IFRS S1 is not automatically mandatory globally upon its release, but becomes mandatory when adopted by local jurisdictions or regulators. While it became effective for annual reporting on January 1, 2024, its enforcement depends on national timelines, with many countries, including those in the EU, and jurisdictions like Nigeria, Canada, and the UK, phasing it in or requiring it over the coming years.
IFRS S1 and IFRS S2 become mandatory when regulators in jurisdictions integrate them into financial reporting frameworks and regulatory requirements.
Although all public and private companies can apply IFRS S1 and IFRS S2, the ISSB does not have the right to mandate the application of the Standards. Companies can voluntarily apply these Standards, and jurisdictional authorities can decide whether to require companies to apply them.
It has not yet been adopted as an official system in the United States. However, any company that does a large amount of international business may need to use IFRS reporting on its financial disclosures in addition to GAAP.
IFRS S1 sets out general requirements for the disclosure of material information about all material sustainability- related financial risks and opportunities and other general reporting requirements. IFRS S2 sets out disclosures that are specific to climate-related matters.
While IFRS compliance is not mandatory for all companies, certain entities are required to follow Ind-AS, including: Listed companies. Unlisted companies with a net worth of Rs. 250 crore or more.
AASB S1 corresponds to IFRS S1 and covers all sustainability-related risks and opportunities. This voluntary standard has been issued in recognition of the Australian Government's intention to approach mandatory sustainability requirements from a 'climate first, but not only' perspective.
The international financial reporting standards (“IFRS”) are the standards applicable to companies who do not apply a local GAAP. These mostly tend to be international companies. IFRS is mandatory for listed companies, but for all other UK companies there is a choice between IFRS and UK GAAP.
Use of IFRS instead became mandatory for group accounts of EU listed companies from 2005. It has been the basis of large-company financial statements audited in the UK since then.
It provides a comprehensive framework for preparing and presenting financial statements that are relevant, reliable and understandable. While publicly traded companies in Canada must use IFRS, private companies can choose ASPE or IFRS.
Current status of ESG reporting mandates in the U.S.
ESG reporting in the U.S. currently combines voluntary guidelines with emerging mandatory regulations. While a comprehensive federal mandate is still under development, state-level regulations are increasingly shaping the reporting landscape.
IFRS S1 represents a significant step in the drive to help companies report sustainability information to investors and other stakeholders. Companies need to identify, disclose and measure the widening spectrum of sustainability issues that could affect their performance.
On June 26, 2023, the International Sustainability Standards Board (ISSB) issued its first two standards, IFRS S11 and IFRS S2,2 with modifications from the exposure drafts (EDs) in response to stakeholder feedback.
IFRS S1 applies to all businesses that prepare general purpose financial reports, regardless of the accounting framework used, including those following International Financial Reporting Standards (IFRS), generally accepted accounting principles (GAAP), or other local reporting standards.
IFRS S1: prescribes how a company prepares and reports its sustainability-related financial disclosures. IFRS S2: sets out supplementary requirements that relate specifically to climate-related risks and opportunities.
At the midpoint of 2025, the ESG landscape continues to evolve amid rising political rhetoric and regulatory change. While some believe that ESG is losing momentum, the reality is that the business case for ESG remains strong.
Declaring (and rightfully so) that their main goal is to protect US investors' interests, the SEC notes that IFRS lacks consistent application, allows too much leeway with judgment, and is underdeveloped in many specific areas, for which the US GAAP has detailed and accepted guidance and established practice ( ...
IFRS Standards are required or permitted in 169 jurisdictions across the world, including major countries and territories such as Australia, Brazil, Canada, Chile, the European Union, GCC countries, Hong Kong, India, Israel, Malaysia, Pakistan, Philippines, Russia, Singapore, South Africa, South Korea, Taiwan, and ...
IFRS offers broader international adoption and flexibility, while US GAAP provides strict, detailed rules—useful in highly regulated environments.
2021 FAR Changes
The FAR section of the CPA Exam saw the elimination of the International Accounting Standards Board (IASB) framework and the IFRS versus U.S. GAAP content area.
The U.S., China, Egypt, Bolivia, Guinea-Bissau, Macao and Niger don't allow their domestic publicly traded companies to use International Financial Reporting Standards.
IFRSs are required for Government-owned enterprises, newly privatised companies (large taxpayers, or 'LTOs'), banks, and insurance companies. IFRSs required in both consolidated and separate financial statements of financial institutions.
The former conservative government announced that they would make IFRS S1 and S2 reporting mandatory with amendments to IFRS S1 and S2 for UK specific requirements. The exposure drafts of UK SRS are therefore very similar to the IFRS S1 and S2 save for certain amendments.
The objective of IFRS S1 is to require an entity to disclose information about its sustainability-related risks and opportunities that is useful to users of general purpose financial reports in making decisions relating to providing resources to the entity.
In 2025, ESG reporting is shifting from voluntary to mandatory in many regions. New regulations in the EU, US, and UK require companies to publish environmental and social performance data alongside financial results.