Transition risk and IAS 7: Difference between pages

From ACT Wiki
(Difference between pages)
Jump to navigationJump to search
imported>Doug Williamson
(Add link.)
 
(Add quote.)
 
Line 1: Line 1:
1. ''Climate change - financial risks''.
''Financial reporting - International Financial Reporting Standards (IFRS).''


Abbreviation for climate transition risk, being financial risks that could arise from adjusting to a lower-carbon economy.
International Accounting Standard 7, dealing with statement of cash flows.


In this context, financial climate transition risks are distinct from the direct physical risks of climate change.
IAS 7 prescribes how to present information in a statement of cash flows about how a reporting entity’s cash and cash equivalents changed during the financial reporting period under review.  




2. ''Risk-free rates - LIBOR and related transitions - conduct.''
IAS 7 is issued by the International Accounting Standards Board.  


In the context of risk-free rates, transition risk refers to the risks arising before, during and after the discontinuation of LIBOR and similar rates, and their replacement by other risk-free interest rates.


These transition risks arise for non-financial corporates, and for financial institutions themselves, for example in relation to conduct.
:<span style="color:#4B0082">'''''Direct method of presentation is encouraged'''''</span>


:"An entity shall report cash flows from operating activities using either:


3. ''Other contexts.''
:(a) the direct method, whereby major classes of gross cash receipts and gross cash payments are disclosed; or


Any risk arising in relation to any kind of transition.
:(b) the indirect method, whereby profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of income or expense associated with investing or financing cash flows.
 
 
:Entities are encouraged to report cash flows from operating activities using the direct method.
 
:The direct method provides information which may be useful in estimating future cash flows and which is not available under the indirect method."
 
:''IAS 7 - paragraphs 18 and 19.''




== See also ==
== See also ==
* [[Bank of England]]
* [[ASC 230]]
* [[Climate change]]
* [[Cash]]
* [[Climate transition risk]]
* [[Cash equivalents]]
* [[Conduct]]
* [[Cash flow]]
* [[Fallback]]
* [[Cash flow statement]]
* [[Financial Conduct Authority]]
* [[Direct method]]
* [[Financial Stability Board]]
* [[Financial reporting]]
* [[Fossil fuel]]
* [[FRS 102]]
* [[Listing Rules]]
* [[Indirect method]]
* [[Paris Agreement]]
* [[International Accounting Standards Board]]
* [[Reputational risk]]
* [[International Financial Reporting Standards]]
* [[Stakeholder]]
* [[Reporting entity]]
* [[Stranded assets]]
* [[Statement of cash flows]]




== External link ==
== Other resources ==
* [https://www.bankofengland.co.uk/knowledgebank/climate-change-what-are-the-risks-to-financial-stability Climate change - What are the risks to financial stability? Bank of England]
*[https://www.iasplus.com/en/standards/ias/ias7 IAS 7 - IAS Plus]
*[https://www.ifrs.org/content/dam/ifrs/publications/pdf-standards/english/2022/issued/part-a/ias-7-statement-of-cash-flows.pdf?bypass=on IAS 7 text - IFRS]


[[Category:Accounting,_tax_and_regulation]]
[[Category:Accounting,_tax_and_regulation]]
[[Category:The_business_context]]
[[Category:Compliance_and_audit]]
[[Category:Identify_and_assess_risks]]
[[Category:Manage_risks]]
[[Category:Risk_frameworks]]
[[Category:Risk_reporting]]
[[Category:Financial_products_and_markets]]

Revision as of 07:40, 1 February 2024

Financial reporting - International Financial Reporting Standards (IFRS).

International Accounting Standard 7, dealing with statement of cash flows.

IAS 7 prescribes how to present information in a statement of cash flows about how a reporting entity’s cash and cash equivalents changed during the financial reporting period under review.


IAS 7 is issued by the International Accounting Standards Board.


Direct method of presentation is encouraged
"An entity shall report cash flows from operating activities using either:
(a) the direct method, whereby major classes of gross cash receipts and gross cash payments are disclosed; or
(b) the indirect method, whereby profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of income or expense associated with investing or financing cash flows.


Entities are encouraged to report cash flows from operating activities using the direct method.
The direct method provides information which may be useful in estimating future cash flows and which is not available under the indirect method."
IAS 7 - paragraphs 18 and 19.


See also


Other resources

Retrieved from ‘https://wiki.treasurers.org/w/index.php?title=Transition_risk&oldid=54418’