Read our new publication on Changes in reporting

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 also bring us significant changes in non-financial reporting, primarily around environmental, social and governance (“ESG”). Multiple sets of sustainability reporting standards have been developed in recent years or are in the process of being developed - there is no single, universal set of global standards in place. The following standards are most relevant in Europe: 

1. European Sustainability Reporting Standards (“ESRS”) developed by European Financial Reporting Advisory Group (“EFRAG”) and adopted by the European Commission in July 2023 for mandatory use in the EU under Corporate Sustainability Reporting Directive (“CSRD”), with mandatory reporting from FY2024 in 2025 along with limited assurance by listed large companies and from FY2025 in 2026 by many large companies. 

2. Sustainability standards issued by International Sustainability Standards Board (“ISSB”), an independent standard-setting body within the IFRS Foundation. 

3. Global Reporting Initiative (“GRI”) commonly used or referred to by many reporters who prepare sustainability reports on a voluntary basis. 

While there is a degree of interoperability and alignment among these standards, there are still some important differences to consider. The rigour and quality of sustainability reporting will need to be the same as that applied in the financial statements – hence, companies need to understand which framework will apply to them and evaluate the impact as soon as possible.

Additionally, in our opinion, the issue of a drastic increase in interest rates is 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.