Management commentary
The International Accounting Standards Board (IASB) is consulting on a new comprehensive management commentary framework to help companies not only explain their financial statements but also give investors insights into factors that affect their ability to create value and generate cashflows, including over the long term. The IASB does not require accountants to release such additional analysis but warns that national regulators may require this going forward. The IASB’s proposed guidance will offer advice on how commentaries should be developed, setting out disclosure objectives about a client company’s business model, strategy, resources and relationships, risks, external environment, and financial performance and position.
Insurance contracts
The IASB is developing a narrow-scope amendment to the transition requirements of IFRS 17 Insurance contracts to help companies increase the usefulness of comparative information presented on initial application of IFRS 9 Financial instruments and IFRS 17.
Sustainability
The International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB) have formally announced their merger to form the Value Reporting Foundation. This will promote the IIRC’s broader-based integrated thinking principles and Integrated Reporting Framework, and the more detailed SASB standards, all of which are designed to help assess, create and preserve enterprise value.
The Global Reporting Initiative (GRI) has released a white paper on the European Union’s ‘double materiality’ concept of the interaction between companies and the environment. The paper says identification of financial issues is incomplete if companies do not assess sustainable development impacts, and that reporting sustainable development issues can enhance corporate financial performance.
The IFRS Foundation has established an ‘eminent persons group’ to provide strategic advice on the proposed formation of an International Sustainability Standards Board and how it links with related regulatory initiatives. It will be chaired by Jean-Claude Trichet, former president of the European Central Bank.
Global trends
The International Federation of Accountants (IFAC) has released a report advising accounting professionals how to handle new practice demands promoted by global trends. These include enabling value creation and sustainability simultaneously, helping to contain climate change, managing the financial impact of procurement and supply chain shifts, coping with changing workplace practices (such as virtual working), and dealing with growth in remote finance services.
Audit
A Monitoring Group, chaired by the International Organization of Securities Commissions (IOSCO), is earmarking funding and personnel to deliver ‘significant improvements to the international audit-related standard-setting system’. The group has been implementing recommendations released in July 2020 that will strengthen the Public Interest Oversight Board (PIOB) in assessing standards produced by the International Auditing and Assurance Standards Board (IAASB) and the International Ethics Standards Board for Accountants (IESBA).
Broad support has been voiced for the IAASB’s auditor reporting standards introduced in 2015 through a 2020 health-check survey whose conclusions have just been released. However, there were some calls for change, such as more clarity in the going concern section on material uncertainty.
Financial crime
The World Economic Forum has released a report advising how accountants, lawyers and other key gatekeeper professions should combat financial crime such as money laundering and corruption. The report, welcomed by IFAC, says policies should include encouraging due diligence, voicing concerns about potential crime, collaboration with colleagues from different professions, training, and updating anti-crime policies and guidance.
Public sector
The International Public Sector Accounting Standards Board (IPSASB) has released its 2021 handbook, including a complete set of updated IPSAS. Volume I covers IPSAS 1–27, volume II covers IPSAS 28–40, and volume III covers IPSAS 41–42.
