Disclosure
The International Accounting Standards Board (IASB) has announced how it will improve its drafting process for disclosure requirements to help companies better judge which information is material and should be disclosed, delivering better data for investors.
The IASB said it would ask investors what information they need early during a standard drafting process. It will also develop recognition and measurement requirements in parallel with disclosure rules. The IASB will also consider the digital reporting implications of new disclosure requirements.
Sustainability
The International Sustainability Standards Board (ISSB) is developing a review process for updating sector-specific Sustainability Accounting Standards Board (SASB) standards, which it now administers and is incorporating into its own ISSB standards. The draft procedure will be released for consultation in May 2023.
Global environmental reporting organisation CDP has warned that only 41% of disclosures it receives from companies report any supply chain emissions. CDP’s 2022 supply chain report, Scoping out: Tracking nature across the supply chain, concluded that ‘companies are not treating their impact on the environment as a whole, with most not engaging suppliers on climate and vital parts of nature, including water security, deforestation and biodiversity’.
The Global Reporting Initiative (GRI) has announced it will create its own sustainability reporting standard for the clothing, footwear and textile sector. This new GRI Textiles and Apparel Standard will help assessments of human rights, waste and recycling challenges within retailers, manufacturers and their supply chains.
The European Financial Reporting Action Group (EFRAG) has released its reasoning behind its first set of European Sustainability Reporting Standards (ESRS) released in November 2022 and submitted to the European Commission for approval.
Ethics
The International Ethics Standards Board for Accountants (IESBA) has released final revisions to the International Code of Ethics for Professional Accountants, addressing independence in writing group financial statements audits. They, for instance, say how independence issues should be communicated between the group auditor firm and other auditor firms participating in a group audit; and provide guidance on determining which auditors are included in an engagement or audit team.
The IESBA has also released guidance on its revisions to definitions of listed entities and public interest entities (PIE) in the International Code of Ethics for Professional Accountants. These include an expanded definition of a PIE by specifying a broader list of PIE categories, including a new category ‘publicly traded entity’ to replace a ‘listed entity’ category. Another change explained is a new transparency requirement for firms to publicly disclose the application of any independence requirements for PIEs.
Audit
The Public Interest Oversight Board (PIOB) has issued a public and separate certification on the IESBA-approved Revisions to the Code Relating to the Definition of Engagement Team and Group Audits, which was overseen by the PIOB. The certification confirms that the standard has been developed in a manner consistent with agreed due process and is in the public interest, according to the board.
Digital assets
A market assessment by the International Auditing and Assurance Standards Board (IAASB) on digital assets has concluded that the recent corporate failures within the crypto-currency sector have highlighted ‘audit’s important role in enhancing confidence in financial statements, thereby contributing to capital markets’ effective functioning and stability’. It said these commercial problems show the ‘need for a consistent approach to financial reporting by, and regulation of, entities in the industry’.
Emerging markets
The International Organisation of Securities Commissions (IOSCO) and the Cambridge Judge Business School have announced a pilot project to develop a Machine Assisted Capacity Building for Standards Implementation (MASI) aiding emerging markets.
MASI will assist self-assessments by their regulators against IOSCO core principles, generating comparisons with other securities control systems from more developed jurisdictions.
