The International Financial Reporting Standards (IFRS) continue to evolve, influencing how global businesses report their financial performance. As we move through 2025, several new updates and changes are making waves in the accounting and financial reporting landscape. These updates aim to improve transparency, consistency, and comparability across financial statements worldwide while addressing emerging issues businesses face today.

Here’s a closer look at some of the significant updates to IFRS and what businesses and stakeholders need to know.

1. IFRS 17: Insurance Contracts

IFRS 17, which came into effect on January 1, 2023, is a major topic for the insurance industry. The standard represents a significant overhaul in the accounting for insurance contracts. Under IFRS 17, insurers are required to provide more detailed and transparent information about their contracts, including a clearer representation of profitability over time.

Key changes under IFRS 17:

• Measurement of Insurance Contracts: Insurers must use a new model that reflects the financial effects of insurance contracts more accurately, especially when it comes to liabilities and profitability.
• Presentation of Financial Statements: There are new requirements for how insurers present their balance sheets and income statements, ensuring consistency in reporting across jurisdictions.
• Disclosures: A greater emphasis is placed on providing detailed disclosures, particularly regarding the assumptions made in the measurement of insurance liabilities.

Though IFRS 17 has been in effect for a couple of years, it’s still being implemented across various insurance entities worldwide. The transition to IFRS 17 requires insurers to adapt their systems and processes, and it’s expected to lead to better comparability between insurers’ financial statements.

2. IFRS 16: Leases – Amended Guidance

Originally implemented in 2019, IFRS 16 brought significant changes to lease accounting by requiring lessees to recognize almost all leases on their balance sheet. However, as businesses continue to implement the standard, the International Accounting Standards Board (IASB) has provided additional clarifications and amendments, particularly regarding the treatment of lease modifications and remeasurements.

Key amendments in 2025:

• Lease Modifications: More precise guidance on how to treat lease modifications and remeasurements, especially concerning determining the new lease liability and how this affects profit and loss.
• Simplified Practical Expedient: Some companies will be able to apply a simplified approach when adjusting their leases due to the global economic shifts post-pandemic, such as temporary rent reductions or lease extensions.

These updates help make IFRS 16 easier to apply and more reflective of current market conditions. Companies in sectors like real estate and retail, which have significant lease obligations, must stay abreast of these changes to ensure compliance and accuracy in their financial reporting.

3. Sustainability Reporting: A Focus on Integrated Reporting

As environmental, social, and governance (ESG) concerns become more prominent, the IASB has acknowledged the growing need for sustainability reporting alongside traditional financial reporting. While IFRS does not directly govern ESG disclosures, there’s increasing pressure for greater integration between financial performance and sustainability metrics.

Several initiatives are underway to address this need:

• The International Sustainability Standards Board (ISSB), part of the IFRS Foundation, is working to develop global standards for sustainability disclosures. These standards aim to offer transparency in how companies report on environmental impact, social issues, and governance practices.
• IFRS Integration with Sustainability Reporting: There is an ongoing push to align financial reporting with sustainability-related disclosures, making it easier for investors to assess both financial and non-financial factors when making decisions.

In 2025, companies may see more pressure to disclose their sustainability efforts in a standardized manner that ties back to financial reporting, especially as global investment trends shift toward sustainability-focused portfolios.

4. IFRS for SMEs (Small and Medium-sized Entities)

The IFRS for SMEs continues to evolve to accommodate the unique needs of smaller businesses. In 2025, the IASB is proposing several updates to the IFRS for SMEs standard to make it even more accessible for small businesses while maintaining comparability with full IFRS.

Key updates include:

• Simplified Accounting for Financial Instruments: Proposals suggest simplifying how SMEs account for financial instruments like derivatives and hedge accounting, as these are less likely to be a significant factor for smaller companies.
• Updates on Revenue Recognition: There are suggestions to streamline the guidance for recognizing revenue in ways that are easier for SMEs to apply while still reflecting the economic substance of transactions.

These changes aim to reduce the complexity of compliance for small businesses while preserving the integrity of their financial reporting.

5. Digital Reporting and Technology Integration

The rise of digital technologies and the growing demand for real-time data has led to increased interest in the digitalization of financial reporting. IFRS has been paying closer attention to how technological tools, such as blockchain and AI, can be used to streamline financial reporting processes and enhance the accuracy of financial statements.

In 2025, it’s expected that the integration of digital reporting solutions will become more widespread, allowing for faster and more transparent financial disclosures. This also means that companies will need to invest in software and tools that enable them to comply with IFRS standards more efficiently and cost-effectively.

Conclusion: Staying Current with IFRS

As IFRS continues to evolve, businesses, auditors, and financial professionals need to stay updated with the latest changes and requirements. Whether it’s adjusting to IFRS 17 for insurance companies, managing leases under IFRS 16, or integrating sustainability reporting with financial statements, the landscape of global financial reporting is changing to reflect the modern needs of businesses and stakeholders.

By remaining proactive in understanding and applying the latest IFRS updates, companies can ensure that their financial reporting remains transparent, compliant, and aligned with international standards.