The International Accounting Standards Board (IASB) updated its work plan to enhance the reporting of climate-related risks in the financial statements, proposed amendments to the classification and measurement requirements in the IFRS 9 Financial Instruments standard, and published the IFRS Accounting Taxonomy 2023. The International Sustainability Standards Board (ISSB) also plans to seek views on the priorities for next two years and on the international applicability of the Sustainability Accounting Standards Board (SASB) standards.
Below is a summary of the recent announcements:
- IASB added a project to its work plan that explores whether and how companies can provide better information about climate-related risks in their financial statements. The project will research to what extent the educational material published in 2020 is helping companies reflect the effects of climate‑related risks in the financial statements, and what actions, if any, the IASB could take to further improve information about these matters. The outcome of this project will be narrow in scope—for example minor amendments to IASB Standards, limited new application guidance or new illustrative examples. IASB also informed that the first two IFRS Sustainability Disclosure Standards are due to be issued by the end of second quarter of 2023.
- IASB published an exposure draft proposing amendments to the classification and measurement requirements in IFRS 9 Financial Instruments, with the comment period ending on July 19, 2023. Based on feedback received to previous consultation, the exposure draft sets out proposed amendments to clarify the classification of financial assets with environmental, social, and corporate governance (ESG) and similar features, along with the settlement of a financial asset or a financial liability through electronic payment systems.
- IFRS Foundation published the IFRS Accounting Taxonomy 2023, which enables digital reporting of financial information prepared in accordance with IFRS Accounting Standards. The IFRS Accounting Taxonomy 2023 includes changes to the IFRS Accounting Taxonomy 2022 to reflect new or amended presentation and disclosure requirements arising from lease liability in a sale and leaseback and non-current liabilities with covenants. It also includes changes to reflect common reporting practice by companies that apply IFRS Accounting Standards and general taxonomy improvements.
- ISSB plans to publish a request for information about its future priorities in May 2023, with a comment period of 120 days. ISSB will seek feedback on the relative priority of the potential projects related to biodiversity, ecosystems and ecosystem services, human capital, human rights, and integration in reporting as well as feedback on the strategic direction of the ISSB activities and the criteria for assessing which projects to prioritize. Also, in May 2023, ISSB plans to open a 90-day consultation on its proposed methodology for revising the SASB Standards to improve their international applicability.
Keywords: International, Banking, ESG, Climate Change Risk, IFRS 9, Financial Instruments, Taxonomy, SASB Standards, Reporting, Sustainability Standards, Disclosures, ISSB, IFRS, IASB
Scott is a Director in the Regulatory and Accounting Solutions team responsible for providing accounting expertise across solutions, products, and services offered by Moody’s Analytics in the US. He has over 15 years of experience leading auditing, consulting and accounting policy initiatives for financial institutions.
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