The US Securities and Exchange Commission (SEC) on Wednesday adopted a rule on climate-related disclosures.
The 886-page rule, which will affect certain foreign private issuers, comes nearly two years after it was proposed and nearly nine months after the International Sustainability Standards Board (ISSB) adopted its first two standards aimed at creating a global baseline for sustainability disclosures.
The SEC rule doesn’t permit use of the ISSB standards, although aspects of it do align with the Task Force on Climate-Related Financial Disclosures (TCFD) framework that is included in the ISSB standards. The US isn’t currently working toward adoption of the ISSB standards and doesn’t have a history of adopting standards set by the IFRS Foundation, which oversees the ISSB.
Sue Coffey, CPA, CGMA, AICPA & CIMA’s CEO–Public Accounting, said in a statement that the SEC rule “brings much-needed clarity for businesses and investors on climate-related information” while also making mention of the importance of the ISSB global baseline.
“We strongly support adoption of a global baseline of sustainability standards issued by the [ISSB],” she said. “As other jurisdictions around the world begin to integrate ISSB standards into their disclosure rules, US companies would benefit from the SEC’s acceptance of their use.”
IASB seeks volunteers for impairment of financial assets research
The IASB is considering feedback on its proposals in the exposure draft focused on small- and medium-size entities (SMEs) in the form of fieldwork, a news release said, to explore the potential effects of the introduction of an expected credit loss model to account for the impairment of financial assets.
According to the release, the IASB tentatively decided that:
- SMEs that do not provide financing to customers as one of their primary businesses be required to continue to use the incurred loss model to measure the impairment of their financial assets.
- SMEs that provide financing to customers as one of their primary businesses be required to apply an expected credit loss model, aligned with the simplified approach in IFRS 9, Financial Instruments, to measure the impairment of their financial assets.
Fieldwork from participants aims to answer the following questions:
- Can preparers determine whether they provide financing to customers as one of their primary businesses and how costly is it to make this determination?
- What would be the costs of applying an expected credit loss model (aligned with the simplified approach in IFRS 9) for SMEs that provide financing to customers as one of their primary businesses?
- Would the benefits (more timely information about expected credit losses) from an expected credit loss model to users of these SMEs’ financial statements outweigh the costs?
The results will be considered by the IASB as part of its redeliberation of the proposals in the exposure draft, the release said. The IASB aims for the questionnaires and follow-up calls to participants to be completed by the end of April. Interested parties can email the project team through the online portal provided in the release.
FRC issues guidance on Corporate Governance Code
The UK Financial Reporting Council (FRC) released guidance to support the application of the UK Corporate Governance Code, which was revised this year, a publication said.
“The purpose of this [nonprescriptive] guidance is to support those who use the Code by providing advice, further detail, and examples,” the publication said. “Reporting against the Code should always be proportionate and appropriate to the company.”
The FRC will regularly review the guidance to ensure it is relevant and up to date and to ensure the included links work effectively.
— To comment on this article or to suggest an idea for another article, contact Steph Brown at Stephanie.Brown@aicpa-cima.com.