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IASB Proposes Illustrative Examples to Guide Climate-Related Reporting

By:
NYSSCPA Staff
Published Date:
Aug 1, 2024

The International Accounting Standards Board (IASB) has proposed eight examples to illustrate how companies can apply International Financial Reporting Standards (IFRS) when reporting the effects of climate-related and other uncertainties in their financial statements.

The proposals, in a consultation document, were a response to concerns from stakeholders, particularly investors, that information about climate-related uncertainties in financial statements was sometimes insufficient or appeared to be inconsistent with information provided outside the financial statements. The IASB’s proposed examples aim to improve transparency of information in financial statements, and to strengthen the connection between financial statements and other parts of a company’s reporting, such as sustainability disclosures.

The eight illustrative examples focus on areas such as materiality judgements, disclosures about assumptions and estimation uncertainties, and disaggregation of information. They are:

● Materiality judgements leading to additional disclosures (IAS 1/IFRS 18) 8;

● Materiality judgements not leading to additional disclosures (IAS 1/IFRS 18) 10;

● Disclosure of assumptions: specific requirements (IAS 36) 12;

● Disclosure of assumptions: general requirements (IAS 1/IAS 8) 14;

● Disclosure of assumptions: additional disclosures (IAS 1/IFRS 18) 17;

● Disclosure about credit risk (IFRS 7) 20;

● Disclosure about decommissioning and restoration provisions (IAS 37) 22; and

● Disclosure of disaggregated information (IFRS 18) 23.

“Investors have clearly communicated that they factor climate-related risks into their decision-making process, said IASB Chair Andreas Barckow in a statement. “Although our Accounting Standards already address such risks, we have identified a need for illustrative examples to improve the application of these requirements. Our proposed examples aim to provide this clarity, helping companies better communicate in their financial statements how climate-related and other uncertainties affect their financial position and performance.”

The IASB invited all stakeholders to provide feedback on the proposed illustrative examples. The comment period is open until Nov. 28.

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