This section provides an overview of the key developments relevant to financial reporting since our last edition.

Geo-political events, COVID-19, natural disasters, events such as the Ukraine-Russia conflict and inflation are just some of the major issues that continue to drive global economic uncertainty today. Entities are experiencing uncertainty in forecasting changes in consumer demand, planning for the impacts of disrupted supply chains, planning for staff shortages, forecasting increased market volatility and adapting to changes in the way that entities operate.

These events create a variety of financial reporting issues (and risks) that need to be clearly communicated to users of financial reports (and not conflated). Entities are strongly encouraged to consider the key drivers of uncertainty in their operations and to avoid conflating separate and distinct events in the reporting of same.

The KPMG resource centre identifies and discusses some of the risks – and opportunities – that are facing governments and organisations in selected economies, which may help you to better understand what the short-term future may hold, and to consider the potential financial reporting implications:

All companies are facing climate-related risks and opportunities and are making strategic decisions in response – including around their transition to a low-carbon economy. These climate-related risks and strategic decisions could impact their financial statements – and KPIs/APMs. While some entities are more immediately and directly impacted than others depending on the nature of their operations, all entities are likely to be impacted by climate change either directly or indirectly and, therefore, entities are encouraged to develop entity specific and progressive climate change disclosures in the financial statements that are of interest to the users of their reports.

Our climate change resource centre provides FAQs to help you identify the potential financial statement impacts for your business and continues to be updated as significant accounting and reporting issues arise: 

IFRS Sustainability Disclosure Standards

When will companies first apply IFRS Sustainability Disclosure Standards?

The ISSB aims to issue the final ISSB standards by the end of 2022, subject to the feedback. Following an endorsement process, it will then be for individual jurisdictions to decide whether they adopt these new standards. Companies need to monitor their jurisdictions’ response to standards issued by the ISSB and prepare for their potentially rapid implementation given the urgency with which the IFRS Foundation is being asked to act.

Timing of Sustainability Reporting [ISSB Board meeting: Nov’ 2022 Frankfurt]

The ISSB agreed that companies would need to report sustainability-related financial disclosures at the same time as their financial statements. This is to encourage connectivity and ensure that information is decision-useful for investors. In response to feedback about the practical challenges, the ISSB plans to introduce transition relief to allow companies to report sustainability-related financial disclosures after their financial statements for a short period of time.

Actions for management:

  • Design your reporting systems, processes and controls to enable reporting of sustainability-related financial information at the same time as the financial statements.
  • Create a roadmap and identify any capacity constraints.
  • Engage in discussions on the applicable transition reliefs in your jurisdiction(s).

Feedback on the proposed IFRS S2 Climate-related Disclosures

Using climate-related scenario analysis

What’s the issue?: Climate-related scenarios can help investors understand how climate-related events and their associated risks and opportunities may impact a company’s business model, strategy and financial performance over time.

What’s the ISSB’s latest thinking?: The ISSB has confirmed that companies would be required to use scenario analysis when describing their assessment of climate resilience.

Actions for management:

  • Familiarise yourself with the Task Force on Climate-related Financial Disclosures (TCFD) guidance on scenario analysis.
  • Take stock of your scenario analysis capabilities to identify gaps and assess whether your existing systems, processes and controls are sufficient to meet the requirements.
  • Develop a roadmap to improve disclosures over time.

Find more information and guidance at KPMG’s: Using climate-related scenario analysis


From 2023, the new insurance standard, IFRS 17 Insurance Contracts, will apply for all companies for annual reporting periods beginning on or after 1 January 2023 [earlier adoption is permitted for entities that apply IFRS 9 on or before the date of initial application of IFRS 17]. IFRS 17 contains more detailed, complex and prescriptive guidance for recognising, measuring and disclosing insurance contracts.

The definition of an insurance contract will change from that under IFRS 4 Insurance Contracts, meaning that some contracts issued by companies could be an insurance contract, even if they are not called insurance contracts – e.g. product breakdown contracts or warranties.

What's the impact?: With changes to the definition of an insurance contract and additional scope exemptions under the new standard, accounting for contracts in the scope of IFRS 17 may be challenging for many companies. It is important for a company to determine now whether it issues any insurance contracts in the scope of IFRS 17.

Our IFRS 17 for non-insurers guide (PDF, 368KB) includes a framework for identifying insurance contracts and illustrative examples.

  • The KPMG 2022 guides to annual financial statements are available here.
  • The illustrative disclosures also includes, amongst other matters, illustrations related to:
    • Financial Reporting in uncertain times
    • Climate change and financial reporting
    • a demand deposit with restrictions on use arising from a contract with a third party, and
    • one possible way to explain the potential impact of a new global minimum tax.

IAASA publications

IAASA highlights matters for companies to consider when preparing their 2022 financial statements.

The information note is available here. (PDF, 684KB)

Climate-related disclosures in financial reports – IAASA information requests

IAASA, published a paper setting out information requests that it has raised with companies on their climate-related disclosures in their annual financial reports.

This paper lists climate-related information requests that IAASA has made to companies in its 2022 cycle of financial statement examinations.

The information note is available here. (PDF, 508KB)

ESMA publications

Financial Reporting Council (FRC) Publications

Ongoing FRC projects

The FRC continues to have two ongoing projects in respect of local GAAP relating to the:

FRED 82 Draft amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and other FRSs – Periodic Review

FRED 82 proposes a number of changes resulting from the second periodic review of FRS 102 and other Financial Reporting Standards. The proposals include: a new model of revenue recognition in FRS 102 and FRS 105; a new model of lease accounting in FRS 102; and various other incremental improvements and clarifications. The FRED is accompanied by a consultation stage impact assessment.

As a result of the amendments set out in FRED 82, FRS 102 will include more transparent reporting of lease obligations, as well as a clear five-step model for determining the recognition of revenue from all contracts with customers. The proposals have been designed to be proportionate to the size and complexity of the entities applying the standards.

The proposed effective date of the amendments set out in the FRED is 1 January 2025. Comments on FRED 82, including the consultation stage impact assessment, are requested by 30 April 2023.

A review of implementation issues

The FRC will review any issues arising relating to the implementation of FRS 102 as they arise, consulting members of its Advisory Panel as appropriate. Decisions will be taken on a case-by-case basis about the best way to address issues such as editorial points, areas where FRS 102 is silent and areas where divergence in accounting practice seems to be emerging.

Further detail on the above ongoing projects being undertaken by the FRC can be accessed here.

KPMG Tool for generating newly effective and upcoming IFRS

For further information on new and upcoming IFRS and amendments to IFRS, please refer to the KPMG webtool which allows you to generate a customised list of newly effective and forthcoming IFRS standards for both IASB IFRS and EU IFRS depending on the accounting period of your entity and which contains links to further guidance on each standard or amendment.

Gender Pay Gap Information Act 2021

The Gender Pay Gap Information Act 2021 requires organisations to report on their hourly gender pay gap across a range of metrics. The Employment Equality Act 1998 (Section 20A) (Gender Pay Gap Information) Regulations 2022 sets out the detail on how these calculations will be made. Organisations employing 250+ employees are required to report by 31 December 2022. Employers with fewer employees will be required to report in subsequent years. The gender pay gap information must be published on the employer’s website or in some other way that is accessible to all its employees and to the public.

S.I. No. 295/2022 - Occupational Pension Schemes Regulations 2022

Amends the Occupational Pension Schemes (Disclosure of information) Regulations 2006. The main amendment is the removal of the Article 8 exemption whereby small schemes (those having less than 100 members entitled to but not receiving retirement benefits), could, in place of the full requirements for audited financial statements and reports, have the option of issuing an alternative Annual Report, which must have been prepared by a qualified auditor or, where some or all of the benefits are secured under contracts of assurance with one or more life assurance companies, by a person designated by those companies. Trustees will going forward be required to produce an annual report and audited accounts for a scheme ending on or after 31 July 2022.

Companies (Corporate Enforcement Authority) Act 2021

The Companies (Corporate Enforcement Authority) Act 2021 (“CEA Act) amended the Companies Act 2014 and commenced on 6th July 2022, with two exceptions - Section 35 relating to the provision of directors' PPS numbers in certain documents submitted to the Registrar of Companies has not yet commenced - and the establishment of the new Corporate Enforcement Authority commenced with effect from 7th July 2022.

While the main aim of the Act is to establish the CEA as a stand-alone authority which will subsume the responsibilities of the Office of the Director of Corporate Enforcement, the Act also makes a number of miscellaneous amendments to Companies Act 2014, many of which fix anomalies in, or restore old company law provisions to, that Act.

One of the most notable of these is that a company can once again use its share premium account for, among other things, the writing off of its preliminary expenses, or the expenses of, or commissions paid on, any issue of shares or debentures by the company.

Read our article on the CEA here.

S.I. No. 380/2022 - European Union (Preventive Restructuring) Regulations 2022

The Regulations provide for the transposition of the mandatory articles of Directive (EU) 2019/1023 of 20 June 2019 on preventive restructuring frameworks, on discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt.

This EU Directive ensures that across the EU viable enterprises that are in financial difficulties have access to effective national preventive restructuring frameworks that can enable them to continue to operate. The Regulations introduce a number of changes to Ireland’s examinership regime as set out in Companies Act 2014 to bring it in line with the requirements of the Directive. The Regulations also introduce a fiduciary duty of directors to have regard to the interests of the company’s creditors “where the directors become aware of the company’s insolvency”.

  • On 8 October 2022, the European Commission formally adopted a 2nd set of FAQs (originally issued as draft on 2 February 2022) complimenting the original FAQs issued in December 2021. Both sets of FAQs are intended to assist financial and non-financial undertakings in the implementation of the relevant legal provisions of the EU Taxonomy. See the formally adopted FAQ document.
  • Complimentary Climate Change Delegated Act (Commission Delegated Regulation (EU) 2022/1214 of 9 March 2022) incorporates certain nuclear and gas energy activities into the list of economic activities which will need to be considered for Taxonomy eligibility and alignment reporting for reports published from 1 January 2023 (in respect of FY 2022 reporting periods).
  • Environmental Delegated Act setting out the technical screening criteria for the four remaining environmental objectives, which was expected to be published during 2022, has not yet been finalised. As Article 8 of the Disclosures Delegated Act states that: ‘The key performance indicators shall cover only the objectives of climate change mitigation and climate change adaptation until 12 months after the date of application of the delegated regulations that contain the technical screening criteria for the other environmental objectives…’, it seems now unlikely that key performance indicators in respect of the remaining four environmental objectives will be required to be reported on for reports published after 1 January 2023 (in respect of FY 2022 reporting periods).
  • Further more extensive disclosure requirements for non-financial undertakings from 1 January 2023 (in respect of FY 2022 reporting periods) and for financial undertakings from 1 January 2024 & 1 January 2026 (as applicable).
  • The RTS on SFDR (Commission Delegated Regulation (EU) 2022/1288) of 6 April 2022 is a consolidated set of technical standards providing additional detail on the content, methodology and presentation of certain existing disclosure requirements under SFDR and the Taxonomy Regulation.
    • It sets out detailed disclosure requirements under the SFDR & EU Taxonomy Regulations (Level 2 disclosures), providing additional requirements which Financial Market Participants must adhere to, including more extensive website disclosures and mandatory disclosure templates for pre-contractual and periodic report disclosures for Article 8 and Article 9 financial products.
  • On 31 October 2022, the EU Commission adopted the final proposal for a new delegated regulation amending the RTS on SFDR. The amendments incorporate the disclosures around the extent to which portfolios are exposed to gas and nuclear-related activities that comply with the EU Taxonomy along with corrections of certain anomalies identified in the original RTS on SFDR. This has not yet been published in the official journal and its effective date will the third day following that of its publication in the Official Journal. The final proposal has been sent to the EU Parliament & EU Council to scrutinise the contents. The aim is for the amendments to take effect from 1 January 2023, in line with the requirements of the RTS on SFDR, however this will depend on the length of the scrutiny period.
  • A set of Q&A’s on the RTS on SFDR (PDF, 599KB) prepared by the Joint ESA’s was issued by ESMA on 17 November 2022. The Q&A’s clarify required disclosures on a number of points including those relating to principal adverse impacts ("PAI") and taxonomy-alignment in pre-contractual documents, website information and periodic reporting.

Corporate Sustainability Reporting Directive (CSRD)

  • The EU Council formally adopted the CSRD proposal on 28 November 2022. It will enter into force 20 days after its publication in the EU Official Journal. EU Member States will then have 18 months to transpose the CSRD into national law.
  • The CSRD significantly widens the scope of the existing reporting requirements of the Non-Financial Reporting Directive to all large companies and entities with debt or equity securities listed on an EU regulated market. Non-EU companies with substantial activity in the EU (including those with a turnover of at least €150 million in the EU) will also have to comply, notwithstanding that there are various exemptions, in particular for third country undertakings.
  • The CSRD proposes a phased-in implementation of the rules as follows:
    • From 1 January 2024 for large public-interest companies (with over 500 employees) already subject to the non-financial reporting directive, with reports due in 2025;
    • From 1 January 2025 for large companies that are not presently subject to the non-financial reporting directive (with more than 250 employees and/or €40 million in turnover and/or €20 million in total assets), with reports due in 2026;
    • From 1 January 2026 for listed SMEs and other undertakings, with reports due in 2027. SMEs can opt-out until 2028.
  • In August 2022, ESMA published their annual update on the ESEF reporting manual – the highlight being the new guidance on the ESEF RTS requirement to mark up the notes to the IFRS consolidated financial statements following the “block tagging” approach when preparing 2022 annual financial reports.    
  • In September 2022, the FRC published their Lab report on digital reporting under the ESEF (PDF, 2.3MB), identifying lessons learned from the first year of implementation. The Lab’s review found that many UK companies have risen to the challenge of producing an annual financial report in the new digital format. However, there is still much to be done as data quality and usability remain below the level expected for companies in a leading capital market. The report sets out some actions to improve companies’ processes, the usability and design of the reports and XBRL tagging.