Sustainability
The International Federation of Accountants (IFAC) has published a blueprint for how upcoming international sustainability reporting standards can be implemented within national and regional jurisdictions. IFAC foresees treating two blocks of sustainability reporting rules (the first block is on investor-focused information, the second on policy-focused reporting) differently. The first block could see International Sustainability Standards Board (ISSB) rules implemented in the same way as IFRS Standards are, or via a special – yet still effective – procedure that effectively writes ISSB standards into national legislation. Jurisdictions would have more flexibility on implementing block-two rules, although IFAC wants interoperability between both blocks.
The importance of the accountant’s role in managing climate change has been stressed by IFAC. In a statement, it said that aligning and integrating climate-related information and disclosures with company climate commitments, targets and strategic decisions is essential. Accountants must ensure that climate-related reporting complies with reporting requirements without material omissions or misstatements.
The European Financial Reporting Advisory Group (EFRAG) project task force on European sustainability reporting standards has signed a cooperation agreement with Shift, a centre of expertise on the UN Guiding Principles on Business and Human Rights. EFRAG and Shift will encourage the swift development of European sustainability reporting standards, while looking to dovetail them with international standards.
The Global Reporting Initiative (GRI) is establishing a working group to develop an international accounting standard for the mining sector. It will recruit experts with reporting or sustainability experience in mining and quarrying to shape the standard and measure the sector’s environmental impact. It will also assess how mines affect human rights and the economy.
IFAC has called on the G20 group, which is holding a summit in Italy at the end of October, to support the initiative on sustainability standards while actively backing public financial management, notably through introducing accrual accounting for governments and state agencies. IFAC says this will deliver financial information crucial to governments as they manage the Covid-19 pandemic and its impact.
Public sector
The International Public Sector Accounting Standards Board (IPSASB) is offering grants for scholarly papers on:
- differential reporting
- discount rates
- intangible assets
- climate change and public sector sustainability reporting
- public sector financial reporting on the impact of digitisation.
Audit
The International Auditing and Assurance Standards Board (IAASB) has released detailed supplemental guidance on its proposed standard for audits of less complex entities. This includes supplemental advice on issues such as ethics, material uncertainty related to going concern, the modification of auditors’ reports, and more. IAASB has also released two mapping documents comparing the proposed IAASB guidance for less complex entities with requirements by International Standards on Auditing (ISAs). The board is consulting on its proposals until 31 January 2022.
Artificial intelligence
The International Organization of Securities Commissions (IOSCO) has published guidance to help its members regulate and supervise the use of artificial intelligence (AI) and machine learning (ML) by market intermediaries and asset managers. This includes AI/ML systems used for client identification, selection of trading algorithms, and portfolio management. IOSCO wants AI/ML used ethically, accurately and carefully, especially if such services are outsourced.
Standards
The International Accounting Standards Board (IASB) is preparing to deliberate on some ongoing technical consultations that will close in the next four months. The consultations cover:
- management commentary (until 23 November)
- disclosure requirements in IFRS Standards (until 12 January 2022)
- subsidiaries without public accountability – disclosure (until 31 January 2022).
Intangibles
EFRAG has published a discussion paper on possible approaches to create better information on intangibles, such as trademarks, brands, staff expertise and customer relationships. EFRAG stresses the difficulties of measuring the value of such assets, which may be unstable. Comments are sought by 30 June 2022.
