Audited Financial Statements and Climate-Related Risk Considerations

September 9, 2021

Published: The CAQ

We are at a pivotal moment for climate-related and other environmental, social and governance (ESG) reporting, as investor and other stakeholder demand for this information continues to increase. This increase in demand has prompted governments and regulators around the world to take a closer look at climate-related reporting requirements to understand whether changes are needed to meet the evolving needs of stakeholders. Earlier this year, we issued a comment letter in support of the SEC’s exploration of climate-related disclosures and encourages ongoing dialogue as regulators and standard setters assess what rules and regulations should be adapted to meet the needs of investors.

Currently, climate-related risks are already being considered and assessed by management and auditors today during the preparation and auditing of financial statements. Under current US GAAP, this publication helps explore when climate-related risks may have:

·         a direct impact on the financial statements

·         an indirect impact on financial statements

·         or no impact at all

Given the increase in demand, understanding current financial statement requirements can be a useful starting point for investors and others as they consider how and where to obtain climate-related information ahead of potential upcoming regulatory changes.

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