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Restatement of comparatives
Under the proposed standards, a company will be required to disclose comparative information that reflects updated estimates when providing sustainability-related financial disclosures. When the company reports updated comparative information, it is required to disclose the difference from the prior year as well as the reasons for the amounts that have been revised.
As explained in the draft Basis for Conclusions to the proposed new standards, there are reasons for retrospective adjustment of changes in estimates. The metrics are not part of a double-entry model that affects reported equity. The nature of some sustainability-related metrics will require significant estimation. It is considered useful to reflect changes in estimates that relate to prior periods through comparatives, rather than knowingly misstating the current period information. In addition, the restatement of estimates may be necessary in the context of sustainability-related financial information because this will help reflect more reliable data that has become available in a future period (e.g., this is often the case for Scope 3 emissions1 ).
However, revising comparatives is a different approach from what companies are used to doing in providing IFRS accounting information, where the effect of a change in an accounting estimate is recognized prospectively, according to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. Currently, companies may not be familiar with the practicalities that may arise when revising comparative information relating to estimates, particularly for sustainability-related matters, where it is quite possible that the information to be disclosed year-on-year could change (especially where comparatives for more than one year are presented). Companies will consequently have to continue tracking previously reported estimates to measure them against their actual outcomes, a task that could be burdensome.