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OMB Compliance Supplement –OMB Issues 2023 Compliance Supplement

Methodology for Enhancing the International Applicability of the SASB Standards and SASB Standards Taxonomy Updates

Sustainability –ISSB Seeks Feedback on Priorities

SASB Standards –ISSB Publishes Exposure Draft on Methodology for Enhancing the International Applicability of the SASB® Standards and SASB Standards Taxonomy Updates

COSO –COSO Releases Guidance on Achieving Effective Internal Control Over Sustainability Reporting

FAF - 2022 Strategic Plan Draft For Public Comment

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OMB Compliance Supplement –OMB Issues 2023 Compliance Supplement

Summary - The White House Office of Management and Budget (OMB) today issued the 2023 Compliance Supplement.

This 2023 Supplement is effective for audits of fiscal years beginning after June 30, 2022, and supersedes the 2022 Compliance Supplement dated May 11, 2022.

The 2023 Compliance Supplement, like previous annual Compliance Supplements, identifies significant existing compliance requirements that the federal government expects to be considered as part of an audit required by the 1996 Amendments to the Single Audit Act. As with prior Compliance Supplements, it adds, deletes, and modifies prior Compliance Supplement sections.

In addition, the 2023 Compliance Supplement follows the OMB mandate adopted in the 2019 Compliance Supplement that requires each federal agency to limit the number of compliance requirements subject to the audit to six, with the exception of the Research and Development cluster.

The Research and Development cluster is permitted to identify seven compliance requirements as subject to the audit. For this purpose, the requirements relating to “A. Activities Allowed and Unallowed” and “B. Allowable Costs and Cost Principles” are treated as one requirement. The Part 2 matrix and the related program sections in parts 4 and 5 reflect the OMB’s six-requirement mandate. Additionally, the six-requirement mandate does not apply to programs not included in the annual Compliance Supplement.

Appendix V provides a list of changes from the 2022 Compliance Supplement. However, changes in the Matrix of Compliance Requirements are reflected in Part 2 of the 2023 Compliance Supplement.

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Methodology for Enhancing the International Applicability of the SASB Standards and SASB Standards Taxonomy Updates

Summary -The ISSB has issued for public comment an Exposure Draft, Methodology for Enhancing the International Applicability of the SASB® Standards and SASB Standards Taxonomy Updates. This proposal sets out the methodology proposed by the ISSB for amending SASB Standards metrics to enhance their international applicability. This Exposure Draft also includes the proposed approach for updating the digital SASB Standards Taxonomy to reflect amendments made to the SASB Standards.

Comments are requested by August 9, 2023.

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Sustainability – ISSB Seeks Feedback on Priorities

Summary - The International Sustainability Standards Board (ISSB) is seeking feedback on its priorities for its next two-year work plan. The Request for Information Consultation on Agenda Priorities is open for comments until September 1, 2023.

Based on research into the information needs of investors, the ISSB has identified four potential projects:

Biodiversity, ecosystems and ecosystem services;
Human capital; and
Human rights
Researching integration in reporting.

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SASB Standards –ISSB Publishes Exposure Draft on Methodology for Enhancing the International Applicability of the SASB® Standards and SASB Standards Taxonomy Updates

Summary - The ISSB has issued for public comment an Exposure Draft, Methodology for Enhancing the International Applicability of the SASB® Standards and SASB Standards Taxonomy Updates. This proposal sets out the methodology proposed by the ISSB for amending SASB Standards metrics to enhance their international applicability. This Exposure Draft also includes the proposed approach for updating the digital SASB Standards Taxonomy to reflect amendments made to the SASB Standards. Comments are requested by August 9, 2023.

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COSO –COSO Releases Guidance on Achieving Effective Internal Control Over Sustainability Reporting

Summary - The Committee of Sponsoring Organizations of the Treadway Commission (COSO) released the document, “Achieving Effective Internal Control over Sustainability Reporting (ICSR): Building Trust and Confidence through the COSO Internal Control-Integrated Framework” (ICSR Guidance). This release includes supplemental guidance for organizations to achieve effective internal control over sustainability reporting (ICSR), using the COSO Internal Control-Integrated Framework (COSO Framework). COSO believes its use will build trust and confidence in ESG/sustainability reporting, public disclosures, and enterprise decision-making.

COSO advises that the ICSR Guidance leverages knowledge gained in the application of COSO Framework to financial reporting over the past two decades. It introduces the concept of “internal control over sustainability reporting” (ICSR) into the internal control lexicon. The ICSR Guidance references and expands on a 2017 study by three of the co-authors, “Leveraging the COSO Internal Control—Integrated Framework to Improve Confidence in Sustainability Performance Data.”

The supplemental guidance points to several key themes as organizations and practitioners begin or continue establishing and maintaining an effective system of internal control over financial and sustainable business information. Although ICSR is not yet well established in practice, the ICSR Guidance discusses crucial insights that can be gained from the experiences of those organizations that are leading the way. In the new study, each of the 17 principles in the 2013 COSO Framework is explained and interpreted for application to sustainability. Additionally, “points of focus” from the COSO Framework are included along with practical insights and application of the supplemental guidance.

The principal authors of the ICSR Guidance are:

Robert Herz, former FASB chair, founding member of the IASB and former SASB Foundation board member;
Robert Hirth, Senior Managing Director at Protiviti, former COSO Chair and former vice-chair of the SASB;
Douglas Hileman, consultant, ESG specialist, and member of [former] ESG Leadership Knowledge Group;
Shari H. Littan, IMA Director, Corporate Reporting Research and Thought Leadership;
Brad Monterio, IIA EVP of Member Competency and Learning and member of the IFRS Foundation’s IRCC; and
Jeffrey C. Thomson, President and CEO of IMA and former COSO board member/lead director.

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FAF - 2022 Strategic Plan Draft For Public Comment

Summary - The Board of Trustees of the Financial Accounting Foundation (FAF) has released its 2022 Strategic Plan Draft for Public Comment and is inviting public and stakeholder input on the plan’s contents. The comment deadline is July 22, 2022.

The draft plan includes the FAF’s mission and vision statements and describes six overarching goals for the organization. Among these are commitments to:

Champion the value of independent standard setting;
Sustain the relevance of the information generated by Generally Accepted Accounting Principles (GAAP);
Demonstrate leadership in global financial reporting; and
Invest in technology to support more effective standard setting.

The draft plan also describes the organization’s commitment to diversity, equity and inclusion, and to ongoing dialogue with relevant parties about future developments in financial reporting around sustainability.

Following the public comment period, the FAF Board of Trustees will meet to consider the public input. The Trustees intend to publish the final document later this year.

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