Changes in reporting of public entities

This publication has been developed to help Audit Committee members and public entities prepare annual reports and manage other reporting-related tasks. It is not easy to track changes in regulations regarding both accounting standards, law provisions and sustainability reporting guidelines. To meet the needs of Audit Committee members and finance department staff of public entities, we offer this publication.

Changes in IFRS Accounting Standards

The aim of this publication is to summarise and briefly present all the upcoming changes approved by the IFRS Board (“IASB”, “Board”). The new accounting standard IFRS 17 “Insurance Contracts” applies for the first time. IFRS 17 was issued in 2017 to ensure greater transparency and comparability of financial statements, and has significant impact on all entities conducting insurance activities, including banks.

For the above mentioned entities, the application of IFRS 17 goes well beyond the financial, actuarial and systems development spheres. For example, it may influence the design and distribution of products, incentive plans and budget preparation.

Moreover, the new standard does not apply only to insurance companies - entities conducting non-financial activities should also consider whether the contracts they enter into contain an insurance element. Amendments to applicable accounting standards clarify the guidelines of the standards, in order to facilitate their application for preparers of financial statements. Nevertheless, we would like to call attention to the amendments to IAS 1, which replaces the requirement to disclose "significant" accounting policies with those that are "material". This seemingly insignificant change requires entities to optimise accounting policy disclosures in their financial statements.

Changes in non-financial reporting

Significant changes are expected in the near future in non-financial reporting, as reflected in the first two standards of the International Sustainability Standards Board (“ISSB”) published in June 2023. The first two standards establish a basic framework for disclosing material sustainability-related information across an entity's value chain and climate-related risks and opportunities. Accordingly, our publication has been expanded to include up-to-date information on the new non-financial reporting standards, published by the newly established ISSB Board.

Sustainability reporting is further challenged by the fact that a single, universal global standard system has not been developed. Apart from the above Standards issued by the ISSB Board, works on EU sustainability standards are currently ongoing. Therefore, in the last section of our publication, we refer to the topic of sustainability (“ESG”), summarising all possible reporting requirements for Serbian reporters, as Serbia is an EU candidate country. Furthermore, we also draw attention to guidelines and expectations of supervisory and regulatory authorities regarding the disclosure of climate-related issues in financial statements. Other important changes in reporting for public companies matters such as significant increase in interest rates and new upcoming obligations to prepare income tax reports, are also important for financial reporting. Furthermore, we would like to raise a concern about the use of the IFRS Foundation's trademarks in financial statements and auditor's reports.

We hope that this publication will be of benefit to Audit Committee members in discussions involving the new upcoming changes and for those preparing financial and non-financial information.

Milivoje Nešović

Partner, PwC Broader Assurance Services Leader for South East Europe