IFRS NEWS March 2025

Accounting News

Financial Information on Sustainability

Sustainability refers to the ability to meet the needs of the present without compromising the ability of future generations to meet their own needs. It considers three main dimensions: environmental, economic, and social.

The IFRS Standard on Sustainability is IFRS S1, titled “General Requirements for Disclosure of Sustainability-related Financial Information,” which aims to require an entity to disclose information about its sustainability-related risks and opportunities that is useful to the primary users of general purpose financial reports in making decisions about providing resources to the entity.

An entity will provide information to disclose related to sustainability.

• Governance: The governance processes, controls, and procedures the entity uses to oversee and manage risks and opportunities.
• Strategy: The approach an entity uses to manage risks and opportunities.
• Risk Management: The processes the entity uses to identify, assess, prioritize, and monitor risks and opportunities.
• Metrics and objectives: The entity's performance in relation to risks and opportunities, including progress towards any objectives the entity has set or is required to meet by law or regulation.

Accounting Inquiries

Principal or Agent?

The entity will determine whether it acts as a Principal or an Agent, based on how it provides goods and/or services to its customers.

An entity is a Principal if it controls the specified good or service before it is transferred to the customer.

The indicators that an entity controls a specified good or service before transferring it to a customer are:

• The entity is primarily responsible for fulfilling the commitment to provide the specified good or service;
• The entity has inventory risk; and
• The entity has the discretion to set the price of the specified good or service.

An entity is an agent if the entity's performance obligation is to arrange for the supply of the specified good or service by a third party. An entity that is an agent does not obtain control of a specified good or service provided by a third party before such good or service is transferred to the customer.