Climate-related and Other Uncertainties in the Financial Statements

Timeline

On 31 July 2024 the International Accounting Standards Board (IASB) published an Exposure Draft Climate-related and Other Uncertainties in the Financial Statements - Proposed illustrative examples.

The Exposure Draft contains material that will accompany IFRS Accounting Standards but will not form an integral part of the Standards. Therefore, there is no effective date or transition requirements. The IASB will consider all comments received in writing by 28 November 2024.

Background

The IASB received strong feedback from stakeholders in its Third Agenda Consultation indicating concerns regarding the effects of climate-related risks in the financial statements and the level consistency with information outside the financial statements.

The Exposure Draft contains a series of eight illustrative examples which indicate how an entity could apply the requirements in IFRS Accounting Standards to report the effects of climate-related and other uncertainties in its financial statements. The IASB has sought to reinforce compatibility with IFRS Sustainability Disclosure Standards when developing the examples.

The IASB staff circulated eight draft illustrative examples which were discussed at the March 2024 IFRS Accounting Standards Advisory Forum (ASAF) and the March and April 2024 IASB meetings. The UKEB also noted stakeholder feedback on those draft examples at its April 2024 meeting (Appendix D: Climate-related matters).

Illustrative Examples

The eight examples are listed below for information and further detailed in the Exposure Draft:

• Example 1—Materiality judgements leading to additional disclosures (IAS 1/IFRS 18)
• Example 2—Materiality judgements not leading to additional disclosures (IAS 1/IFRS 18)
• Example 3—Disclosure of assumptions: specific requirements (IAS 36)
• Example 4—Disclosure of assumptions: general requirements (IAS 1/IAS 8)
• Example 5—Disclosure of assumptions: additional disclosures (IAS 1/IFRS 18)
• Example 6—Disclosure about credit risk (IFRS 7)
• Example 7—Disclosure about decommissioning and restoration provisions (IAS 37)
• Example 8—Disclosure of disaggregated information (IFRS 18)

UKEB outreach

The UKEB outreach plan includes discussions with stakeholders and public consultation. Publication of the Draft Comment letter is expected in September 2024 and the Final Comment Letter to the IASB in November 2024.

For further updates on UKEB projects, you can subscribe to our newsletters and alerts by emailing contact@endorsement-board.uk. Please include ‘SUBSCRIBE’ in the email subject line.

UKEB meetings

Meeting(s) related to the project are as follows:

• 14 December 2023: IASB General Update (Appendix B: Climate-related matters)
• 18 July 2024: Project Initiation Plan