There has been a strong focus on climate-related risks globally and in Singapore. Climate-related risks can have a material impact on an entity’s business model, cash flows, financial position and financial performance. Most, if not all, entities are likely to be impacted by climate-related risks.
The financial statements are a key source of information for stakeholders to understand the financial impact of climate-related risks on an entity. However, the current accounting and auditing standards do not specifically address climate-related risks.
Arising from these observations, the AASC-FRC ESG WG has developed TB1 to raise awareness on the need to consider the impact of climate-related risks on an entity’s business and operating environment, and the potential implications on the entity’s financial statements.
TB 1 also includes an illustrative example of how climate-related risks could affect the application of the principles of the financial reporting standards and auditing standards.