Sustainability
The first chair of the International Sustainability Standards Board (ISSB) has highlighted an imperative to tackle greenwashing, where companies make false claims about the environmental benefits delivered by their products and services.
ISSB chair Emmanuel Faber said that ‘companies can make claims that nobody can verify’, which impedes effective capital allocation decisions. ‘High-quality global standards for disclosing sustainability information will significantly reduce greenwashing “noise” and help companies and investors have meaningful conversations about what really matters to them and the concrete steps taken to implement sustainability commitments.'
'High-quality global standards for disclosing sustainability information will significantly reduce greenwashing'
International Accounting Standards Board (IASB) vice-chair Sue Lloyd will become ISSB vice-chair from 1 March 2022. And Janine Guillot, Value Reporting Foundation (VRF) CEO, will become a special adviser to the ISSB chair. The IFRS Foundation announced in November 2021 the consolidation of the VRF and the Climate Disclosure Standards Board (CDSB) into the IFRS Foundation.
The Global Steering Group for Impact Investment (GSG) has issued a three-year strategy that will expand its network of countries with national advisory boards considering the environmental impact of investments – it will aim to represent two in every three people worldwide and at least 50% of people in poverty. New boards are expected to be established in South-East Asia, Africa and Europe.
The GSG will also promote the use of impact tools to help refugees and people living in informal settlements.
Audit
The IAASB has released detailed changes to its standards resulting from its new and revised quality management standards, which were released in December 2020. This impacts a range of topics covered by the technical amendments, which include engagement quality reviews, assurance reports, and quality objectives. The amendments will become effective from December 2022.
The IAASB has released a bulletin exploring how an application programming interface (API) can establish a method for obtaining relevant and reliable external data that can be used in an audit.
APIs can ‘enable companies to open their application’s data and functionality to external third-party developers, business partners and internal departments within their companies’. The bulletin adds that the availability of accessible, standardised data created by APIs builds opportunities to improve finance functions, enhance audit quality, and radically streamline the audit process.
Ethics
The International Ethics Standards Board for Accountants (IESBA) has released guidance on how auditors should handle fees from clients for non-audit work, such as consultancy, to avoid conflicts of interest.
The advice comes in a set of FAQs, including how fees should be received, declared and how quality management applies.
Public sector
The International Public Sector Accounting Standards Board (IPSASB) has released proposed changes to IPSAS Chapter 3, Qualitative characteristics and Chapter 5, Elements in financial statements, for consultation.
This includes clarifying the role of ‘prudence’ in public sector financial reporting; revising definitions of an asset and a liability; clarifying what constitutes a transfer of resources when deciding whether an entity has a liability; and restructuring guidance on liabilities to improve the standards’ clarity.
Leases
IPSASB has issued a new standard on accounting for leases – IPSAS 43, which for lessees introduces a right-of-use model, replacing the risks and rewards incidental to ownership model in the old IPSAS 13 on leases.
The new system will apply from 1 January 2025, with earlier application permitted in certain circumstances. IPSASB notes that having a three-year period to apply IPSAS 43 provides public sector entities time to prepare for the new requirements and allows for learning to be drawn from the private sector experience in applying IFRS 16.
Securities markets
The International Organisation of Securities Commissions (IOSCO) has released a set of good practices related to the use of global supervisory colleges in securities markets to increase cooperation and information sharing among securities regulators. The 14 good practices cover matters such as general purpose, membership, governance, multilateral confidentiality arrangements and the cross-border operations of supervisory colleges.
