Climate-proofing accounting standards: Developing a guidebook of options for accountants to improve the accounting for long-lived and climate-exposed assets
Date
2023
Authors
Tingey Holyoak, J.
Cooper, B.
Crase, L.
Pisaniello, J.
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Report
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Abstract
This project is part of the 2022 CPA Australia Global Research Perspectives Program, addressing the theme The role of the accountancy profession in addressing the impacts of climate change and associated policy impacts for long-term sustainability. The research directly addresses the role of the accountancy profession in tackling climate change by identifying and investigating a range of approaches for linking climate risks to accounting for long-lived assets. Through identification of such techniques, engagement with practitioners, isolating links to current approaches, and exploring asset accounting decision making, preliminary guidance has been developed that can assist accountants. In the interests of parsimony, we focus on the food sector as it moves toward climate accounting for long-lived assets. Nonetheless, some of the findings are likely applicable to other sectors.The accounting community is concerned about how to practically follow guidance on accounting for long-lived assets in a changing climate. Standards and guidance are emerging and becoming closer to being mandatory, however, they have not provided the level of clarity required by the profession on the uncertainty of future climate and how this impairs some assets. Little on-the-ground climate accounting for long-lived assets is being undertaken. Accordingly, the objective of this research was to explore different approaches and provide guidance on how accountants can better account for climate change and decision making. To do so, the research sought to answer the core question: How can a preliminary guidebook be developed for accountants to improve accounting for long-lived climate-exposed assets when the future climate is so uncertain?