The Irish Auditing & Accounting Supervisory Authority (IAASA) has, for the first time recently, covered accounting for climate change and sustainability initiatives in its compendium of financial reporting decisions. This, according to IAASA, reflects “public attention and concern about climate change and companies’ responses to that and the sustainability agenda”.
The publication is in accordance with IAASA’s revised policy paper on publication of information regarding its financial reporting supervision activities, issued in December 2022. The publication aims to strike a balance between transparency and confidentiality. It is also in keeping with IAASA’s particular focus on climate commitments as outlined in its October 2022 Observations on Selected Financial Reporting Issues.
We examine IAASA’s powers and functions regarding financial reporting supervision. This includes details of what it proposes to publish in this area as part of its Work Programme 2023 - 2025.
IAASA is empowered, among other things, to examine the yearly and half yearly financial reports prepared by issuers whose securities are admitted to trading on the Irish market. It carries out this task as the designated competent authority under the Transparency (Directive 2004/109/EC) Regulations 2007, as amended (Regulations).
The 2004 Directive was recently amended by the Corporate Sustainability Reporting Directive (CSRD) signed on 14 December 2022. The CSRD, once transposed into Irish law, is expected to provide IAASA with additional powers regarding the monitoring of sustainability reporting.
IAASA’s powers under the Regulations
IAASA already has wide ranging powers and functions to facilitate it in monitoring financial reporting activity. These include the power to issue:
- Notices requiring the supply of information and written explanations on yearly and half yearly financial reports (Regulation 44)
- Directions requiring the revision of annual or half yearly financial reports (Regulation 45)
IAASA is also entitled to require undertakings to pay some, or all of the costs incurred by IAASA in examining the financial information published by an undertaking and in performing its functions under the Regulations.
If an undertaking does not comply with a Direction issued by IAASA, IAASA may apply to the High Court to enforce the Direction. Equally, an undertaking is entitled to apply to the High Court to vary or set aside a Direction issued by IAASA to it to revise a particular financial report. These types of hearings may be heard in private at the discretion of the Court.
Publication by IAASA
The Regulations give IAASA wide discretion in terms of publication of its activities. For example, IAASA is entitled to make public, in such a manner as it thinks fit, the issue of a Notice or Direction to include any written explanation or revised information prepared by the undertaking concerned.
IAASA, in its December 2022 policy paper on publication of information regarding IAASA’s financial reporting supervision activities states that it will make public the outcome of its financial reporting enforcement by publishing:
- Significant financial reporting decisions if IAASA considers that it will promote high quality financial reporting
- Corrective public notices by issuers, consequent on engagement with IAASA
- An annual list of examinations undertaken
- An annual observations paper arising from financial reporting matters identified by IAASA arising from its examination of financial reports during that year
- Thematic publications which may involve the publication of the names of issuers included in thematic examinations, together with details of the overall findings
The requirement to adhere to fair procedures underpins all of IAASA’s investigation and enforcement activities in respect of financial reporting and includes entitlements on the part of the issuer, to be given an adequate opportunity to respond to the matter being identified and pursued. This extends to publication by IAASA.
IAASA has set out a roadmap on the areas it proposes to focus on and to publish in the area of financial reporting. This should be of interest to all issuers regulated by IAASA in ensuring compliance with financial reporting requirements. Issuers should familiarise themselves with IAASA’s roadmap and publication policy in this area.
For more information on these reporting requirements, contact a member of our Public, Regulatory & Investigations team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.