ISSB defines sustainability; FRC proposes revisions to revenue and lease standardsRead a roundup of the recent developments in corporate reporting, including UK government legislation on flexible working.
Earlier this week, the International Sustainability Standards Board (ISSB) took a step that can help companies articulate the relationship between sustainability and creating financial value — the board defined "sustainability".
Sustainability, according to a news release, will be described in the ISSB's General Sustainability-Related Disclosures Standard (S1) as "the ability for a company to sustainably maintain resources and relationships with and manage its dependencies and impacts within its whole business ecosystem over the short, medium, and long term. Sustainability is a condition for a company to access over time the resources and relationships needed (such as financial, human, and natural), ensuring their proper preservation, development, and regeneration, to achieve its goals."
At COP15, the United Nations global biodiversity conference in Montreal, ISSB Chair Emmanuel Faber said in remarks to delegates that the ISSB was created to "change the current fragmented ESG disclosure landscape".
Faber went on to explain more about the articulation of sustainability as it relates to a company's value:
"Our clarification of the fundamental articulation between financial value creation and sustainability, borrowed from concepts in the Integrated Reporting Framework, will ground our standard-setting work and make clear that while our focus is on information for investors, financial value creation is affected by the proper preservation, development, and regeneration of all the resources and relationships (including natural and human) needed for a company to achieve its goals."
IPSASB sets out sustainability task force
The International Public Sector Accounting Standards Board (IPSASB) chose three public sector-specific sustainability reporting projects for research and scoping, pending securing the resources needed to begin guidance development, an IPSASB news release said.
"This decision builds on IPSASB's 25 years of public sector standard-setting experience as well as the strong global stakeholder support for the proposals in its consultation paper Advancing Public Sector Sustainability Reporting," the news release said.
The IPSASB's immediate action will be to establish a Sustainability Task Force to lead the research and scoping phase. IPSASB's prioritised research topics are:
- General Requirements for Disclosure of Sustainability-Related Financial Information;
- Climate-Related Disclosures; and
- Natural Resources — Non-Financial Disclosures (in parallel with the development of financial reporting guidance proposed in its consultation paper Natural Resources).
FRC proposes revisions to standards
The UK's Financial Reporting Council (FRC) issued draft amendments to the standard applicable in the UK and the Republic of Ireland. The Financial Reporting Exposure Draft (FRED) 82 proposes a number of changes resulting from the second periodic review of FRS 102 and other Financial Reporting Standards, an FRC news release said.
The proposals include a new model of revenue recognition in FRS 102 and FRS 105; a new model of lease accounting in FRS 102; and other incremental improvements and clarifications, the news release said.
The FRC is requesting comments on FRED 82 by 30 April 2023. Comments can be submitted through email to email@example.com.
The proposed effective date for these amendments is accounting periods beginning on or after 1 January 2025, with early application permitted, provided all amendments are applied at the same time. Transitional provisions are also proposed.
FRC offers tips for better annual reports
On Tuesday, the FRC published a report that sets out the attributes for high-quality annual report and accounts (ARA). The publication provides a range of good practice examples identified by the FRC as part of its ongoing supervision work, according to a news release.
The report, What Makes a Good … Annual Report and Account, represents:
- Good quality application that the FRC encourages other companies to consider when preparing their ARA;
- Issues identified in ARAs; and
- The ways in which a company may improve the quality of its reporting.
A high-quality ARA, according to the FRC, will:
- Comply with relevant accounting standards, laws and regulations, and codes;
- Be responsive to the needs of stakeholders in an accessible way; and
- Demonstrate the corporate reporting principles and effective communication characteristics outlined by the FRC.
UK government announces flexible working measures
Millions of employees will be able to request flexible working from day one of their employment under new government plans to make flexible working the default, the UK government said in a press release.
The new legislation also applies to employees making use of "job-sharing, flexitime, and working compressed, annualised, or staggered hours," the press release said.
— To comment on this article or to suggest an idea for another article, contact Steph Brown at Stephanie.Brown@aicpa-cima.com.