Glossary›AASB S2 disclosure requirements / AASB S2 mechanics›Current and anticipated financial effects
Glossary term
Cluster C · C17
Tier 1 · differentiator
Current and anticipated financial effects
Definition
AASB S2 requires an entity to disclose the effects of climate-related risks and opportunities on its financial position, financial performance and cash flows for the reporting period, and the anticipated effects over the short, medium and long term. This is the requirement that connects the climate disclosures to the financial statements.
On this page
In practice
This is the requirement that turns a climate report into a finance document, and it is the one a CFO should read first.
Two reliefs make it workable in year one. An entity need not provide quantitative information about anticipated financial effects if it does not have the skills, capabilities or resources to do so, or if the effects are not separately identifiable, or if the measurement uncertainty is so high that the information would not be useful. Where quantitative information is not provided, qualitative information is.
Those reliefs are not a blanket exemption and they have to be applied and explained item by item, not asserted once for the whole disclosure.
What the assurer does with it
Current-period financial effects are the point where the assurer moves between the two reports. Where the entity says a climate risk affected an asset’s carrying value, useful life, provision or impairment assessment, the assurer expects to see that reflected consistently in the financial statements, and the financial statement auditor expects the reverse. An asserted current financial effect that appears nowhere in the accounts, or an impairment in the accounts driven by climate that appears nowhere in the climate statements, is an inconsistency both engagements must consider.
They accept a quantified effect with a model behind it and a traceable link to a financial statement line item, or an omission carrying the explicit paragraph 19 to 21 explanation the standard requires. They reject a quantified effect with no working, a blanket assertion of the relief applied once across the whole disclosure, and silence on financial effects with no paragraph 21 explanation at all.
Commonly confused with
The financial statements themselves. The financial effects disclosure identifies the line items, totals and subtotals likely to be affected and explains the connection; it does not restate the accounts. Also confused with an impairment assessment, which is one place a climate-driven effect may land rather than the whole of the requirement.
Timing and relief
The reliefs at paragraphs 19 and 20 are not transitional. They are permanent features of the requirement, available in every reporting period and applied item by item, and paragraph 21 fixes what must be disclosed in exchange. Paragraph 17 also permits a single amount or a range in any year. No Appendix C transitional relief touches paragraphs 15 to 21.
Sources
1
2
ASSA 5010 Timeline for Audits and Reviews of Information in Sustainability Reports under the Corporations Act 2001
AUASB
3
Review status
Review required
Last reviewed
15 September 2026
Editorial pass, unsigned
Reviewer required
Registered company auditor
Next scheduled review
1 July 2027
Part of
Cluster C, AASB S2 disclosure requirements / AASB S2 mechanics
25 terms on what the climate disclosure standard actually requires, pillar by pillar, plus the reliefs and the effort standard.
Related terms
The requirement that the two reports tell the same story
What the assurer reads the disclosure against
The pillar this requirement is limb 9(d) of
Related questions
What is the materiality threshold for climate disclosures?
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There is no prescribed number. Under AASB S2, information is material if omitting or misstating it could reasonably be expected to influence users’ decisions. Separately, your assurance practitioner sets a quantitative materiality for testing, and the two are related but different.
What does the board have to sign?
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The directors’ declaration in the sustainability report. For financial years commencing between 1 January 2025 and 31 December 2027, directors declare they have taken reasonable steps to ensure the report complies with the Corporations Act. From financial years commencing 1 January 2028, they declare their opinion that it does comply.
What does AASB S2 compliance cost?
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There are three separate costs and conflating them is why quotes look incomparable: preparation of the report, assurance as a separate engagement with a separate provider, and your own internal time. Preparation cost moves on the number of entities and sites, whether Scope 3 is in scope, and how retrievable your activity data already is. Assurance cost moves mostly on the quality of your working papers.
Where this sits commercially
Carbonhalo writes the financial effects disclosure with the finance team, so it agrees with the accounts.
Other terms in this cluster
Current and anticipated financial effects