Sustainability
A report from Business at OECD (BIAC), the private sector arm of the OECD, has called for international harmonisation over sustainability reporting, with continued fragmentation from multiple standards piling on costs. It highlights how companies may have to follow global standards such as the International Sustainability Standards Board (ISSB) or European Union (EU) standards, while facing voluntary standards such as the Global Reporting Initiative (GRI). ‘The lack of international alignment across frameworks, definitions and time-lines creates a series of risks that go well beyond administrative inconvenience,’ said BIAC.
Meanwhile, the IFRS Foundation has published near-final examples developed by its International Accounting Standards Board to demonstrate how companies can improve reporting of uncertainties in their financial statements. These use climate-related examples as practical illustrations, helping reporters characterise uncertainties, particularly climate-related issues. The guidance is designed to mesh with ISSB sustainability-related disclosure requirements.
EFRAG (the European Financial Reporting Advisory Group) has published exposure drafts for its consultation on revised European Sustainability Reporting Standards (ESRS), with 57% fewer mandatory datapoints and 68% fewer voluntary and mandatory datapoints than existing ESRS. The overall length of the standards has been shortened by over 55%, ‘making ESRS more accessible and implementable’, said EFRAG. The consultation runs until 29 September.
The European Commission has approved a European Union (EU) recommendation (formal guidance) mandating voluntary sustainability reporting for SMEs. The goal is helping EU SMEs not covered by the EU Corporate Sustainability Reporting Directive to offer sustainability information to requesting large financial institutions and companies. The recommendation includes the SME reporting standards, developed by EFRAG.
The GRI has launched new courses to boost climate and nature reporting skills. One focuses on reporting with the GRI 102 Climate Change Standard and IFRS Sustainability Disclosure Standards, explaining why a holistic approach to climate reporting that includes human and biodiversity dimensions is needed. A second teaches why organisations can use GRI and Taskforce on Nature-related Financial Disclosures standards to boost sustainability transparency.
Accounting for SMEs
Stand-alone modules have been developed by the IFRS Foundation for each section of the IFRS for SMEs accounting standard. They are designed to support anyone learning about, applying or reading financial statements prepared using this standard. Each module includes requirements, notes, case studies and examples, a comparison with full IFRS accounting standards, multiple-choice tests and more.
Auditing
The International Auditing and Assurance Standards Board (IAASB) has released guidance on how the IAASB’s revised going concern and fraud standards reinforce professional scepticism. This will help users to understand how new revisions to ISA 570 on going concern and ISA 240 on auditors’ responsibilities, including on fraud, ‘strengthen the consistent application of professional scepticism throughout the audit’.
Ethics
The International Ethics Standards Board for Accountants (IESBA) has published an alert highlighting key ethical matters for accounting firms to stress when considering or accepting investment from private equity (PE) organisations. Private Equity Investment in Accounting Firms: Key Ethics and Independence Considerations warns that PE investors might push accounting firms to breach confidentiality principles or act unethically pursuing new revenue goals. It also warns about PE investors holding a controlling interest while also having financial interests in the firm’s audit clients, as well as other concerns.
IESBA has also released guidance helping sustainability assurance practitioners understand and apply its new International Ethics Standards for Sustainability Assurance, including International Independence Standards (IESSA). One paper outlines the main differences between the IESSA and IESBA’s International Code of Ethics for Professional Accountants; another highlights IESSA restrictions related to sustainability assurance engagements of public interest entities, and more.
In addition, the ethics board has released three graphics videos explaining the ethics around sustainability assurance, sustainability reporting and sustainability standards.
