Chapter 03 · Reporting & strategyReporting, Disclosure & Frameworks
Anticipated financial effects
Definition
Anticipated financial effects are the reasonably expected effects of sustainability-related risks and opportunities on an undertaking's financial position, financial performance or cash flows over relevant time horizons.
References
This reference provides supporting context for how “Anticipated financial effects” is defined and used.
Overview
How it is used
In professional practice, “Anticipated financial effects” helps standard setters, scheme owners, certification bodies, auditors and organisations seeking assurance describe or assess expected changes to financial position, performance or cash flows arising from sustainability-related risks and opportunities.
It is commonly encountered in standards, certification, conformity assessment, audits, controls and assurance engagements. A credible application identifies the named standard or scheme, version, scope, criteria, assurance level and competent decision-maker.
Why it matters
The practical importance of “Anticipated financial effects” lies in the decisions attached to it. It influences the criteria, evidence and level of confidence attached to an assessment or claim; the term should therefore be supported by evidence proportionate to the claim or decision being made.