ISSB provides Scope 3 guidance; FRC announces areas of focus in 2023

The International Sustainability Standards Board (ISSB) has set out a series of "guidance and reliefs to support those applying the requirement within its Climate-related Disclosures Standard (S2) to disclose Scope 3 GHG emissions when material for a company", an IFRS news release said.

The framework, to be provided by the ISSB in S2 for the measurement of Scope 3 GHG emissions, will require the use of reasonable and supportable information that is available without undue cost or effort and incorporates the use of estimation, the news release said.

The agreed reliefs include a temporary exemption for a minimum of one year following the effective date of S2, designed to give time for companies to implement their processes, the news release said.

The ISSB also agreed to confirm and refine proposed requirements for financed emissions, intended to support preparers in the financial sector with the measurement and disclosure of emissions associated with their portfolios, the news release said.

IESBA moves forward on sustainability work

The International Ethics Standards Board for Accountants (IESBA) published an overview of the sustainability-related decisions made by the board and how those will shape the board's work in 2023, an IESBA news release said.

The publication contains two new projects, which were approved in early December.

As part of IESBA's sustainability project, the board will deliver profession-agnostic independence standards for use by all sustainability assurance practitioners and specific ethics provisions relevant to sustainability reporting and assurance, the publication said.

"The IESBA will determine the format, structure, and packaging of the profession-agnostic ethics and independence standards for sustainability assurance so they not only set a high ethics bar but also can be adopted and applied by assurance providers from any profession," the publication said.

As a part of its experts project, the board said it will deliver specific ethics and independence provisions addressing the use of experts by organisations as well as in the context of audit and assurance engagements, including sustainability assurance.

The IESBA is aiming to approve related exposure drafts in the second half of 2023 and the final standards in late 2024.

IAASB publishes guidance for group audits

The International Auditing and Assurance Standards Board (IAASB) has published a new fact sheet that highlights aspects of a group audit that may be affected by ISA 220 (Revised), ISA 600, and International Standard on Quality Management (ISQM) 1, an IAASB news release said.

The fact sheet includes the revised definition of engagement team and leadership and direction, supervision, and review responsibilities and will be particularly useful for group audits in which component auditors are involved, the news release said.

ISA 220 (Revised) and ISQM 1 are effective for audits of financial statements as of 15 December 2022. ISA 600 won't be effective until 15 December 2023, but the IAASB said it "may provide useful guidance in the interim period."

FRC announces areas of focus for 2023 and 2024

The UK's Financial Reporting Council (FRC) has announced focus areas and priority sectors for its corporate reporting reviews in the next two years. The Corporate Reporting Review Team within the FRC will conduct four thematic reviews in 2023, an FRC news release said.

The new year's thematic review topics will include IFRS 17, Insurance Contracts; large private companies; the Task Force on Climate-related Financial Disclosures (TCFD); and IFRS 13, Fair Value Measurement, the news release said.

When identifying audit thematic reviews, the FRC will look at topics such as sampling, hot reviews, network resources and service providers, and root-cause analysis, the news release said.

FRC publishes three-year plan

The FRC published a draft of its three-year plan, which sets its priorities and the resources needed to achieve them, an FRC news release said.

The plan sets out the FRC's five strategic objectives for the coming years:

• Setting high standards in corporate governance and stewardship, corporate reporting, auditing, and actuarial work and assessing the effectiveness of the application of those standards, enforcing them proportionately where it is in the public interest.
• Promoting improvements and innovation in the areas for which the FRC is responsible and exploring good practice with a wide range of stakeholders.
• Influencing international standards and sharing best practice through membership of a range of global and regional bodies and incorporating appropriate standards into the UK regulatory framework.
• Creating a more resilient audit market through greater competition and choice.
• Transforming the organisation into a new robust, independent, and high-performing regulator, acting in the public interest.

"This plan will enable us to deliver on our mission to serve the public interest and improve the quality of corporate governance and reporting and continue to work towards the aspirations of the reform programme," Chief Executive Sir Jon Thompson said in the news release.

The consultation on the draft will run until 27 January 2023. Respondents can email comments to FRC.Plan.Budget@frc.org.uk by close of business on that date.

— To comment on this article or to suggest an idea for another article, contact Steph Brown at Stephanie.Brown@aicpa-cima.com.