A new question-and-answer guide provides businesses with best practices on reporting environmental issues in annual financial statements. The guide — aimed at those preparing, auditing and using annual financial statements published by businesses — covers reporting requirements, implications for companies and report users, and guidance for auditors.
The guide released by the Institute of Chartered Accountants for England and Wales (ICAEW) in association with the Environment Agency, covers the legal requirements placed on companies with regard to environmental reporting, and includes annexes on European Union (EU) environmental directives and the environmental implications of existing accounting standards.
The guide, Environmental Issues and Annual Financial Reporting (PDF), provides guidance to all organizations on reporting environmental issues.
Here are six questions that all businesses need to answer when addressing reporting requirements.
- What are the principal legal requirements relating to environmental performance?
- What government directives and recommendations are likely to affect the reporting of environmental issues?
- What does the law require companies to disclose about environmental matters in the annual report and business review?
- Are there non-mandatory recommendations for environmental disclosure? For example, the UK’s Accounting Standards Board’s statement of best practice on the Operating and Financial Review may offer some guidance.
- Which international and domestic accounting standards, abstracts and interpretations are most relevant to the treatment of environmental matters in annual reports?
- Is there anything special about how items are included or disclosed in annual financial statements?
The report also discusses the topics of implications for companies and report users, and guidance for auditors.