Climate-related and Other Uncertainties in the Financial Statements

The IASB met on 20 September 2023 to discuss its project on Climate-related Risks in the Financial Statements. The IASB discussed:

• whether to generalise the project objective to cover the reporting of financial information about the effects of other uncertainties in addition to those related to climate in the financial statements (Agenda Paper 14A);
• the results of research on the nature and causes of stakeholders’ concerns about reporting the effects of climate-related risks in the financial statements (Agenda Paper 14B); and
• the potential actions the IASB could take to respond to these concerns (Agenda Paper 14C).

Project objective (Agenda Paper 14A)

The IASB decided that the objective of this project is to explore whether and, if so, how targeted actions could improve the reporting of financial information about climate-related and other uncertainties in the financial statements.

Nine of 13 IASB members present agreed with this decision. One member was absent.

Because of this decision, the project name is now changed to ‘Climate-related and Other Uncertainties in the Financial Statements’.

Results of work on the nature and causes of concern (Agenda Paper 14B)

The IASB discussed a summary of the results of research on the nature and causes of stakeholders’ concerns about reporting the effects of climate-related risks in the financial statements.

The IASB was not asked to make any decisions.

Potential actions (Agenda Paper 14C)

The IASB discussed potential actions it could take to respond to stakeholders’ concerns about reporting the effects of climate-related risks in the financial statements. The IASB decided:

1. to explore whether to create examples to illustrate how to apply requirements in IFRS Accounting Standards to reporting the effects of climate-related and other uncertainties.
   Thirteen of 13 IASB members present agreed with this decision. One member was absent.
2. to explore clarifying or enhancing requirements in IFRS Accounting Standards in relation to disclosure of information about estimates.
   Eight of 13 IASB members present agreed with this decision. One member was absent.
3. to refer to the IFRS Interpretations Committee a question about the circumstances in which an entity recognises a liability when applying IAS 37 Provisions, Contingent Liabilities and Contingent Assets to climate-related commitments.
   Thirteen of 13 IASB members present agreed with this decision. One member was absent.
4. to consult with the IFRS Interpretations Committee on questions related to the application of IAS 36 Impairment of Assets to measure value in use when an asset is subject to highly variable future cash flows over an extended period.
   Nine of 13 IASB members present agreed with this decision. One member was absent.

The IASB decided not to explore clarifying or enhancing requirements in IFRS Accounting Standards in relation to:

1. connections between items of information in the financial statements and between the financial statements and other general purpose financial reports.
   Seven of 13 IASB members present agreed with this decision. One member was absent.
2. assessing whether information is material.
   Ten of 13 IASB members present agreed with this decision. One member was absent.
3. the ‘catch-all’ disclosure requirement in paragraph 31 of IAS 1 Presentation of Financial Statements.
   Eleven of 13 IASB members present agreed with this decision. One member was absent.

However, the IASB will continue to monitor developments in climate-related and other uncertainties to determine whether to take further action.