Clarity in corporate reporting - January-February 2026 monthly newsletter

NGER reporters and financial institutions in ‘Group 1’ should consider early adoption

On 15 December 2025, the AASB approved amendments to specific greenhouse gas emissions disclosure requirements under AASB S2 Climate-related Disclosures, mirroring the International Sustainability Standards Board’s (ISSB) recent amendments to IFRS S2 Climate-related Disclosures.

For Australian entities, such as NGER reporters and financial institutions, these amendments ease implementation challenges by supporting closer alignment with existing regulatory and measurement frameworks (NGER) and reducing Scope 3 Category 15 complexity.

The amendments are effective for annual reporting periods beginning on or after 1 January 2027, with early application permitted.

Entities affected by these amendments (particularly Group 1 entities that are NGER reporters or financial institutions) should familiarise themselves with these amendments and consider opportunities available from early adoption.  

Under section 336A(3) of the Corporations Act 2001, entities electing to apply the amendments early would be required to document the early adoption election in writing by the directors. This is usually actioned by a directors’ resolution to adopt the amendments early.

We’ve published a Clarity publication explaining the amendments with additional insights for Australian entities, which is available on deloitte.com.

The Australian Accounting Standards Board (AASB) has also released frequently asked questions (FAQs) addressing the amendments.

More information:

• Clarity publication Amended relief for specific GHG emission disclosures
• AASB S2025-1 Amendments to Greenhouse Gas Emissions Disclosures [AASB S2]
• AASB S2 Amendments FAQs (AASB resource)

Late lodgement of sustainability reports will not automatically result in mandatory suspension

The ASX has announced amendments to the ASX Listing Rules so that non-lodgement of an entity’s sustainability report by the due date (three months after year end) will not result in automatic suspension of trading in an entity’s securities. 

The update to ASX Listing Rule 17.5 follows an earlier consultation paper in which the ASX sought views on how to respond to what the ASX sees as an inadvertent expansion of the mandatory suspension rule with practical issues for enforcement as sustainability reporting is being phased in over a number of years. Non-lodgement of the directors’ report, the statutory financial report or the auditor’s report on the financial report by the due date will continue to result in automatic suspension. 

Listed entities are still required to lodge their sustainability reports within three months after year end under ASX Listing Rule 4.5. However, suspension of the entity’s securities will not be an automatic consequence of late lodgement. This rule change preserves the current status quo under the Listing Rules but does not diminish the Corporations Act 2001 obligation to prepare a sustainability report.

The ASX received 8 submissions on the proposals, with all but one of those submissions supporting the change. 

The change to ASX Listing Rule 17.5 came into effect on 16 January 2026. The revised Listing Rules are available on the ASX website (the amendments are identical to those proposed in the consultation paper).

More information:

• Listed@ASX Compliance Update no. 13/25 (item 1)
• Consultation Paper Amendment to Listing Rule 17.5.

Consider the impacts of these decisions on financial reporting

The IFRS Interpretations Committee (IFRIC) finalised two agenda decisions related to IFRS 9 Financial Instruments (IFRS 9) at its November 2025 meeting. These agenda decisions were approved by the International Accounting Standards Board (IASB) at its January 2026 meeting and have been published:

Embedded Prepayment Option (IFRS 9)

This decision considered whether, for purposes of applying paragraph B4.3.5(e)(ii) of IFRS 9 to a prepayment option in a financial liability, ‘the entity’ should be read to refer to ‘the lender’ or ‘the reporting entity’ (that is, the borrower).

The distinction between ‘the entity’ meaning ‘the lender’ or ‘the reporting entity’ can be significant, because the assessment of whether to separate an embedded derivative from the host contract could differ depending on whether it is assessed from the lender’s or the borrower’s perspective. The effects of accounting for an embedded derivative at fair value through profit or loss and for a host contract at amortised cost differ from the effects of accounting for the entire financial liability at amortised cost.

Evidence gathered by the IFRIC indicated no material diversity in practice with regards to interpreting the term ‘the entity’ in paragraph B4.3.5(e)(ii) of IFRS 9. Feedback suggested that stakeholders read the requirements as referring to the lender. Based on its findings, the IFRIC concluded that the matter described in the request does not have widespread effect and decided not to add a standard-setting project to the work plan.

Determining and Accounting for Transaction Costs (IFRS 9).

This decision considered whether costs that are directly attributable to the origination or issuance of a financial instrument but are incurred before entering into the contractual arrangement are ‘incremental’ and, therefore, meet the definition of transaction costs in Appendix A of IFRS 9. Feedback gathered suggested that:

• Costs that are directly attributable to the origination or issuance of a financial instrument but are incurred before entering into the contractual arrangement are not precluded from being ‘incremental’ and, accordingly, could meet the definition of transaction costs in IFRS 9
• Transaction costs are recognised in the statement of financial position, often as prepayments or other assets.

The IFRIC noted evidence gathered indicated no material diversity in applying IFRS 9 when determining and accounting for costs incurred before entering into a contractual arrangement. Consequently, the IFRIC concluded that the matter did not have widespread effect and decided not to add a standard-setting project on the work plan.

Other decisions

Also at its November 2025 meeting, the IFRIC decided to finalise the updates to six agenda decisions related to IFRS 18 Presentation and Disclosure in Financial Statements:

• Disclosure of Revenues and Expenses for Reportable Segments (IFRS 8 Operating Segments) (July 2024)
• Demand Deposits with Restrictions on Use arising from a Contract with a Third Party (IAS 7 Statement of Cash Flows) (April 2022)
• Subsequent Expenditure on Biological Assets (IAS 41 Agriculture) (September 2019)
• Disclosure of Changes in Liabilities Arising from Financing Activities (IAS 7 Statement of Cash Flows) (September 2019)
• Physical Settlement of Contracts to Buy or Sell a Non-financial Item (IFRS 9 Financial Instruments) (March 2019)
• Normal operating cycle (IAS 1 Presentation of Financial Statements) (June 2005).

The IASB confirmed its agreement with the updates to the IFRS 18 agenda decisions at its January 2026 meeting.

Furthermore, the IFRIC also decided to recommend to the IASB to withdraw the agenda decision Supply Chain Financing Arrangements—Reverse Factoring. At its January 2026 meeting the IASB decided to defer reaching a decision to a future meeting. The IASB also decided to undertake targeted outreach to identify any specific accounting matters that might arise from the recommended withdrawal of the agenda decision.

Entities should consider the impacts of these agenda decisions on their current accounting and implement any necessary changes in accounting policies where necessary.

ASIC releases educational modules on sustainability reporting

ASIC has released eight educational modules to help smaller companies and other report preparers understand and apply Australia's new mandatory climate-related financial sustainability reporting requirements. The modules were designed in partnership with the Australian Accounting Standards Board (AASB) and are supported by Regulatory Guide 280 Sustainability reporting, which provides regulatory guidance.

ASIC publishes updates to various Information Sheets on financial reporting and auditing

ASIC has published updates to a number of information sheets related to financial reporting and auditing to reflect changes to guidance on specific processes or compliance issues or detailed guidance.

Some of the updates relate to the resignation and removal of auditors of registrable superannuation entities, resignation and removal of auditors of Australian financial services licensees, etc. A full list of updates is available on ASIC’s website.

New ASIC sustainability reporting form available

As previously reported in ASIC’s November 2025 update, the new sustainability reporting Form 398 Copy of sustainability report and auditor’s report is now available for use when lodging sustainability reports under the Corporations Act 2001.

The sustainability report and related auditor’s report must be lodged together with the new sustainability reporting form. Importantly, entities should complete and lodge the sustainability reporting form separately to Form 388 Copy of financial statements and reports. Form 388 will still be required to be used when lodging financial reports, related auditor’s reports and director’s reports.  

AUASB amendments to phasing of assurance over ESG and illustrative reports

The Auditing and Assurance Standards Board (AUASB) has issued ASSA 2025-10 Amendments to ASSA 5010: Timeline for Audits and Reviews of Information in Sustainability Reports under the Corporations Act 2001, which requires the phasing in of assurance for Group 1, 2 and 3 entities to be applied for voluntary sustainability reports under the Corporations Act 2001. The AUASB will consider at its 25 February 2026 Board meeting whether assurance reports should cover the directors’ declaration for years commending 1 July2026 to 31 December 2027.

The AUASB also released Illustrative Corporations Act Sustainability Assurance Reports. These illustrative reports are intended to promote consistent reporting by auditors from 31 December 2025. 

Productivity Commission report proposes mandatory digital financial reporting

The Productivity Commission (PC) released its final inquiry report into Harnessing data and digital technologies, recommending that digital financial reporting be made mandatory and should initially cover disclosing entities as defined in the Corporations Act 2001. The PC further recommended that the transition follows a phased implementation approach. The Federal Government is yet to respond to the recommendations.

Further information:

• Deloitte Australia reports on embracing the power of digital corporate reporting.

GHG Protocol Standard on Land Sector and Removals released

The GHG Protocol’s Independent Standards Board has approved and released the Land Sector and Removals Standard, establishing new mandatory GHG accounting requirements for agriculture and CO₂ removal technologies. The Standard is effective from 1 January 2027.

The new Standard may inform disclosures made in mandatory sustainability reports where relevant.

More information:

• Media release
• Executive summary
• Quick overview article
• Frequently asked questions
• Basis for conclusions.