[Global Financial Insights] IASB and ISSB June 2025 Updates – Key IFRS Decisions | AI Audit Guidance

Global Financial Insights is a weekly feature for the Accounts and Audit Module subscribers of Taxmann.com. It provides you with the latest updates on financial reporting and auditing practices from across the globe. Here is this week’s financial update:

1. IASB June 2025 update – Key decisions on equity instruments, hyperinflation accounting, and other ongoing projects

In its June 2025 meeting, the International Accounting Standards Board (IASB) advanced several ongoing projects:

(a) Amendments on presentation and disclosures for Equity Instruments

At its June 2025 meeting, the IASB advanced its redeliberations on the project Financial Instruments with Characteristics of Equity, addressing stakeholder feedback on the Exposure Draft. Key tentative decisions were made regarding presentation and disclosure requirements in IFRS 18, IFRS 7, and IFRS 19.

For presentation, the IASB proposed requiring entities to separately present profit or loss attributable to ordinary shareholders, participating rights holders, and non-participating rights holders in the statement of profit or loss. Definitions of these rights were clarified, and the term ‘ordinary share’ was aligned with IAS 33. Presentation requirements in the statement of financial position and changes in equity were withdrawn, with enhanced disclosures moved to IFRS 7 and IFRS 18, including terms of equity instruments and reconciliations of undeclared dividends.

On disclosures, the IASB agreed to retain most of the proposed requirements with refinements. These include clearer guidance on classifying claims, terms and conditions, and maximum dilution of ordinary shares, such as including off-balance-sheet arrangements and buy-back features. Puttable instruments and certain equity-like liabilities were also brought within scope.

For eligible subsidiaries under IFRS 19, aligned disclosure requirements were introduced to support consistent reporting of equity instruments and their implications on profit attribution and dividend disclosures.

The IASB decided not to expedite these amendments ahead of classification-related redeliberations. The Board will continue deliberations on classification aspects in the next phase.

(b) Amortised Cost Measurement

The project has been moved from research to standard-setting, following stakeholder input on practical challenges. The IASB will next consider potential solutions.

(c) Equity Method

The Board confirmed its original objectives and decided to redeliberate proposals in the Exposure Draft without expanding the project’s scope significantly.

(d) Translation to a Hyperinflationary Presentation Currency

The IASB concluded key redeliberations on its Exposure Draft Translation to a Hyperinflationary Presentation Currency. The Board tentatively approved disclosure and transition requirements for entities, including subsidiaries applying IFRS 19. Such subsidiaries will be required to disclose that all financial amounts have been translated at the closing rate as of the latest reporting date, and whether their presentation currency has ceased to be hyperinflationary. When applying the previously introduced exception to the translation method, these entities must label comparative financial information to reflect consistent inflation adjustments.

In terms of transition, the IASB agreed on retrospective application under IAS 8, unless an entity qualifies for the exception. Those applying the exception must restate comparatives using a consistent general price index and clearly label the information. Relief from certain disclosures under IAS 8 and IFRS 19 was also approved. Importantly, no exemption will be provided for first-time adopters under IFRS 1.

The Board also confirmed that the amendments will be effective from annual periods beginning on or after 1 January 2027, with early application permitted. These amendments will be issued without re-exposure, and balloting is expected to follow with issuance targeted for Q4 2025.

(e) Climate-related and Other Uncertainties

The IASB will issue illustrative examples (excluding one) to help preparers reflect climate-related uncertainties in financial statements. These are expected in October 2025.

(f) Other Projects

Updates were provided on Business Combinations, Intangible Assets, and Provisions; however, no decisions were made at this stage.

Source – International Financial Reporting Standards

2. ISSB June 2025 update – Advances amendments to SASB standards and IFRS S2 guidance

At its June 2025 meeting, the International Sustainability Standards Board (ISSB) made important progress on updates to the SASB Standards and IFRS S2 industry-based guidance:

• SASB Standards – The ISSB ratified a draft proposing amendments to 9 priority SASB Standards and targeted changes to an additional 41. The proposed changes aim to enhance consistency in disclosure across industries. A 150-day comment period has been approved, and the effective date is expected 12–18 months after issuance, with early application permitted.
• IFRS S2 Guidance – To align with the revised SASB content, the ISSB approved issuing an exposure draft proposing consequential amendments to the IFRS S2 industry-based guidance. The same 150-day comment period and effective date approach apply.

Both exposure drafts are scheduled for publication in July 2025. The ISSB confirmed due process compliance and is moving forward with balloting.

Source – International Financial Reporting Standards

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