The Financial Reporting Council (FRC) has launched a consultation on revisions to the Ethical Standard. The proposed revisions enhance prohibitions where an audit firm's independence could be threatened. There are also changes proposed to reflect findings from audit inspections and enforcement cases, as well as changes to reflect developments in the International Ethics Standards Board for Accountants (IESBA) since the FRC last revised the standard in 2019. The consultation remains open until 31 October 2023.

The International Auditing and Assurance Standards Board (IAASB) has issued its proposed International Standard on Sustainability Assurance (ISSA) 5000, General Requirements for Sustainability Assurance Engagements. This proposed standard will now undergo a consultation period running until 1 December 2023 and stakeholders are encouraged to respond and share their feedback to the proposed standard. ISSA 5000 is a principles-based, overarching standard suitable for both limited and reasonable assurance engagements on sustainability information reported across any sustainability topic. It is intended to work with various sustainability reporting frameworks (including the European Sustainability Reporting Standards and the IFRS Sustainability Disclosure Standards). The standard is drafted as a profession agnostic standard and should be suitable for use by accountant and non-accountant assurance practitioners. With the sustainability reporting requirements for certain entities set to increase over the coming years, a standalone sustainability standard is seen as a key piece of the framework to help ensure that users of sustainability information can place greater trust in the information they are consuming on an entities Environmental, Social and Governance impacts. In launching the consultation, IAASB Chair Tom Seidenstein commented “Our proposed ISSA 5000 is a crucial step in enhancing confidence and trust in sustainability reporting. This proposal directly responds to the International Organization of Securities Commissions recommendations and complements the work of other standard setters, including the International Ethics Standards Board for Accountants,”. The comment period remains open until 1 December and the IAASB are seeking a broad range of views on the standard to gather the views and insights needed to finalise it.

The European Commission (EC) has adopted the European Sustainability Reporting Standards (ESRS) on 31 July 2023. This marks a significant milestone in the development of European Sustainability Reporting Standards and is the culmination of great effort from the various parties tasked with its development- including the EFRAG Sustainability Reporting Board, the EFRAG Sustainability Technical Expert Group, its initial Project Task Force and respondents to the recent consultations on the ESRS. The EC has also published a press announcement and Q&As and have indicated that additional implementation guidance will be prepared and made available over the coming months. The standard will enter into force following its publication in the Official Journal of the European Union and the first wave of entities will report under the ESRS for periods commencing on or after 1 January 2024. The reporting requirements will then be phased-in over the subsequent years to various company types and sizes. If you wish to find out more about the ESRS, please see our recent free webinar "Further your knowledge about the European Sustainability Reporting Standards"

The International Accounting Standards Board (IASB) has announced that it has concluded its decision making on two projects and will begin drafting and balloting two new IFRS Accounting Standards. The IASB expect to issue the new standards in the first half of 2024. The first of these standards will be the result of the Primary Financial Statements project and will supersede IAS 1 Presentation of Financial Statements. This standard will result in companies reporting more consistently and transparently on their financial performance, making it easier for investors to compare companies. The second standard is the result of the Subsidiaries without Public Accountability: Disclosure project and will reduce the disclosure requirements for subsidiaries that are not traded on a public market, or who do not hold assets entrusted to them by their customers. The IASB have decided that the effective date for the two new standards will be periods commencing on or after 1 January 2027, with early adoption permitted.

The Financial Reporting Council (FRC) has published a thematic review entitled “CRR Thematic review of climate-related metrics and targets” which assesses the quality and maturity of climate-related metrics and targets disclosures across 20 companies annual reports for 2022. The review focusses on 4 sectors- materials and buildings, energy, banks and asset managers. The report is intended to assist preparers in the preparation of climate-related disclosures and highlights instances of good practice identified as well as opportunities for improvement and omissions identified. Throughout the report the FRC consider the following overarching questions; Has companies’ climate-related metrics and targets reporting improved since last year? Are companies adequately disclosing their plans for transition to a lower carbon economy, including interim milestones and progress? Are companies using consistent and comparable metrics? Are companies explaining how their targets have affected the financial statements? Overall, the report shows an improvement in the quality of companies’ disclosures of net-zero commitments and interim emissions targets, however it also noted that disclosures of actions and milestones required to meet these targets were sometimes unclear.  

The International Auditing and Assurance Standards Board (IAASB) has announced that it plans to issue its proposed sustainability assurance standard, International Standard on Sustainability Assurance 5000 (ISSA 5000) on 2 August. This will then be subject to public consultation until early December to allow for stakeholder feedback. In making the announcement the IAASB stated that "When approved, ISSA 5000 will be the most comprehensive sustainability assurance standard available to all assurance practitioners across the globe. It will apply to sustainability information reported about any appropriate sustainability matter and prepared under any suitable framework. It will also apply for both limited and reasonable assurance engagements."