Key International Financial Reporting Standards (IFRS) updates and new standards to expect
- Sergio Montebello
- 5 days ago
- 3 min read
Updated: 4 days ago
International Financial Reporting Standards (IFRS) are continuously changing providing better insights for how various types of transactions and events should be reported in the financial statements, enabling businesses to compare financial performance and position across borders. The applicability of IFRS will enhance a true and fair view leading to increased confidence among the stakeholders so it is important to keep up with any changes and developments in IFRS.
As from 2025, new updates and changes will be introduced and are required for accounting periods beginning on or after 1 January 2025. They will focus on various areas to enhance financial reporting, improve transparency, and address emerging issues in the accounting world.
Some of the key updates include:
Lack of Exchangeability – Amendments to IAS 21
Amendments to the Sustainability Accounting Standards Board (SASB)
Lack of Exchangeability – Amendment to IAS 21
Lack of Exchangeability amends IAS 21 The Effects of Changes in Foreign Exchange Rates to require an entity to apply a consistent approach to assessing whether a currency is exchangeable into another currency and when it is not, to determining the exchange rate to apply. The amendments also provide the required disclosures when a currency is not exchangeable. The amendments also extend to conforming amendments to IFRS 1 which previously referred to, but exchangeability was not defined.
Amendments to the SASB standards to enhance their international applicability
In December 2023, the International Sustainability Standards Board (ISSB) has published amendments to the SASB Standards to enhance their international applicability. These amendments were intended to help preparers apply the SASB Standards regardless of the jurisdiction in which they operate or the type of generally accepted accounting principles (GAAP) they use without substantially altering the SASB Standards’ structure or intent.
There are additional anticipated requirements which are effective for annual periods beginning on or after 1 January 2026 but an early application is permitted. These include:
Amendments to IFRS 9 and IFRS 7 regarding the classification and measurement of financial instruments
Such amendments require entities to derecognise a financial liability settled using an electronic payment system before the settlement date providing certain criteria are met.
Other clarifications include the classification of financial assets with ESG-linked features via additional guidance on the assessment of contingent features. In addition, disclosures are introduced for financial instruments with contingent features and equity instruments classified at fair value through other comprehensive income.
There are additional anticipated requirements which are effective for annual periods beginning on or after 1 January 2027 but an early application is permitted.
IFRS 18 Presentation and Disclosure in Financial Statements
The IASB has published the new accounting standard IFRS 18 ‘Presentation and Disclosure in Financial Statements’, which aims to improve companies' financial statement disclosures with a focus on the statement of profit or loss. This standard responds to the needs of stakeholders, who need comparable, transparent and consistent information about company performance.
IFRS 19 Subsidiaries without Public Accountability: Disclosures
IFRS 19 permits some subsidiaries to apply IFRS Accounting Standards with reduced disclosure requirements. These entities apply the requirements in other IFRS Accounting Standards except for their disclosure requirements.
An entity is required to consider whether to provide additional disclosures when compliance with the specific requirements in IFRS 19 is not sufficient to enable users of financial statements to understand the effect of transactions and other events and conditions on the entity’s financial position and financial performance.
These amendments are not yet endorsed for use in the EU.
Get in Touch with Quazar
If you need further information or wish to understand how these amendments and new standards might have an impact on your organisation, contact us today. Our experienced team is here to help your organisation.
Get in Touch:
Rodianne Cutajar
rcutajar@quazar.mt / +356 2388 4600
Daniel Galea
dgalea@quazar.mt / +356 2388 4600
