Climate-related and Other Uncertainties in the Financial Statements

Timeline

The IASB issued an Exposure Draft: IASB/ED/2024/6  Climate-related and Other Uncertainties in the Financial Statements - Proposed illustrative examples on 31 July 2024.

The illustrative examples are proposed to accompany IFRS Accounting Standards and will therefore not form an integral part of the Standards. Consequently, the ED does not contain an effective date or any 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 Draft Comment Letter

The UKEB published its Draft Comment Letter on 25 September 2024 for public consultation which closed on 11 November 2024. The Final Comment Letter will be discussed at the UKEB meeting on 28 November 2024 and then submitted to the IASB for their consideration.

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 (see below)
• 19 September 2024: Draft Comment Letter

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