feedback that would inform the development of a taxonomy to enable digital consumption of sustainability disclosures prepared using the ISSB's IFRS Sustainability Disclosure Standards.

The IFRS Sustainability Disclosure Taxonomy would be the counterpart to the IFRS Accounting Taxonomy developed to enable digital consumption of information provided by companies applying IFRS Accounting Standards issued by the International Accounting Standards Board (IASB).

Responses to the staff request for feedback are due by September 30, 2022 and can be provided by filling in an online form or by sending a comment letter.

Review the press release on the IFRS Foundation's website.

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IAASB less complex entities conference yields key takeaways and strong support for an LCE standard

May 24, 2022

On May 24, 2022, the International Auditing and Assurance Standards Board (IAASB) published key takeaways from its recent Paris conference on the audits of financial statements of less complex entities (LCEs). Drawn from two days of discussions with more than 130 participants from 33 jurisdictions, the takeaways indicate a strong steer for the IAASB to finalize the develop of a separate standard for audits of financial statements of LCEs in the public interest.

Key takeaways focus on themes around the continuing need for a timely global solution comprising a separate, standalone standard; working towards a common understanding of what an ‘LCE’ is and that this should also appropriately include audits of group financial statements; ways to support adoption and implementation of the standard; and the importance of communication about how the standard helps serve the public interest.

Review the press release and key takeaways on the IAASB's website.

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G7 welcomes ISSB’s progress on global baseline of sustainability disclosures

May 20, 2022

On May 20, 2022, the G7 Finance Ministers and Central Bank Governors have issued a communiqué which discusses work done to support Ukraine, macroeconomic stability, global health, digitalization of economies, climate and environment, financial market policy and sustainability, and international financial architecture.

In particular, the G7 communiqué comments on the establishment of the ISSB and its future work:

The G7 welcomes the inauguration of the International Sustainability Standards Board (ISSB) and its progress of work on the global baseline of sustainability reporting standards. We welcome the ISSB “path to global baseline” statement of 18 May 2022 and call on all relevant stakeholders to participate in the ongoing consultation on the proposed standards. We urge the ISSB and national and regional standard-setters as well as other reporting initiatives to actively cooperate in the process of elaborating the baseline with the aim of reaching standards that can be implemented globally. The baseline should be practical, flexible and proportionate and ultimately suitable for small- and medium-size enterprises and enable jurisdictions to implement the baseline and a more extensive approach to supplement the baseline. We encourage countries to prepare or continue to prepare the ground for usage of the baseline, aim to ensure interoperability of national and regional standards and the global baseline in order to minimize fragmentation of reporting requirements, reduce reporting burdens, and enable the availability of consistent sustainability information for users. We encourage the ISSB to continue its work on sustainability reporting standards beyond climate, such as nature and social issues.

Review the communiqué on G7 Germany website.

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OSFI releases first Annual Risk Outlook

May 19, 2022

The Office of the Superintendent of Financial Institutions (OSFI) released its first Annual Risk Outlook. This new document provides details of the risks facing Canada’s financial system and our plans to address them in the coming year.

The 2022-2023 Annual Risk Outlook describes risks to the financial system ranging from cyber attacks and digital innovation to housing-related considerations, climate change and more. This is not an exhaustive list but rather the risks that OSFI considers most critical. Each risk is viewed through our prudential mandate and is accompanied by the supervisory and regulatory actions that we are taking. A table providing the timing and topics of consultations and guidance is included to help institutions and Canadians know how to best engage with us.

Review the press release on the OSFI's website.

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ISSB success also requires action by others

May 18, 2022

On May 18, 2022, the IFRS Foundation’s International Sustainability Standards Board (ISSB) published a summary of the necessary steps required to establish a comprehensive global baseline of sustainability disclosures.

The announcement highlights that the ISSB’s global baseline presents a unique opportunity to reduce the existing and further fragmentation of sustainability disclosure requirements and that widespread use of the baseline will reduce the costs for data preparers and improve information usability for data users. It also outlines the steps the ISSB has taken, and is taking, to have completed by the end of 2022 the necessary institutional and technical standard-setting work to establish the core elements of the global baseline. Nevertheless, the announcement also stresses that achieving this goal will require actions by others, in particular by jurisdictional authorities and market participants. It states:

Once in place, the future success of the global baseline will depend on combined action by public authorities to incorporate it into their jurisdictional reporting requirements, and market demand through investors and others encouraging use of the ISSB’s IFRS Sustainability Disclosure Standards. The ISSB reaffirmed its commitment to work collaboratively with jurisdictions and stakeholders in pursuit of this public interest objective and is poised to engage proactively as jurisdictions and other stakeholders begin their evaluation of the ISSB’s standards.

Review the full announcement on the IFRS Foundation's website.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.