2023

ACCA publishes a new guide on sustainability reporting preparation

28 Nov, 2023

The Association of Chartered Certified Accountants (ACCA) has published a new guide 'Sustainability reporting - the guide to preparation' to help companies start to prepare for sustainability reporting.

The guide which is aimed at professional accountants, senior management and talent developers, can be adapted to companies of all sizes.  It focuses on preparing for sustainability reporting in accordance with the International Sustainability Standards Board (ISSB) Standards (IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures) but is equally relevant to companies applying other sustainability reporting frameworks or standards.

The guide, which is the first in a series, includes the key steps to help companies start to prepare for sustainability reporting and focuses on an eight-stage sustainability reporting cycle addressing:

  • who is accountable and responsible for sustainability reporting;
  • the process for identifying material sustainability-related information for reporting purposes;
  • determining, collecting and reporting the data;
  • considerations for verification that can lead to continual improvement of reporting; and
  • the role of people and technology in enabling quality reporting.

The guide is complemented by a series of videos, produced in partnership with the ISSB.

A press release and the full guide are available on the ACCA website.

IFRS Foundation video on proposed changes to IFRS Accounting Taxonomy 2023

28 Nov, 2023

The IFRS Foundation has issued a video featuring IASB Member Ann Tarca who provides an explanation of the proposed changes to the IFRS Accounting Taxonomy for 2023.

Key proposals in IFRS Accounting Taxonomy — Proposed Update 2 include:

  • Enhanced comparison of narrative information.
  • Financial instruments based on common reporting practice.
  • General improvements.
  • Technology update.

Comments on the proposals are requested by 5 January 2024. For more information, see the press release on the IFRS Foundation’s website.

A4S publishes third edition of introduction to sustainability-related reporting

28 Nov, 2023

Accounting for Sustainability (A4S) has published the third edition of 'Navigating the Reporting Landscape'.

The guide summarises recent key developments in corporate reporting, with respect to trends in sustainability reporting and sustainability-related financial reporting. It has been updated following the developments in mandatory and voluntary reporting standards and frameworks, including the International Sustainability Standards Board (ISSB) and the Taskforce on Nature-related Financial Disclosures (TNFD).

Please click to download Navigating the Reporting Landscape from the A4S website.

Report of the October 2023 Emerging Economies Group meeting

27 Nov, 2023

The 26th meeting of the IASB's Emerging Economies Group (EEG) was held on 30–31 October 2023. The IASB has published a full report of the meeting.

Par­tic­i­pants at the meeting, which was chaired by IASB member Tadeu Cendon, were introduced to and discussed the prospective IFRS Accounting Standards (1) IFRS 18 Presentation and Disclosures in Financial Statements and (2) Subsidiaries without Public Accountability: Disclosures. In addition, members were provided an overview of the IASB’s tentative decisions on the equity method project and updated on the IASB technical work, hyperinflation, business combinations under common control, and application issues in Zimbabwe and Namibia.

Please click for access to the full report on the IFRS Foundation's website.

Pre-meeting summaries for the November 2023 IFRS Interpretations Committee meeting

27 Nov, 2023

The IFRS Interpretations Committee (Committee) meets on 28-29 November 2023. The IFRS IC will discuss two new items, finalisation of one agenda decision and input to three International Accounting Standards Board (IASB)’s projects.

Initial consideration:

IAS 37 Provisions, Contingent Liabilities and Contingent Assets—Climate-related Commitment: The IFRS IC received a submission asking its views on how IAS 37 applies to climate-related commitments to a fact pattern where an entity manufacturer of household products publicly states a net-zero transition commitment. The manufacturer published a detailed plan for the modification of the manufacturing method to achieve 60% reduction in emissions in nine years and to buy carbon credits to offset its remaining emissions after those nine years. The submitter asked i) whether the public statement of a net zero transition commitment creates a constructive obligation as defined in IAS 37; ii) whether a constructive obligation created by a net zero transition commitment meets the criteria in IAS 37 for recognising a provision; and iii) if a provision is recognised, whether the expenditure required to settle it recognised is as an asset or as an expense when the provision is recognised.

IFRS 8 Operating Segments—Disclosure of Revenues and Expenses for Reportable Segments: The IFRS IC received a submission asking about the application of IFRS 8:23 which requires an entity to report a measure of profit or loss for each reportable segment and to disclose specified amounts for each reportable segment. The submitter said it observes diversity in its jurisdiction in the application of two aspects of IFRS 8:23: (a) how to read the requirement for an entity to disclose the specified amounts applying IFRS 8:23(a)-(i) for each reportable segment; and (b) how to determine ‘material items’ applying IFRS 8:23(f). The staff believes that the principles and requirements in IFRS Accounting Standards provide an adequate basis for an entity to determine the accounting treatment or disclosure requirements for the above submission. The staff recommends not to add a standard-setting project to the work plan and instead to publish tentative agenda decisions.

Finalisation of agenda decision:

IAS 27 Separate Financial Statements—Merger between a Parent and Its Subsidiary in the Separate Financial Statements: In its June 2023 meeting, the IFRS IC discussed a submission about how an entity applies IAS 27 to account for a merger with its subsidiary (which contains a business) in its separate financial statements and whether the merger should be accounted for as a business combination applying IFRS 3 or whether the parent entity should recognise the subsidiary’s assets and liabilities at their previous carrying amounts (carrying amount method). In the meeting, the IFRS IC members generally agreed with the staff’s analysis. The respondents to the agenda decision provided comments on different perspectives of the agenda decision. The staff recommends that the agenda decision be finalised, with some proposed changes.

IFRS IC input to IASB projects:

Climate-related and Other Uncertainties in the Financial Statements: In its September 2023 meeting, the IASB discussed potential actions it could take to help address concerns about reporting the effects of climate-related risks in financial statements. The IASB decided to consult the IFRS IC on how entities apply the requirements in IAS 36 in measuring value in use when an asset is subject to highly variable future cash flows over an extended time horizon. The IASB seeks input from the IFRS IC on the concerns identified in respect of lack of compliance due to misunderstanding of the requirements, limitations of the requirements and insufficiently clear requirements in IFRS Accounting Standards.

Provisions—Targeted Improvements: The IASB is conducting a project to make three targeted improvements to IAS 37. The IASB seeks IFRS IC input on one of the proposed improvements with respect to: i) initial suggestions for possible amendments to the requirements and illustrative examples supporting the ‘present obligation’ recognition criterion in IAS 37; and ii) whether to add to IAS 37 application requirements specifying when an entity has a present obligation for costs payable if a measure of its activity—for example, its revenue or carbon emissions—exceeds a specified threshold.

Power Purchase Agreements: In July 2023, the IASB added a project to its work plan to research whether narrow-scope amendments to IFRS 9 could be made to better reflect how financial statements are affected by Power Purchase Agreements (PPAs). The project team has conducted further research on the prevalence of PPAs and how to restrict the scope of any potential standard-setting solution to limit the risk of unintended consequences for other contracts or transactions to purchase non-financial items. The IASB seeks IFRS IC members’ input into the additional research performed.

The full agenda for the meeting and our comprehensive pre-meeting summaries can be found here.

Summary of the October 2023 CMAC meeting

27 Nov, 2023

Representatives from the International Accounting Standards Board (IASB) met with the Capital Markets Advisory Council (CMAC) in a hybrid meeting on 19 October 2023. Notes from the meeting have now been released.

The topics discussed at the meeting included:

  • IASB and ISSB update
  • Post-implementation Review of IFRS 15
  • Climate Related and Other Uncertainties in the Financial Statements
  • Equity Method

The meeting summary is available on the IFRS Foundation’s website.

Secretary of State for Business and Trade issues an updated remit letter to the FRC

27 Nov, 2023

The Secretary of State for Business and Trade has issued the Financial Reporting Council (FRC) with a new remit letter updating the Government’s priorities for the FRC’s work.

The remit letter, which updates the letter issued in 2019:

  • Asks that in fulfilling its core purpose to enhance public trust and confidence in corporate governance, financial reporting and audit, the FRC should contribute to promoting the competitiveness and growth of the UK economy, embedding its growth duty across its work.
  • Asks that the FRC considers proportionality when introducing any new requirements and also looks at where rules and guidance are no longer proportionate and can be removed or streamlined.
  • Welcomes the FRC's work to review and update the UK Corporate Governance and Stewardship Codes and asks that the FRC, in its management of the Codes, ensures that they promote good governance as a key component of company success and facilitate good engagement between companies, investors and stakeholders in the interests of the economy as a whole. 
  • Encourages the FRC to continue its work on areas such as driving up the quality of audit, engaging with the government on measures to simplify and streamline current non-financial reporting requiremements and in supporting the assessment of IFRS Sustainability Disclosure Standards to enable consistent and proportionate reporting on sustainability matters by companies.

A copy of the letter and the FRC Chief Executive Officer's reply are available on the Government's website.   

UK Endorsement Board publishes its 2022/23 Annual Reports

24 Nov, 2023

The UK Endorsement Board (UKEB) has published its two Annual Reports for the reporting period 2022/2023.

The first report, Report on the carrying out of functions designated under The International Accounting Standards (Delegation of Functions) (EU Exit) Regulations 2021, sets out how the UKEB discharged its delegated functions, including the adoption of major standards and narrow scope amendments and in influencing the development of international accounting standards.

The second report, Governance & Due Process Annual Report, sets out how the UKEB fulfilled its governance and due process responsibilities.

The reports are available on the UKEB website:

    FRC publishes thematic review of audit sampling

    24 Nov, 2023

    The Financial Reporting Council (FRC) has published its thematic review of audit sampling.

    The FRC reviewed the sampling methodologies and guidance for audit sampling of the largest audit firms.  

    The purpose of the thematic was to:

    • Identify common practice, concerns, and good practice across the largest audit firms to drive improvement and support the FRC's monitoring of the firms’ systems of quality management.
    • Share findings to educate the wider audit market, as sampling has been an area of repeated Audit Quality Review (AQR) findings for smaller firms, and
    • Support Audit Committees in understanding and evaluating the approach taken by audit teams.

    The review found all audit firms should:

    • Ensure that they provide engagement teams with sufficient guidance and training to support their use of professional judgement in audit sampling; and
    • Update their methodologies and guidance to drive better documentation of key professional judgements in this area.

    press release and the full thematic review are available on the FRC website.

    IASB begins webcast series on the forthcoming standard for subsidiaries

    23 Nov, 2023

    The IASB has released the first in a series of webcasts explaining the requirements in the forthcoming reduced-disclosure standard for subsidiaries of parent companies that apply IFRSs.

    The webcast gives an overview of the new standard and explains why the IASB developed it, who are the subsidiaries eligible to apply the new standard and the benefits it will bring to subsidiaries and their parent companies, as well as the users of financial statements.

    Further webcasts in the series will explain the expected effects of the future standard.

    Please click to access the webcast (9 minutes) on the IFRS Foundation website.

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