Sustainability
The European Financial Reporting Advisory Group (EFRAG) has released its first full set of final draft sustainability reporting standards for the European Union (EU) for public consultation. EFRAG has been charged with developing standards expected to become compulsory under a proposed EU Corporate Sustainability Reporting Directive. The European Parliament, the European Commission and the EU Council of Ministers are about to negotiate an agreed text. EFRAG has now launched consultations on the details of these standards, which would be authorised by the European Commission under the law. The consultation will run until 8 August.
The EFRAG Sustainability Reporting Board has appointed an EFRAG Sustainability Reporting Technical Expert Group (EFRAG SR TEG), drawn from 11 EU countries and covering a wide range of professional expertise. It will provide technical advice on EFRAG’s draft EU Sustainability Reporting Standards.
EFRAG is to join a new International Sustainability Standards Board (ISSB) working group boosting compatibility between ISSB draft standards and ongoing national and regional sustainability disclosure initiatives. The Sustainability Standards Advisory Forum will comprise the Chinese Ministry of Finance, the European Commission, EFRAG, the Japanese Financial Services Authority, and the Sustainability Standards Board of Japan Preparation Committee; the UK Financial Conduct Authority; and the US Securities and Exchange Commission (SEC).The International Federation of Accountants (IFAC) has supported the move, saying it will support the ‘equivalency and interoperability in sustainability initiatives around the world’, and highlights the benefit of consistency between EFRAG and ISSB standards.
Audit
IFAC has also released a survey report offering guidance on the costs of audit fees as a percentage of corporate revenue. It compares fees paid by mega-cap, large-cap, mid-cap, small-cap and micro-cap entities trading on US, Canadian and European stock exchanges from 2013 to 2020.
The International Auditing and Assurance Standards Board (IAASB) has released guidance on how auditors should ensure that, when applying International Standard on Auditing (ISA) 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements, they comply with other ISAs.
The IAASB has released a factsheet helping audit practices define and structure engagement teams of professionals charged with handling an audit job.
Public sector
The International Public Sector Accounting Standards Board (IPSASB) has started a consultation process that may lead to the board issuing its first standards on sustainability reporting – with early guidance possibly coming in 2023. It is assessing demand for global public sector-specific sustainability reporting guidance and priority areas for coverage.
IPSASB has also released a consultation paper discussing how public sector entities should recognise, measure and report on natural resources. These include sunlight, air, water and land, which deliver significant economic resources but are often poorly assessed in monetary terms, undermining how governments value and protect them.
Climate-related risks
The International Accounting Standards Board (IASB) has expanded its 2022-26 work plan by adding a project on considering climate-related risks, while developing research on intangible assets, cashflow statements and related matters. The IASB has decided not to add new projects on reporting cryptocurrencies and related transactions, and on ‘going concern’ disclosures.
Islamic finance
The IASB’s Islamic Finance Consultative Group has released a discussion paper on developing guidance about financial instruments with the characteristics of equity that comply with Islamic rules on financial services.
Ethics
The International Ethics Standards Board for Accountants (IESBA) has reported on how its International Code of Ethics for Professional Accountants dovetails with similar US rules issued by the SEC and the Public Company Accounting Oversight Board (PCAOB). The paper particularly focuses on guidance on independence when auditing public interest entities.
IESBA has released a report summarising its work in 2020 and 2021, including strengthening international standards on audit independence regarding non-assurance services, fees, defining public interest entities, tax planning and technology.
