Sustainability
The IFRS Foundation trustees have moved forward with their plan to develop global sustainability reporting standards, forming a working group to undertake technical work. It will focus on enterprise value issues with sustainability assessments, and plan the creation of a potential international sustainability reporting standards board under IFRS Foundation governance. The trustees will also create a multistakeholder expert consultative committee with bodies such as the International Organization of Securities Commissions (IOSCO) to formalise the new board’s interaction with other sustainability reporting groups.
The Global Reporting Initiative (GRI) has welcomed the proposed new European Union corporate sustainability reporting directive, which would force large or listed companies operating in the EU to publish reports on their environmental and social impact. EU sustainability reporting standards will be developed through a multistakeholder and transparent process led by the European Financial Reporting Advisory Group (EFRAG) and take account of GRI standards and other existing reporting frameworks.
GRI and the Sustainability Accounting Standards Board (SASB) have released a practical guide sharing experience of how their standards can be used together. It argues that this can deliver a holistic picture of corporate performance, better integrating sustainability and financial information.
The SASB has published an updated climate risk technical bulletin. Designed to show how climate risks and opportunities are present across 77 industries, it recommends industry-specific standards for measuring, managing and communicating these potential impacts.
The International Auditing and Assurance Standards Board (IAASB) has released guidance on how auditors should conduct assurance on non-financial reporting, such as sustainability, corporate social responsibility, climate-focused and other assessments. Its non-authoritative guidance on applying ISAE 3000 (revised) to extended external reporting assurance engagements is designed to help practitioners work with new non-financial reporting regimes, including those being considered by the IFRS Foundation, the EU and others.
Technology
The IAASB has also advised auditors on managing the risk of overreliance on technology such as automated tools and techniques, or basing assessments on information produced by an organisation’s IT systems. Experienced auditors should be aware that information generated by IT may include biases that need countering by human analysis, the board warns.
Valuation
The International Accounting Standards Board (IASB) has proposed accounting rules guiding companies on valuing foreign currency assets or debts when they cannot be converted to domestic currency. It proposes that companies should effectively assess what exchange rate would probably apply if an exchange transaction was made. Watch an IFS webcast on lack of exchangeability here.
Accounting estimates
The IASB has released proposals to change its taxonomy rules affecting how accounts should be classified and framed. The changes take account of IFRS reforms released in February on disclosing accounting policies and defining accounting estimates.
Covid-19
The IASB has extended by one year to June 2022 temporary changes to the IFRS 16 standard on accounting for leases to help lessees with Covid-related rent concessions, such as rent holidays and temporary rent reductions. The goal is to highlight the anticipated post-Covid lease liability outlook, as well as existing cashflow demands.
Ethics
The International Ethics Standards Board for Accountants (IESBA) has launched a post-implementation review of the long association provisions of its ethics code, which require a five-year cooling-off period for engagement partners after running audits of certain public interest entities. The aim is to ensure that auditors remain objective. With this minimum period mandatory under IESBA guidance from December 2023, the board is looking for feedback on its long association rules, which came into force in 2018.
