EFRAG Issues Feedback Statement on the IASB ED Climate-related and Other Uncertainties in the Financial Statements - Proposed illustrative examples
EFRAG has published its Feedback Statement on the IASB's Exposure Draft, IASB/ED/2024/6 Climate-related and Other Uncertainties in the Financial Statements - Proposed illustrative examples (the 'ED').
The Feedback Statement outlines stakeholders' responses, including responses to EFRAG’s draft comment letter, and details how this input informed the position reflected in EFRAG's Final Comment Letter (‘FCL’), submitted to the IASB on 28 November 2024.
In its FCL, EFRAG considered that the ED’s proposed examples would complement existing IASB educational material, enhancing the reporting, auditing, supervision, and enforcement of climate-related and other uncertainties in the financial statements. EFRAG also supported these examples being included as illustrative guidance to accompany IFRS Accounting Standards.
Overall, EFRAG considered the ED to be a pragmatic initial step towards addressing stakeholder expectations and suggested the IASB move forward with finalising and issuing the ED’s examples promptly. This should be done after considering the suggested targeted improvements and clarifying the interpretation of paragraph 125 of IAS 1 Presentation of Financial Statements through standard setting.
Looking ahead, EFRAG recommended that, after issuing the ED's examples, the IASB consider undertaking standard-setting activity where warranted. Furthermore, EFRAG suggested the IASB should consider developing other examples, addressing both non-climate-related uncertainties and various aspects of recognition, measurement and presentation.
Finally, EFRAG recommended further actions to improve the connectivity of reported information and clarify the boundaries of information reported within and outside the financial statements. This could be achieved by the IASB and ISSB jointly developing connectivity-related illustrative examples.