IFRS Accounting Standards

IASB launches review of IFRS 16 Leases

The International Accounting Standards Board (IASB®) published a Request for Information as part of its Post-implementation Review (PIR) of IFRS 16 Leases in June 2025. The PIR will assess the real-world effects of implementing IFRS 16 by evaluating whether IFRS 16 is broadly working as intended for investors, companies, auditors and regulators. 

Stakeholders are encouraged to share their experiences with the IASB, particularly regarding:

• the usefulness and comparability of information when applying judgment in measuring lease liabilities;
• the usefulness of information about a lessee’s lease-related cash flows;
• the ongoing costs for lessees of applying the measurement requirements; and
• how IFRS 16 interacts with other IFRS Accounting Standards.

The consultation is open for comment until 15 October 2025.

IASB issues revised Practice Statement on management commentary

IASB released a revised Practice Statement on management commentary in June 2025 to enhance the quality and global consistency of narrative reporting. Prompted by investor concerns, the update aims to better meet their information needs and serve as a global benchmark for regulators and companies. Developed in collaboration with the International Sustainability Standards Board (ISSB™), the revision aligns financial and sustainability reporting and incorporates innovations like the Integrated Reporting Framework.

UKEB endorses amendments to the classification and measurement of financial instruments

In April 2025, the UK Endorsement Board (UKEB) endorsed amendments to IFRS 7 Financial Instruments: Disclosure and to IFRS 9 Financial Instruments that clarify the requirements for:

• the recognition and derecognition of financial assets and financial liabilities;
• the classification requirements for financial assets, particularly those containing contingent features (such as ESG-linked targets), non-recourse features or contractually linked instruments; and
• disclosures related to the amendments to the classification requirements, and also for investments in equity instruments designated at fair value through other comprehensive income.

The amendments are effective for annual reporting periods beginning on or after 1 January 2026, with early application permitted.

ICAEW supports UK endorsement of IFRS amendments to contracts referencing nature-dependent electricity

ICAEW’s April 2025 response supports the UK endorsement of the IASB’s amendments to IFRS 9 and IFRS 7 Financial Instruments: Disclosure regarding contracts referencing nature-dependent electricity for use in the UK.

IASB’s amendments:

• require entities to provide relevant disclosure about contracts within their scope; and
• introduce new guidance into the standard for the application of own-use requirements to contracts referencing nature-dependent electricity, and new hedge accounting requirements for those contracts.

The above amendments are effective for annual periods beginning on or after 1 January 2026 with early application permitted.

IFRS Foundation updates going concern educational material

The IFRS Foundation published an updated version of its going concern educational material in May 2025. The updates reflect recent developments and support the consistent application of IFRS Accounting Standards related to going concern assessments.

Sustainability reporting

UK Sustainability Reporting Standards consultations launched

The UK government has launched a consultation on the first two draft UK Sustainability Reporting Standards (UK SRS), alongside separate consultations on assurance of sustainability reporting and climate-related transition plan requirements. The draft UK SRS are closely aligned with IFRS S1 and IFRS S2, to ensure consistency with international sustainability reporting practices, and are designed to be interoperable with existing sustainability reporting frameworks. 

All of the consultations will be open for responses until 17 September 2025.

For further details, please read this Insights article.

Using revised Management Commentary Practice Statement with ISSB Standards

The ISSB supports the IASB’s revised Management Commentary Practice Statement as a key enabler of connected reporting, linking financial and sustainability disclosures. IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information allows flexibility in presenting sustainability information, including within management commentary.

The Practice Statement and ISSB Standards are aligned and complementary, helping companies provide context to financial statements and address long-term prospects. Together, they guide the integration of material sustainability-related insights into narrative reporting.

EFRAG’s call for input on revising ESRS – ICAEW response

Following the European Commission (EC)’s Omnibus publication earlier this year, the European standard-setter received a mandate to revise and simplify existing European Sustainability Reporting Standards (ESRS). As a first step, the European Financial Reporting Advisory Group (EFRAG) issued a public call for input to which ICAEW responded in May 2025. 

While acknowledging its support for the ambitions of the European Green Deal and recognising EFRAG’s influence in accelerating global sustainability reporting, ICAEW called upon EFRAG to learn from previous standard-setting shortcomings and to do things differently this time around. In particular, we asked EFRAG to give serious consideration to building on the ISSB’s global baseline by focusing standard-setting efforts on aspects of the Corporate Sustainability Reporting Directive (CSRD) that are not covered by the ISSB Standards, such as the application of double materiality.

ICAEW also highlighted that a structure where ESRS requirements over and above the ISSB baseline are explicitly identified would reduce unnecessary divergence and inefficient reporting practice. Believing equivalence should be the ultimate aim, ICAEW therefore supports calls for the EC to prioritise work that will enable equivalence to be possible.

With a deadline of 31 October 2025 to deliver the revised draft ESRS to the EC, EFRAG intends to publish Exposure Drafts for a 30-45 day public consultation period at the very end of July.

ISSB proposes targeted amendments to IFRS S2 to ease application for companies

In April 2025, the ISSB published an Exposure Draft proposing targeted amendments to IFRS S2 Climate-related Disclosures (ED) that proposes additional reliefs and to clarify existing reliefs from disclosure of greenhouse gas (GHG) emissions requirements.

The amendments relate to four key areas: 

1. Measurement and disclosure of Scope 3 Category 15 GHG emissions.
2. Use of the Global Industry Classification Standard in applying specific requirements related to financed emissions disclosures.
3. Jurisdictional relief from using the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (2004).
4. Applicability of jurisdiction relief for the use of global warming potential values other than those based on the latest available Intergovernmental Panel on Climate Change assessment.

The deadline for responding to this ED is 27 June 2025.

Guidance on disclosures about transition plans

In June 2025, the IFRS Foundation published a new guidance document on disclosures related to an entity’s climate-related transition, including information about transition plans, in accordance with IFRS S2. The new guide builds on disclosure-specific material developed by the Transition Plan Taskforce.

The guidance:

• supports entities applying IFRS S2 Climate-related Disclosures;
• is designed to enable entities to provide high-quality information about their climate-related transition when applying IFRS S2; and
• covers disclosures about any ‘transition plan’ an entity has, including both mitigation and adaptation efforts.

Educational material about GHG disclosure requirements in IFRS S2

The IFRS Foundation published educational material in May 2025, answering questions about disclosure requirements for GHG emissions in accordance with IFRS S2. 

This is part of the ISSB’s commitment to supporting the implementation of ISSB Standards and specifically covers: 

• the context and reasoning underlying the GHG emissions-related requirements;
• the use of the materials of the GHG Protocol in IFRS S2 requirements; and
• specific aspects of the GHG emissions-related requirements.