The IASB’s illustrates the reporting of climate-related risks in financial statements through examples

The International Accounting Standards Board (IASB) recently issued an Exposure draft (ED) aimed at improving the reporting of the effects of climate-related risks and other uncertainties in financial statements. The ED was issued in response to stakeholders’ concerns that information about the effects of climate-related risks in the financial statements was sometimes insufficient or appeared to be inconsistent with information reported in other general-purpose financial reports.

The proposed guidance is provided through eight examples that illustrate the application of the disclosure requirements in IFRS Accounting Standards for climate-related risk and other uncertainties. In particular, the examples illustrate how an entity:

• determines whether information about how climate-related risks and other uncertainties that affected its financial position and financial performance is material, including the connection with information provided in other general-purpose financial reports;
• discloses information about climate-related assumptions and other sources of estimation uncertainty where the carrying amounts of assets and liabilities are affected; and
• disaggregates information about assets and liabilities based on dissimilar climate-related risk characteristics.

The illustrative examples will not add or change any of the existing requirements in the IFRS Accounting Standards. The IASB decided that the guidance will be included as illustrative examples that accompany the IFRS Accounting Standards to make it easier for

 stakeholders to identify connections between the examples. The illustrative examples will thus not be included in any specific IFRS Accounting Standard.

Disclaimer

The article has been prepared by the Secretariat of the ASB for information purposes only. It has not been reviewed, approved, or otherwise acted on by the Board.