Technical update

SMEs

The International Accounting Standards Board (IASB) has released a significant update to the IFRS for SMEs Accounting Standard, which is currently required or permitted for small and medium-sized enterprises (SMEs) in 85 jurisdictions. Among the new requirements are: the disclosure of information about supplier finance arrangements; consistency of approach on foreign currency disclosures; clarification of assessments of fair value measurements; and improved declarations about business combinations, consolidations and financial instruments. This third edition of the standard is effective for annual periods beginning on or after 1 January 2027, with early application permitted.

Professional education

The International Federation of Accountants (IFAC) has revised its International Education Standards (IES) on technical competence (IES 2), professional skills (IES 3) and professional values, ethics and attitudes (IES 4), and modernised its formal assessment of professional competence (IES 6). The standards represent a minimum global baseline for developing competences in the profession. A key change is enabling accountants to deliver sustainability-related financial information so that they can connect financial and sustainability data effectively.

Sustainability reporting

The European Union’s executive body, the European Commission, has proposed delaying and simplifying sustainability reporting requirements under the EU Corporate Sustainability Reporting Directive (CSRD). Under an ‘omnibus package’ of reforms, the Commission has proposed delaying until 2028 all CSRD reporting requirements for companies due to report in 2026 and 2027. The proposal will also remove around 80% of all companies from the CSRD’s scope, focusing requirements on larger corporations. The European Financial Reporting Action Group’s (EFRAG) Sustainability Reporting Board will participate in the proposed simplification process.

The EU move has been criticised as a ‘backward step’ by Global Reporting Initiative (GRI) CEO Robin Hodess. She argues that the ‘double materiality’ principle retained within the CSRD ‘recognises the strategic importance of transparency for the impacts of companies on the economy, environment and people’ and that reducing the number of companies reporting ‘undermines the level playing field needed to achieve sustainable growth’.

EFRAG has released new versions of its video series explaining its European Voluntary Sustainability Reporting Standard for non-listed SMEs (VSME) in 15 additional languages: Bulgarian, Croatian, Czech, Danish, Dutch, French, German, Greek, Italian, Polish, Portuguese, Romanian, Slovenian, Spanish and Swedish.

The IFRS sustainability team has announced that standards developed by the Sustainability Accounting Standards Board (SASB) are now integrated into IFRS Sustainability Disclosure Standards. They are available in PDF and HTML formats, free of charge for non-commercial use, through a new SASB Standards Navigator, using IFRS login details.

The GRI has released five case studies from corporate early adopters of its GRI Biodiversity Standard, designed to promote transparency on companies’ impact on nature. The case-study companies are CDL (Singapore), Coca-Cola HBC (Switzerland), Ecopetrol (Colombia), Enel (Italy) and JSW Steel (India).

EU VAT

The EU Council of Ministers has formally approved an EU directive, regulation and implementing regulation reforming EU VAT rules. Changes include making VAT reporting obligations for EU companies selling goods and services to businesses in another EU member state fully digital by 2030. Also, online platforms must pay VAT on short-term accommodation rentals and passenger transport services, where individual service providers do not charge VAT. And online VAT one-stop-shops enabling businesses to undertake a single registration for all 27 EU countries have been expanded.

AI

The International Organization of Securities Commissions (IOSCO) has issued a report on the increasing use of artificial intelligence (AI) in capital markets to support decision-making, internal operations and processes. While highlighting benefits in efficiencies, it also warns of potential malicious uses of AI and risks related to data, third-party dependency, and interactions between humans and AI systems.

Taxonomy

The IFRS Accounting Taxonomy 2024 and an associated easy-to-read illustrated taxonomy have been released in Ukrainian and Japanese, and the 2023 version is also available in Korean and Japanese.

Auditing

IFAC has highlighted the release of a free e-book from the Institute of Independent Auditors of Brazil. Independent Audit: Mission and Responsibilities – Studies and Opinions assesses the role of independent auditors in the corporate governance structure of companies. Topics include capital market rules and the assurance of financial statements.