Question to the Department for Business and Trade:

To ask His Majesty's Government, in the light of the joint letter sent by Principles for Responsible Investment and the Institutional Investors Group on Climate Change to the CEO of the Financial Reporting Council (FRC), dated 16 December 2025, what steps they are taking to ensure that the FRC and other regulators ensure that issuers and auditors apply new guidance set out by the International Accounting Standards Board in Disclosures about Uncertainties in the Financial Statements—Illustrative examples, published on 28 November 2025.

Answered by Baroness Lloyd of Effra - Baroness in Waiting (HM Household) (Whip)

The illustrative examples provide guidance to help preparers meet the mandatory requirements within IFRS Accounting Standards, which are adopted in the UK as UK-adopted international accounting standards. However, application of this guidance does not form part of mandatory requirements and it is ultimately for companies and auditors to decide whether to use the examples. Any FRC engagement with companies and their auditors will be through either reviews of annual reports, or reviews of audits, undertaken as part of its Supervision work.

Question to the Department for Business and Trade:

To ask His Majesty's Government what assessment they have made of the effectiveness of the guidance by the International Accounting Standards Board Disclosures about Uncertainties in the Financial Statements—Illustrative examples, published on 28 November 2025, in ensuring companies affected by climate change explain to investors the material climate assumptions on which their accounts are drawn up, in such areas as asset valuation, asset lives and contingent liabilities.

Answered by Baroness Lloyd of Effra - Baroness in Waiting (HM Household) (Whip)

The UK Endorsement Board widely consulted with UK stakeholders, including investors and companies, throughout the International Accounting Standards Board’s (IASB) development of the illustrative examples. Feedback, on whether they would support companies in reporting the effects of climate-related, and other, uncertainties in their financial statements, was shared with the IASB and incorporated before finalisation.

The upcoming reporting cycle will clarify whether the guidance has influenced company reporting on such matters.

Question to the Department for Business and Trade:

To ask His Majesty's Government what assessment they have made of the new guidance by the International Financial Standards Board on the application of existing financial reporting standards, set out by the International Accounting Standards Board in Disclosures about Uncertainties in the Financial Statements—Illustrative examples, published on 28 November 2025.

Answered by Baroness Lloyd of Effra - Baroness in Waiting (HM Household) (Whip)

The UK Endorsement Board widely consulted with UK stakeholders, including investors and companies, throughout the International Accounting Standards Board’s (IASB) development of the illustrative examples. Feedback, on whether they would support companies in reporting the effects of climate-related, and other, uncertainties in their financial statements, was shared with the IASB and incorporated before finalisation.

The upcoming reporting cycle will clarify whether the guidance has influenced company reporting on such matters.

Question to the Department for Business and Trade:

To ask His Majesty's Government what assessment they have made of British companies’ and auditors’ readiness to apply the new guidance set out by the International Accounting Standards Board in Disclosures about Uncertainties in the Financial Statements—Illustrative examples, published on 28 November 2025, in their financial reporting this year; and what assessment they have made of the contingency plans that the Financial Reporting Council and other regulators have in place should those companies and auditors fail to apply the new guidance.

Answered by Baroness Lloyd of Effra - Baroness in Waiting (HM Household) (Whip)

The illustrative examples provide guidance to help preparers meet the mandatory requirements within IFRS Accounting Standards, which are adopted in the UK as UK-adopted international accounting standards. However, application of this guidance does not form part of mandatory requirements and it is ultimately for companies and auditors to decide whether to use the examples. Any FRC engagement with companies and their auditors will be through either reviews of annual reports, or reviews of audits, undertaken as part of its Supervision work.