SRG 1: testing a client's readiness for IFRS S1 and S2
How a Nigerian firm can use the FRC's SRG 1 readiness assessment to judge whether a client is prepared for IFRS S1 and S2, and report it.
By Achekam · · 5 min read · For Accountants & audit firms in Nigeria
A listed client's finance director asks a simple question at the audit close meeting: "Are we ready for the sustainability standards?" Nobody in the room can answer it. The company has an environmental policy, a few slides on community projects and an electricity bill. Whether that adds up to anything an IFRS S1 or S2 report could stand on is a different matter.
Nigeria's Financial Reporting Council has given firms a structured way into that conversation. Its Sustainability Reporting Guideline 1 sets out an Adoption Readiness Test Assessment, and a firm that understands it can turn a vague worry into a scoped piece of advisory work with a clear output for the board.
What the FRC published in February 2026
On Monday, 23 February 2026 the FRC unveiled two documents together: an amended Roadmap for the Adoption of IFRS Sustainability Disclosure Standards in Nigeria, and Sustainability Reporting Guideline 1 (SRG 1) 2026. Both are meant to guide entities adopting IFRS S1 and IFRS S2.
The roadmap is not new. The FRC explains that the 2026 amendment updates the version first issued in 2024, which had positioned 41 Nigerian entities on the verge of full compliance with the ISSB standards, four of them early adopters. The amended text, according to the regulator, clarifies recent amendments to IFRS S2, the reporting timelines, assurance requirements and which categories of professionals are eligible to undertake sustainability reporting.
The FRC's own announcement of the amended roadmap and SRG 1 is the place to start: it summarises what changed and links to the documents themselves. Read the guideline in full before scoping any engagement, because the announcement describes the readiness assessment only in outline.
The Adoption Readiness Test Assessment
In the FRC's words, SRG 1 explains the Adoption Readiness Test Assessment, which guides entities in evaluating their preparedness for compliance with the IFRS Sustainability Disclosure Standards. Two points follow for a practitioner.
First, the assessment is the entity's own evaluation. A firm can help a client run it, challenge the answers and document the evidence, but the conclusion about readiness belongs to the client's management and board.
Second, it is a test of preparedness, not a disclosure exercise. The useful question is not "what would we write?" but "what would we need in place to write it, and to have it assured later?" That framing is what turns a readiness review into a practical work plan.
Assurance and who may do the work
Advisers sometimes skip the assurance question at the readiness stage. That is a mistake. Under the FRC's amended roadmap, assurance starts from the third reporting year, so the data a client gathers in its first two years will eventually be looked at by an assurance provider. Systems built without an audit trail will need rebuilding.
The roadmap also addresses which categories of professionals are eligible to undertake sustainability reporting. Before the firm offers to prepare, review or assure anything, check that its people fall within those categories for the role they will play. Keep advisory and any later assurance roles clearly apart in the engagement letter.
Timelines for public interest entities and SMEs
The roadmap's dates drive how urgent the readiness work is for each client:
| Reporter | When IFRS sustainability reporting becomes mandatory |
|---|---|
| Public interest entities | Periods beginning on or after 1 January 2028 |
| SMEs | From 1 January 2030 |
| Governments | From 1 January 2028, under IPSASB SRS 1 |
These are the dates as recorded from the FRC's amended roadmap at the time of writing. Confirm them against the roadmap itself before quoting them in an engagement letter or board paper, because the FRC has already amended the plan once.
For a public interest entity, a 2028 start means the readiness review is late if it begins after 2026. For an owner-managed SME client, the conversation can be lighter but should still happen, if only so the client knows which of its customers or lenders may start asking for the information sooner.
Running the readiness review as a defined engagement
A readiness review drifts when it is treated as a favour attached to the audit. It works better as its own engagement with its own scope, fee and file.
In Achekam, staff choose an engagement's type when they create it, and a firm can add its own named types alongside the built-in ones such as statutory audit or independent review. A firm offering this work can create a type such as "SRG 1 readiness assessment", so that these engagements are easy to find, staff and bill separately from the client's audit.
The work items inside the engagement then carry the discipline. Each work item lists the procedures to perform and the documents required. A step counts as done only when someone writes a response and attaches its documents, or sets it aside with a stated reason, and steps are never deleted. For a readiness review that matters: when the board later asks why the firm concluded that the client's emissions data was not ready, the answer and its evidence sit on the step.
A practical set of areas to work through with the client:
- Governance. Who on the board oversees sustainability matters, and is that written down anywhere?
- Risks and opportunities. Has management identified the sustainability-related risks that could affect its prospects, and how?
- Climate data. For IFRS S2, what climate-related information exists today, who produces it and how reliable is it?
- Systems and controls. Could the data survive an assurance provider's questions in the third year?
- People. Who will prepare the report, and are they among the professionals the roadmap treats as eligible?
- Timeline. Which date in the roadmap applies, and how many reporting cycles remain before it?
These areas are the firm's own structure for the conversation. Map them to the questions SRG 1 actually asks once you have the guideline in front of you, and drop anything the guideline does not require.
Reporting the findings to the board
The output of a readiness review should be short enough for a board meeting. A useful shape is: where the client stands against each area, what is missing, who should own each gap and by when, and what the firm recommends doing first.
Avoid two traps. Do not express readiness as a score unless SRG 1 itself prescribes one, and do not tell the board the client already meets the standards. The honest message is a list of gaps and a plan. Keep the board paper, the minutes that record its discussion and the evidence behind each finding on the engagement file, so the next review can start from them.
For the wider picture of how Nigeria's timetable compares with Kenya's, see the sustainability reporting roadmaps in both countries. How Nigerian firms deal with new standards before local endorsement is covered in using new IFRS without endorsement.
List the firm's public interest entity clients and note which roadmap date applies to each. Read SRG 1 itself, then offer each of those clients a readiness review as a separate engagement, starting with the one whose data you already know is thinnest.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
