The European Financial Reporting Advisory Group (EFRAG) has published its Final Comment Letter regarding the International Accounting Standards Board’s (IASB) Exposure Draft IASB/ED/2024/6, titled Climate-related and Other Uncertainties in the Financial Statements – Proposed Illustrative Examples (the “ED”).
Support for IASB’s Illustrative Examples
EFRAG expressed strong support for the IASB’s proposed examples, highlighting their potential to enhance the reporting, auditing, and enforcement of climate-related and other uncertainties in financial statements. The organization emphasized that these examples would effectively complement existing IASB educational materials and advocated for their inclusion as illustrative examples accompanying the IFRS Accounting Standards.
Call for Swift Finalization
EFRAG urged the IASB to finalize and issue the proposed examples promptly, incorporating targeted improvements suggested in the Comment Letter. The group also called for clarification of paragraph 125 of IAS 1 (Presentation of Financial Statements) through standard-setting measures.
Proposed Further Steps
EFRAG recommended the IASB consider additional actions post-finalization, including:
- Developing illustrative examples for non-climate-related uncertainties.
- Addressing recognition, measurement, and presentation challenges.
- Undertaking limited standard-setting activities when justified by stakeholder needs.
Enhancing Connectivity in Reporting
To strengthen the coherence of reported information, EFRAG proposed collaboration between the IASB and the International Sustainability Standards Board (ISSB) to develop connectivity-related illustrative examples. The aim is to clearly delineate the boundaries between information presented in financial statements and other sections of the Annual Report.
This development reflects EFRAG’s continued commitment to fostering transparency and alignment in financial reporting amid growing demands for clarity on climate-related and other uncertainties.
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