In July 2024, the International Accounting Standards Board (IASB) published Exposure Draft  2024/6 Climate-related and Other Uncertainties in the Financial Statements. The Exposure Draft (ED) proposes eight examples illustrating how an entity applies the requirements in IFRS Accounting Standards to report the effects of climate-related and other uncertainties in its financial statements. The consultation closed on 28 November 2024.

CA ANZ and CPA Australia jointly responded to the ED and expressed support for the IASB’s proactive approach to enhancing transparency and consistency when reporting the effects of climate-related and other uncertainties in financial statements. We view these examples as a valuable first step in the IASB’s work to clarify disclosure of climate-related and other uncertainties in the financial statements. However, we made several recommendations for improvements as follows:

• There is broad demand for additional guidance, with a particular focus on more complex issues and areas of judgement. We recommended that the IASB continues to develop additional examples and educational materials on this emerging issue, in close collaboration with the International Sustainability Standards Board (ISSB).
• In addition to including these as illustrative examples accompanying the IFRS Accounting Standards, we suggested that the IASB publish them as educational materials, to allow greater accessibility and flexibility.
• We submitted that the examples should focus more on the application of underlying concepts and the decision-making process behind the conclusions reached. We provided specific recommendations for improvements to each of the eight examples.
• Many felt that the IASB’s intention for the examples to be sufficiently high level to apply equally to other types of uncertainty was not entirely achieved. Accordingly, we suggested either omitting the single example that does not directly concern a climate-related uncertainty (Example 5) or incorporating additional examples of other types of uncertainties to improve the balance.
• Some members expressed disappointment in the narrow range of industries included in the examples, and the lack of illustrative disclosures with sample wording for effective and complete note disclosures. We recommended that any additional examples incorporate a broader range of industries, including agriculture, healthcare, and the energy sector, and that sample illustrative disclosures are added to examples where suitable.