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Financial reporting considerations - Coggle Diagram
Financial reporting considerations
Sets requirements in IFRS Standards that could require companies to consider
climate-related and other emerging risks
The potential financial implications, but
are not limited to:
Effects on impairment calculations because of increased costs or reduced demand
Changes in expected credit losses for loans and other financial assets
Changes in the useful life of assets
Changes in the fair valuation of assets
Asset impairment, including goodwill
IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets
Whether some expenses relate to items that satisfy the definition of an asset
and can be recognised
The estimated useful lives of assets, the amount of depreciation
or amortisation recognised each year.
IFRS 13 Fair Value
Measurement
IFRS 13 requires companies to disclose key assumptions used where assets are
recognised at fair value.
When the fair value of an asset is affected by climate-related risks changes to laws and regulations with respect to managing such risks, a company to disclose how it factors climate-related risk into the calculations.
IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures
IFRS 9 impairment requirements use forward-looking information to recognise
expected credit losses.
Environment have changed significantly the borrower’s ability to meet its debt
obligations.
IFRS 7 requires disclosure of such a company’s exposure to market risks arising from financial instruments, its objectives in managing these risks and changes from the previous period.
IAS 37 Provisions, Contingent Liabilities and Contingent Assets
Companies are required to provide a brief description of the nature of any contingent liability, an estimate of its financial effect and an indication of the uncertainties relating to the outflow of resources for settling the obligation.
Climate-related risks and uncertainties may also affect the best estimate of
a provision.
Recognition of an onerous contract provision
Disclosure of a contingent liability for potential litigation and fines or
penalties
IAS 36 Impairment
of Assets
A company’s exposure to climate-related risks could be an indicator that an asset or a group of assets is impaired; that exposure could also affect future estimated cash inflows and outflows used for recoverable amount calculations.
IAS 36
Requires disclosure of the key assumptions on which cash flow projections have been based and management’s approach.
IAS 1 Presentation of
Financial Statements
IAS 1 requires disclosure in the notes of information that is not presented
elsewhere in the financial statements.
Information will be relevant if it could reasonably be expected to
influence decisions made by investors.