Sustainability
A memorandum of understanding has been signed by the IFRS Foundation with Canadian investment agency Montréal International to obtain financial support from the governments of Canada and Quebec to establish a base in Montreal for the International Sustainability Standards Board (ISSB). The goal is to ensure that ISSB meetings will be held in the city in October and December 2022 and that the board’s inaugural symposium will also be hosted there.
The IFRS Foundation trustees and the Value Reporting Foundation (VRF) board have announced that VRF will be consolidated into the IFRS Foundation (and hence the ISSB) by 1 August 2022.
The ISSB and the Global Reporting Initiative (GRI) have released details on how they plan to cooperate on sustainability reporting standards. There will be an agreed schedule of meetings and a roadmap on collaboration. The two bodies will ensure requirements in the upcoming draft IFRS S1 and IFRS S2 sustainability standards are equivalent to GRI standards. The ISSB and GRI will also develop a methodology to cross-reference guidance and other ISSB/GRI materials ‘to maximise usefulness to preparers of information’.
The European Union (EU) Council of Ministers and the European Parliament have approved in principle the proposed EU corporate sustainability reporting directive, which mandates some sustainability reporting in all 27 member states. The move has been welcomed by the European Financial Reporting Advisory Group (Efrag), which is developing detailed rules on how the reporting should operate, noting the decision confirms its role as technical adviser to the European Commission.
Ethics
The International Ethics Standards Board for Accountants (IESBA) has called on the ISSB to integrate ethics into its work, as it starts to develop global guidance on sustainability reporting. IESBA wants the ISSB to ‘take every opportunity to advocate the importance of high standards of ethical behaviour… to help underpin public confidence and trust in information that is increasingly being used for capital allocation or other purposes by investors, customers, employees or potential employees, government agencies and other stakeholders’.
Risk management
The International Accounting Standards Board (IASB) is to develop a standard based on dynamic risk management. It wants to help investors to better understand the effect of a company’s management of repricing risk due to changes in interest rates and to evaluate the effectiveness of those policies.
Accounting standards
After a post-implementation review of IFRS 10, IFRS 11 and IFRS 12, the IASB has concluded that the three accounting standards are working as intended, with only five low-priority matters arising. The five topics are: subsidiaries that are investment entities; transactions that change the investor-investee relationship; transactions involving ‘corporate wrappers’; collaborative arrangements outside the scope of IFRS 11; and additional disclosures about interests in other entities.
Audit
The International Auditing and Assurance Standards Board (IAASB) has proposed changes to its standards to improve guarantees that auditors are independent and honest in their assessments of clients. The reforms are designed to operationalise recent changes made by the IESBA to its international code of ethics for professional accountants (including the international independence standards) dealing with listed and public interest entities. As a result, firms will be required to publicly disclose when the independence requirements for public interest entities have been applied in an audit of financial statements.
Crypto and digital
The International Organization of Securities Commissions (Iosco) has released a crypto-asset roadmap for 2022–23, setting out the workplan to the end of 2023 for its new Fintech Task Force (FTF). The new body will be looking at crypto and digital assets (CDA) and decentralised finance (DeFi) on the basis of analysing and responding to market integrity and investor protection concerns.
