Sustainability
The International Accounting Standards Board (IASB) is considering adding sustainability reporting guidance to its own international financial reporting standards (IFRS Standards). This task is being added to its work programme, following the approval of the first two standards developed by the International Sustainability Standards Board (ISSB). While the IASB has said it will not develop a climate-related risks standard, it might ‘leverage the ISSB’s work.’
The IASB and the ISSB have released a note on how both boards are developing ‘connectivity‘ between their work, so that standards and digital taxonomies mesh.
The ISSB will exempt companies generating reports for the first time under its S1 and S2 sustainability and climate reporting standards from a series of requirements. They will not have to disclose sustainability-related risks and opportunities beyond climate-related information; provide annual sustainability-related disclosures at the same time as the related financial statements; or disclose scope 3 value chain greenhouse gas emissions.
The European Commission has asked the European Financial Reporting Advisory Group to delay its development of sector-specific European reporting standards and rather focus on helping companies apply the initial set of European Union broad pan-sector standards expected to be released by June.
Tax
The IASB has finalised changes to its IAS12 standard on income taxes to help major companies report adjustments to their liabilities under the OECD’s ‘Pillar Two’ rules, telling multinationals to pay a minimum 15% tax from this year. The amendments will introduce a temporary IAS12 exception to accounting for deferred taxes caused by Pillar Two; and targeted disclosure requirements to explain a company’s exposure to Pillar Two income taxes. The revised standard will be released by May.
Ethics
An International Foundation for Ethics and Audit (IFEA) has been launched, to host the International Ethics Standards Board for Accountants (IESBA) and the International Auditing and Assurance Standards Board (IAASB) within one organisation. The IFEA will be independent of the International Federation of Accountants (IFAC), although the IFAC will still appoint board members, together with the Monitoring Group and the Public Interest Oversight Board. IESBA chair Gabriela Figueiredo Dias and IAASB chair Tom Seidenstein are co-CEOs of the new foundation.
The IESBA has released final revisions to its International Code of Ethics for Professional Accountants, helping accountants and auditors use recent technology, including digitalisation, in an ethically sound way. The changes boost guidance on confidentiality, professional competence and due care. It also advises under what circumstances firms and network practices may provide technology-related non-assurance services to an audit or assurance client.
Assurance
The International Organization of Securities Commissions (IOSCO) has released a detailed report backing the development of global sustainability reporting assurance and auditing standards, saying it will support their roll out. IOSCO said it will consider how technology may help create systems, processes and data analytics tools delivering an effective reporting and assurance ecosystem. It will also assess how ‘training, qualification and accreditation’ for audit and non-audit firm assurance providers ‘would give investors confidence’ that sustainability assurance is of high quality. The IESBA and the IAASB have welcomed the report, stressing that they will stage public consultations later this year on standards for sustainability ethics and assurance, respectively, for formal release in 2024.
