The Australian Accounting Standards Board (AASB) called for submissions on its draft position statement on Extended External Reporting.
As a starting point, we note the structure that the International Financial Reporting Standards (IFRS) Foundation has adopted for the formation of the International Sustainability Standards Board (ISSB). The ISSB has been formed by virtue of a change to the IFRS Foundation’s Constitution, and it sits alongside the International Accounting Standards Board (IASB). It is our view that this not only ensures the impartiality of the ISSB but ensures that expertise and resources are allocated appropriately.
We agree that, as a first step, the AASB would be best placed to act in a caretaker capacity for considering an appropriate local structure and dedicated interpretation of the envisaged international sustainability standards for the Australian landscape. However, in the medium to longer-term we recommend that the Financial Reporting Council (FRC) considers mirroring the international structure adopted by the IFRS Foundation and establish a separate Australian Sustainability Standards Board. Australia has typically been a taker of international standards and this structure would best enable the domestic issuance of sustainability standards, whether voluntary or mandatory.
There are multiple considerations for the Australian corporate reporting environment of incorporating sustainability standards. These considerations, and our responses to the specific questions posed by the AASB, can be found in the submission below.
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