Technical update

Sustainability

Brazil, Latin America’s largest economy, has confirmed plans to make International Sustainability Standards Board (ISSB) reporting standards mandatory for publicly held companies from January 2026, having already authorised voluntary use by public companies and investment funds from 2024. The country’s finance ministry and its securities regulator the Comissão de Valores Mobiliários (CVM) have confirmed the move under CVM resolution 193. According to the CVM, Brazil is the first country to write the ISSB’s IFRS S1 and S2 reporting standards into its national regulations.

The ISSB has deepened cooperation with the GRI (Global Reporting Initiative) with the joint launch of a Sustainability Innovation Lab (SIL). The lab will help companies meet sustainability disclosure requirements, ‘fostering professional development, training, practical solutions and innovative thinking’. The SIL will be based in Singapore – 81% of listed companies in the Asia Pacific region report with GRI standards.

An attempt at the European Parliament to halt the formal approval of European Sustainability Reporting Standards (ESRS) as mandatory for large companies from 2025 was voted down by MEPs 359 to 261. The move clears a final hurdle for ESRS to be written into the European Union’s official journal in 2023 as part of EU law.

To help implement the new EU sustainability reporting system, the European Financial Reporting Advisory Group (Efrag) has launched an ESRS Q&A platform to collect and answer technical implementation questions from accountants and other reporters.

Accounting taxonomy

The IFRS Foundation has published proposals to update the IFRS accounting taxonomy 2023 to support the digital tagging of information. Planned changes include amendments to the taxonomy’s common reporting practice for the presentation of financial instruments in digital financial statements. They would clarify the accounting meaning of a report element, reducing tagging errors.

Public sector

The International Public Sector Accounting Standards Board (IPSASB) has released IPSAS 49 on retirement benefit plans, establishing accounting and reporting requirements for such benefits. The new standard guides accounting and reporting by a retirement benefit plan, boosting accountability to beneficiaries and other users.

SMEs

The International Federation of Accountants (IFAC) has released a small business sustainability checklist to help small and medium-sized enterprises (SMEs) incorporate sustainability practices into their strategy and business operations. Examples include SWOT analyses of climate change, waste, extreme weather, biodiversity, energy, and carbon taxes/price impacts.

Assurance

The International Auditing and Assurance Standards Board (IAASB) has released a set of FAQs to improve auditors’ understanding of materiality concepts within the expanding range of sustainability reporting standards. It includes guidance on single and double materiality, and the potential impact of materiality within sustainability assurance engagement procedures. The publication of the FAQs comes as the IAASB debates its planned International Standard on Sustainability Assurance (ISSA) 5000 on materiality.

Ethics

The International Ethics Standards Board for Accountants (IESBA) has released guidance on its revisions to the code relating to the definition of engagement team and group audits. The guidance is designed to promote independence when auditing group financial statements and creating audit engagements.