Sustainability
The European Union has postponed implementation of its mandatory sustainability reporting legislation, giving large companies with fewer than 500 employees and listed small and medium-sized businesses two more years to undertake sustainability reporting. These deadlines will now fall in 2028 and 2029 under a revised Corporate Sustainability Reporting Directive. The EU Council of Ministers and the European Parliament have also postponed by one year (to 2028) reporting checks required for the largest companies under changes to the EU Corporate Sustainability Due Diligence Directive. These changes were approved by a fast-track procedure – part of the planned Omnibus I and II business regulation simplification reforms of the new European Commission that took office in December 2024. See this month’s AB article ‘Sustainability reporting changes’ for more information.
The US Securities and Exchange Commission (SEC) has abandoned its defence of the climate disclosure rules it released in March 2024 against legal challenges. The SEC will no longer oppose motions by private parties and states opposing the rules as regulatory overreach but has yet to propose amendments or abolition. The rules largely followed single materiality principles of measuring the impact of climate change on reporters. Large companies would have had to report double materiality data about indirect emissions from energy purchases as well as direct greenhouse gas emissions. The rules were suspended pending a ruling on the legal challenges.
The International Sustainability Standards Board (ISSB) is pressing ahead with encouraging regulatory adoption of its global standards, releasing a ‘roadmap development tool’ and associated reference templates for regulators and legislators. The tool groups the possible jurisdictional approaches under the four decision areas of how (regulatory process), who (reporting entities), what (requirements) and when (readiness).
The IFRS Foundation has signed a memorandum of understanding with the Taskforce on Nature-related Financial Disclosures (TNFD). The ISSB, which sets the IFRS Sustainability Disclosure Standards, will henceforth consider the relevance of TNFD recommendations in aiding global capital markets. The ISSB and TNFD will share research, knowledge and technical expertise and explore joint market engagement and capacity-building initiatives.
Accounting
The International Federation of Accountants (IFAC) is consulting on changes to the obligations of its 180 professional accountancy member organisations in over 135 jurisdictions, including a commitment to adopt IFRS Sustainability Disclosure Standards. The obligations would formalise ‘the expectation to adopt or work toward the adoption of all IFRS Standards, including [the ISSB’s] S1 and S2’. IFAC members would also be required to enhance quality assurance reviews, promote flexible entry requirements for accounting education programmes, and assess adoption of the International Auditing and Assurance Standards Board (IAASB) standard on auditing for less complex entities (ISA for LCE).
The IFRS Foundation has published new translations of IFRS Accounting Standards, agenda decisions and exposure drafts in Albanian, French, Japanese, Korean, Spanish and Tajik.
Auditing
The IAASB has released an implementation guide for the ISA for LCE, with an overview of the standard’s concepts, structure and format, and step-by-step insights for each section.
The IAASB has also released a revised ISA 570 on going concern to help auditors check managers’ assessment of an entity’s ability to continue operations. Effective for audits of financial statements from 15 December 2026, the standard will require auditors to conduct timely and thorough risk assessments into whether events or conditions potentially undermining a business have been identified. Auditors must look for management bias and evaluate going concern issues for at least one year after approval of the financial statements.
Ethics
The International Ethics Standards Board for Accountants (IESBA) is consulting on whether its international code of ethics for professional accountants should be revised to address the independence of auditors when auditing collective investment vehicles and pension funds. Regulated open-end funds, including collective investment vehicles, controlled US$69 trillion in 2023, says IESBA, so ‘robust and clear independence standards and guidance to maintain public trust’ in their audits is important.
More information
Watch Adam Deller’s series of videos explaining the fundamentals of IFRS Accounting Standards.
