Author: by Alessio Faccia, Francesco Manni and Fabian Capitanio
Summary:
Corporate financial statements address multiple stakeholders needs. International Financial Reporting Standards (IFRSs), among others, allow two different classifications, œby function of expense and œby nature of expense, for the statement of profit and loss and other comprehensive income for the period (from now on, also identified in short as œIncome Statement, or œIS). XBRL standards ensure compliance and consistency in financial statements drafting and filing. XBRL taxonomies reflect the Income Statement IFRS disclosure requirement in the {310000} and {320000} codifications, respectively. Given the recent EU enhanced regulations that proposed extend mandatory ESG reporting to SMEs, this study aims to design and recommend an additional Income Statement to embed structured Environmental, Social, and Governance (ESG) disclosure. A restatement of the IS is organised following an adjusted Value-Added perspective to fit the purpose of sustainability disclosure. The above-mentioned Income Statement should be suitable and adaptable for entities of any size and operating in any industry. This goal can be achieved through customised input weighting. Therefore, this applied research can fill a current financial ESG disclosure gap, ensuring financial statements comparability and encouraging additional mandatory disclosures through standardisation. Two more items in the XBRL (IFRS-based) structure are suggested, leading to the introduction of one fully structured statement œ{330000}”Statement of comprehensive income, profit or loss, by Added Value, ESG based and a semi-structured œ{814000}”Notes”ESG Ratings and Reporting to better discuss and disclose the assumptions and results of the ESG Statement. View Full-Text
