Details on the new Partnership Framework, which is designed to support preparers, investors and other capital market stakeholders as they prepare to use IFRS Sustainability Disclosure Standards, are already available on the IFRS Foundation website, including a timeline for the five-year, three-phase effort.

The announcement that CDP and the ISSB have agreed that CDP will incorporate the IFRS S2 requirements into its disclosure platform means that CDP’s 17,000+ voluntary users will disclose data structured to IFRS S2 in the 2024 disclosure cycle as a step towards delivering a global baseline for capital markets through the adoption of ISSB standards.

The Board will discuss the following:

• Sustainability disclosure taxonomy
• General requirements  
  
  • Comparative information and updated estimates
  • Timing of reporting
• Climate-related disclosures
  • Strategy and decision-making and climate-related targets
• Cross-cutting issues

The full agenda for the meeting can be found here. We will post any updates to the agenda, our comprehensive pre-meeting summaries, as well as observer notes from the meeting on this page as they become available.

The 2022 Statement of Principles, which implements the revised pre-emption regime set out in the UK Secondary Capital Raising Review (UKSCRR), is effective immediately.

The Statement of Principles provides guidance on the factors to be taken into account by companies and investors when considering the case for disapplying pre-emption rights.  It applies to all companies (wherever incorporated) with shares admitted to the Premium Listing segment of the Official List, although companies with shares admitted to the Standard Listing segment of the Official List, to the High Growth segment or to trading on AIM are also encouraged to adopt the Statement of Principles. 

Further information including the revised Statement of Principles and template resolutions is available on the FRC website.

The update reports on the forthcoming webinars and online outreaches: EFRAG Conference "Where is Corporate Reporting heading?" on 7 December 2022; the forthcoming EFRAG, Accounting Standards Committee of Germany (ASCG) and International Accounting Standards Board (IASB) roundtable on Primary Financial Statements on 11 November 2022; and an EFRAG - IASB online roundtable - What are the implications of the recent IASB decisions on Primary Financial Statements? on 15 November 2022. The update also reports on the EFRAG educational session on the IASB’s Primary Financial Statements project which took place on 18 October 2022.

The update also covers the EFRAG Financial Reporting Board webcast meeting held on 18 October; the EFRAG Financial Reporting Technical Expert Group webcast on 6 October; the EFRAG Adminstrative Board public session on 17 October and EFRAG's sustainability reporting related activities.

Please click to download the October EFRAG update from the EFRAG website.

ED 83 Reporting Sustainability Program Information — RPGs 1 and 3: Additional Non-Authoritative Guidance aims to demonstrate how RPG 1 Reporting on the Long-Term Sustainability of an Entity’s Finances and RPG 3 Reporting Service Performance Information can be immediately applied to report on sustainability programme information. Additional implementation guidance is proposed, along with illustrative examples on such key topics as green bonds, carbon taxes, tax expenditures, and other programmes developed to mitigate the effects of climate change and achieve the UN’s Sustainable Development Goals.

Comments on the ED are requested by 16 January 2023. Please click for additional information and access to the ED in the press release on the IPSASB website.

A sample of 100 companies drawn from the whole premium listed market was reviewed. The comprehensive report presents the findings from the review and sets out the FRC’s expectations for the future application of the UK Corporate Governance Code (“the Code) and reporting.

The report highlights areas of high-quality reporting, but also draws attention to improvement needed in areas such as disclosures on workforce and wider stakeholder engagement, diversity and oversight of the effectiveness of the risk management and internal control systems. In particular, the FRC has looked closely for disclosure of actions and outcomes resulting from governance policies, procedures and activities noting that better disclosures include specific examples and case studies.

As last year, the FRC notes a general improvement in reporting. The review highlights the continuing need for high quality governance which is linked to effective decision-making by Boards and management and for greater clarity as to how a company is applying the Code’s principles and clearer explanations where there are departures from the Code provisions so that shareholders and stakeholders have greater confidence in the quality of governance.

To improve disclosures, the FRC reporting expectations include the following:

• Moving away from declaratory statements and providing specific disclosures.
• Providing clear and meaningful explanations when departing from the Code.
• Demonstrating how the company’s culture, is aligned to its purpose, values and strategy.
• Reporting on engagement with shareholders and stakeholders, and how their views have been considered.
• Making clear linkages in the annual report to policies or disclosures that relate to stakeholder matters.
• Reporting on diversity, including at a senior leadership level beyond the recommended external targets including objectives and targets.
• Explaining how the board or a committee has reviewed the effectiveness of the risk management and internal control systems. Companies are expected to explain how they have monitored their risk management and internal control systems throughout the year and any changes made to ensure their continuous efficacy.  When reporting the outcome of their review companies should demonstrate the current state of the risk management and internal control systems confirming the effectiveness of these systems or, where weaknesses or inefficiencies have been found, describing these in the annual report.  Companies should also disclose what evidence led them to their conclusion about the effectiveness by reporting on the actions they have taken to monitor and review those systems during the year.
• Reporting on how the executive remuneration arrangements align with the company’s purpose, values and strategy.

In addition, the FRC draws attention to ensuring clarity in the disclosures of:

• not only the outcomes from culture assessment and monitoring activities, but also the impact of any remedy initiatives to assess their effectiveness in the following reporting year;
• the extent to which shareholder engagement activity enabled shareholders to ask questions and present their views and concerns;
• how workforce views obtained from engagement activities are connected to actions carried out by the board;
• management of modern slavery risk including how the company has evaluated the impact of modern slavery on the business and who is responsible for driving strategy on modern slavery;
• the methodology used to calculate energy and carbon data, as well as a discussion of work that is underway to disclose in future, or to enhance current disclosure, and clarity about which of the Scope 3 categories will be included;
• how diversity objectives and initiatives link to company strategy; and
• procedures to identify and manage emerging risks; and following an assessment, an explanation of the emerging risks identified and actions to mitigate them.

Members of the audit committee, should ensure that their companies are well prepared in advance of their year ends to address the recommendations and to consider matters for ongoing improvement.

A press release and the full report are available on the FRC website.

The decisions in this compilation relate to IFRS 2/IAS 32, IFRS 9/IFRS 16, IFRS 15, IFRS 17, IFRS 17/IAS 21, IAS 32, and IAS 37.

The IFRS Foundation initiated the compilation series in October 2019 and will continue it by publishing new volumes biannually in April and October. For more information, see the press release and compilation on the IASB website.

On Thursday this week, ISSB members will discuss sources of guidance to identify sustainability-related risks and opportunities and disclosures. The additional paper to be discussed is available on the IFRS Foundation website.

The IRCC will advise the IFRS Foundation Trustees, the International Accounting Standards Board (IASB) and the International Sustainability Standards Board (ISSB) on how reporting required by the IASB and the ISSB could be integrated, and how the IASB and the ISSB could consider applying principles and concepts from the integrated reporting framework to their projects.

A list of the members and a corresponding press release are available on the IFRS Foundation website.

The FRC reviewed 20 audits across six audit firms covering both the financial statement opinion and the Value for Money (VfM) arrangements conclusion work. The report focuses on the key areas requiring action across the firms, in relation to major local audits, to safeguard and enhance audit quality.

The FRC indicated that 70% of audits required no more than limited improvements (the same as last year) - an improvement from the 46% average over the preceding three years - and that 93% of the auditor’s work on VfM arrangements required no more than limited improvements.  However the number of audits assessed as requiring significant improvements has increased from none last year to 15% in 2021/22.  The findings which contributed to this increase were inadequate financial statements review procedures, ineffective evaluation of identified misstatements and insufficient justification for issuing a qualified audit opinion  

Timliness of audits was also identified as a key finding where 91% of 31 March audits of local government bodies were not completed by the target date of 30 September 2021.  Findings also showed that there was a remaining backlog of audits from the prior year where 19% of 31 March 2020 audits were still incomplete as at 30 September 2021.  The FRC indicates that "Audited bodies, local auditors and those with regulatory responsibilities must continue to work together to restore timely financial reporting and audit".

A press release and the full report is available on the FRC website