The AASB is proposing three new external reporting projects: sustainability reporting, service performance reporting and digital financial reporting.
In our submission we emphasise the importance of the AASB completing its existing projects in a timely manner before commencing new projects. We recommend that the NFP framework reform, the fair value project and the post-implementation review of AASB 1058 continue to be prioritised.
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. The caveat however being that in the medium to longer-term, we recommend the Financial Reporting Council (FRC) consider mirroring the international structure adopted by the IFRS Foundation and establish a separate Australian Sustainability Standards Board. We support a ‘climate first’ approach to sustainability reporting but consider that this should form the first step of a broader roadmap (which could include the development of an overarching conceptual framework for corporate reporting) that covers the full range of environmental, social, and governance (ESG) criteria that are material to enterprise value creation.
Non-financial information is important for accountability and decision making, as well as “telling the story” of how value is created by the entity. On this basis we agree the AASB should add service performance reporting to its work program.
We support steps toward mainstreaming digital financial reporting up to and including mandatory adoption. We believe XBRL-based digital reporting is a primary way of addressing the complexity of disclosures. Digital reporting is a first step in enabling users to access financial information in a way that is customised to their needs and capacity, as opposed to ‘one size fits all’ financial statements.
We also support the inclusion of supporting research for these projects in the AASB’s research agenda.