Changes in reporting of public entities
IFRS Accounting Standards, IFRS Sustainability Disclosure Standards and other changes
Guide for the Audit Committee (November 2023 Edition)
The purpose of this publication is to assist members of Audit Committees and persons preparing annual reports of public entities in carrying out their reporting-related tasks. It is not easy to track changes in regulations regarding both accounting standards, law provisions and guidelines related to sustainability reporting. In order to meet the needs of members of Audit Committees and financial staff of public entities, we offer you this publication.
With respect to changes in IFRS Accounting Standards, the aim of this publication is to summarize and briefly present all upcoming changes approved by the IFRS Board (“IASB”, “Board”). In terms of financial reporting, in 2023, the new accounting standard IFRS 17 “Insurance Contracts” applies for the first time. IFRS 17 was issued in 2017 to ensure greater transparency and comparability of financial statements and has significant impact on all entities conducting insurance activities, including banks. For these entities, the application of IFRS 17 goes well beyond the financial, actuarial and systems development spheres. - For example, it may influence the design and distribution of products, incentive plans, and also preparing budgets. Moreover, the new standard does not apply to insurance companies only - entities conducting non-financial activities should also consider whether the contracts they enter into contain an insurance element. Further, the amendments to applicable accounting standards clarify the guidelines of the standards, in order to facilitate their application for preparers of financial statements. Nevertheless, we would like to highlight the amendments to IAS 1, which replace the requirement to disclose “significant” accounting policies by those that are "material". This seemingly insignificant change requires entities to optimize accounting policy disclosures in their financial statements.
The near future will bring us significant changes in non-financial reporting, as reflected in the first two standards of the International Sustainability Standards Board (“ISSB”) published in June 2023. The first standards establish a basic framework for disclosing material sustainability-related information across an entity's value chain, and also include requirements for disclosing information about climate-related risks and opportunities. Therefore, for the first time in this edition, our publication has been expanded to include up-to-date information on new standards related to non-financial reporting, which were published by the newly established ISSB Board. Sustainability reporting issues are further complicated by the fact that there is no single, universal global standard system developed. Apart from the above Standards developed by the ISSB Board, there are currently ongoing works on EU sustainability standards. Therefore, in the last part of our publication, we refer to the topic of sustainability (“ESG”), summarizing all the requirements that reporters in Poland can expect. Furthermore, we also draw attention to the guidelines and expectations of supervisory and regulatory authorities regarding the disclosure of climate-related issues in financial statements. Additionally, in our opinion, the issue of a drastic increase in interest rates, as well as new upcoming obligations to prepare income tax reports, are also important for financial reporting. Finally, we raise concerns about the use of the IFRS Foundation's trademarks in financial statements and auditor's reports. We hope that this publication will be useful for members of Audit Committees in discussions with companies about upcoming changes. We also hope that it will be helpful for those preparing financial statements and non-financial information.
