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The EU Emissions Trading System under IFRS -- Towards a ‘True and Fair View’

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  • Madlen Haupt
  • Roland Ismer

Abstract

This research paper seeks to contribute to the latest discussions on the financial reporting for emissions trading schemes. It analyses the International Financial Reporting Standards' (IFRS) accounting policies for emissions allowances, liabilities and carbon hedging instruments which are currently applied by the majority of participants in the European Union Emissions Trading System (EU ETS). The paper introduces assessment criteria for the evaluation of different accounting approaches and argues that the current rules under IFRS are not fully appropriate. A future accounting standard on emission trading schemes should largely follow the recent tentative decisions reached by the International Accounting Standards Board and Financial Accounting Standards Board. However, a different solution is advocated for the subsequent measurement of emission allowances held for compliance and the credit-side entry for freely allocated allowances. Only such an adjusted approach would capture the particular nature and purpose of cap and trade emissions trading schemes like the EU ETS and hence result in financial information which is useful to management and investors alike.

Suggested Citation

  • Madlen Haupt & Roland Ismer, 2013. "The EU Emissions Trading System under IFRS -- Towards a ‘True and Fair View’," Accounting in Europe, Taylor & Francis Journals, vol. 10(1), pages 71-97, June.
    • Handle: RePEc:taf:acceur:v:10:y:2013:i:1:p:71-97
    DOI: 10.1080/17449480.2013.772726
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    Cited by:

    1. Rong He & Le Luo & Abul Shamsuddin & Qingliang Tang, 2022. "Corporate carbon accounting: a literature review of carbon accounting research from the Kyoto Protocol to the Paris Agreement," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(1), pages 261-298, March.
    2. Córdova, Carmen Raquel & Zorio-Grima, Ana & García-Benau, María, 2018. "Novas formas de relatório corporativo: Informação sobre a pegada de carbono na Espanha," RAE - Revista de Administração de Empresas, FGV-EAESP Escola de Administração de Empresas de São Paulo (Brazil), vol. 58(6), November.
    3. Weetman, Pauline, 2018. "Financial reporting in Europe: Prospects for research," European Management Journal, Elsevier, vol. 36(2), pages 153-160.
    4. Carien Van Mourik & Peter Walton, 2018. "The European IFRS Endorsement Process – in Search of a Single Voice," Accounting in Europe, Taylor & Francis Journals, vol. 15(1), pages 1-32, January.
    5. Tae Hee Kim & Sun Hye Lee & Petros Vourvachis, 2023. "Accounting Standard-Setting for an Emission Trading Scheme: The Korean Case," Journal of Business Ethics, Springer, vol. 182(4), pages 1003-1024, February.

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