Could this be the calm before the storm when it comes to corporate reporting? No matter which direction you look, change is on its way. New sustainability reporting requirements are set to hit all but the smaller businesses. The International Accounting Standards Board (IASB) and the Financial Reporting Council (FRC) are considering what will be on the agenda for IFRS reporters, with the latter also reviewing UK GAAP requirements. Additionally, changes to filing requirements at Companies House look set to affect all those on the UK companies register. This article provides an overview of the changes ahead.

Sustainability reporting

Mandatory climate-related financial disclosure requirements are set to be brought into UK legislation for most large companies (publicly quoted companies, large private companies and LLPs) from April 2022. The requirements will be based on the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations, which encourage disclosure across four key areas: governance, strategy, risk management and metrics and targets.

Formally announced at COP26, the IFRS Foundation is to form a new board, the International Sustainability Standards Board (ISSB), with the objective of developing and maintaining a global set of sustainability disclosure standards. It will be for individual jurisdictions to decide if, and how, they would like to adopt international sustainability standards. While it is too early to say which jurisdictions will choose to adopt them, there has been widespread international support for the ISSB, including from the UK government.

IFRS agenda: five-year plan

In March 2021, the IASB issued a Request for Information on its Third Agenda Consultation. The IASB asked for views on its strategic direction and balance of activities, priorities, and the criteria for adding projects to its work plan. The consultation set out a list of potential projects, which included comprehensive reviews of IAS 38 Intangible Assets and IAS 7 Statement of Cash Flows, as well as projects considering climate-related risks and cryptocurrencies.

The IASB is currently reviewing the responses to this consultation and is yet to announce any subsequent decisions. As part of his inaugural speech in September 2021, the new IASB Chair, Professor Dr Andreas Barckow, indicated that he would like the IASB to explore what can be done to increase transparency around self-generated intangibles, so IAS 38 may be top of the bill.

In addition to any outcomes from this agenda consultation, it is also worth mentioning that there continue to be other projects on the current work plan that are by no means insignificant. Namely, Business Combinations under Common Control, Goodwill and Impairment and Primary Financial Statements.

UK GAAP periodic review

The FRC initiated the next periodic review of FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland in the spring of 2021. Areas that might be addressed as part of the review include the introduction of the newest IFRSs, accounting for climate-related matters and accounting for cryptocurrencies.

Any proposed changes to FRS 102 as a result of the periodic review will be subject to public consultation and the effective date for amendments is currently expected to be 1 January 2024.

Changes to filing requirements

As part of the government’s work on reforming the role and powers of Companies House, a consultation on Improving the quality and value of financial information on the UK companies register took place in early 2021. Potential outcomes could be far-reaching and include:

• mandatory digital filing; 
• reduced filing deadlines; and
• changes to the filing options available to small companies, including requiring a profit and loss account to be filed.

The government’s response and next steps are expected in late 2021/early 2022. Watch this space.

The Financial Reporting Faculty will continue to closely monitor developments in these areas and keep members informed of changes as they happen. Stay up to date by regularly visiting icaew.com/frnews.

About the author
Laura Woods, Technical Manager, Financial Reporting Faculty