Technical update

Sustainability

The European Commission is adopting a package of infringement decisions due to the absence of communication by member states of measures taken to transpose EU directives into national law. The Commission has called on 17 member states to fully transpose the corporate sustainability reporting directive (CSRD). Under the directive, mandatory sustainability reporting should be undertaken by larger companies in 2025, for financial years beginning on or after 1 January 2024. Letters of formal notice have been sent to the concerned member states, which now have two months to respond and complete their transposition.

The IFRS Foundation has published guidance for companies voluntarily applying the IFRS Sustainability Disclosure Standards issued by the International Sustainability Standards Board (ISSB). The guide for preparers is designed to be especially useful for companies operating in jurisdictions lacking regulatory requirements to apply the standards. It will help reporters offer a baseline of disclosures aiding investors.

The World Bank and the IFRS Foundation have announced a commitment to support the adoption of IFRS Sustainability Disclosure Standards in emerging markets and developing economies. The partners will help public and private sector organisations expand sustainability reporting, including through capacity building.

The Global Reporting Initiative (GRI) and the World Benchmarking Alliance (WBA) have released analysis concluding that the proper utilisation of GRI standards delivers stronger corporate social performance. Companies publishing a sustainability report with a GRI content index achieve scores at least 47% higher than other companies in the WBA’s social benchmark, according to the report.

Investments

The International Accounting Standards Board (IASB) is consulting on proposed amendments to IAS 28, Investments in associates and joint ventures, to improve reporting using the equity method. The IASB wants more comparability in such reports and has also proposed new disclosure requirements that will enhance information about such investments.

Revenues

Following a post-implementation review, the IASB has decided major changes are not needed to IFRS 15, Revenue from contracts with customers, although it may make smaller amendments in 2025. These could focus on how companies decide whether they are a main seller or an agent in a transaction; how to report on payments to customers; and how IFRS 15 works alongside other IFRS Accounting Standards.

Auditing

The International Auditing and Assurance Standards Board (IAASB) has approved a ‘technology position’ that encourages auditors to use new technologies where appropriate. The IAASB is currently conducting a gap analysis to ensure current standards align with technological advancements.

The IAASB has released guidance helping jurisdictions adopt the International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (ISA for LCE). It advises on the standard adoption process, highlighting common steps and successful approaches, and addressing potential challenges.

Quality management

The International Federation of Accountants (IFAC) has released the third and final instalment of guidance helping small and medium practices implement IAASB quality management standards. It addresses factors driving the nature, timing and extent of quality monitoring; establishing feedback loops for continuous improvement; creating a framework for evaluating findings, and identifying and evaluating deficiencies; and the ongoing assessment of quality management.

Internal audit

The Institute of Internal Auditors (IIA) has identified digital disruption and climate change as the two fasting-growing risk areas for organisations across all industries. The body’s latest Risk in Focus research reported that 3,500 internal audit leaders worldwide predict global risk levels for digital disruption and climate change will increase by 20 and 16 percentage points respectively over the next three years – far outpacing other risks.