10 April 2017

ESMA reports on EU accounting enforcement in 2016

The ESMA has published its annual report on the enforcement and regulatory activities of accounting enforcers within the EU in 2016. In addition, the report also outlines ESMA’s activities for 2017 in the area of corporate reporting following its Supervisory Convergence Work Programme.

As in previous years, ESMA together with European enforcers identified, and will include in their supervisory practices, a set of common enforcement priorities significant for European issuers when preparing their 2016 IFRS financial statements. The 2016 priorities focus on:

(1) the presentation of financial performance,

(2) the distinction between equity instruments and financial liabilities, and

(3) disclosures of the impact of the new standards issued by the IASB, but not yet mandatorily applicable (IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers and IFRS 16 Leases).

In the public statement, ESMA and European enforcers also urge issuers to provide disclosures on their exposure to risks arising from the UK’s decision to leave the EU and its expected impacts and how management handles and plans to mitigate those risks.

ESMA actively participated in the accounting standards setting process by providing European enforcers’ positions on all major new standards issued by the IASB as well as by contributing to the discussions in the EFRAG Board and the EFRAG TEG meetings. Notably, ESMA provided specific input to the due process and endorsement advices on IFRS 16 and IFRS 9, on aspects related to investor protection and financial stability as well as on the interaction of IFRS 9 with IFRS 4 Insurance Contracts. In addition, ESMA also contributed to the consistent application of IFRS by engaging with the IASB and the IFRS IC when enforcers identified relevant issues where a lack of clarity in IFRS could contribute to their divergent application.

ESMA envisages to start updating internal guidance on methods to select issuers for examination. Moreover, ESMA will continue to work on a thematic study on IFRS 13 and initiate another thematic study on IFRS 10, 11 or 7 12 in order to contribute to the IASB’s Post-Implementation Reviews on the respective standards. Finally, ESMA and European enforcers will continue to monitor the application of the APMs Guidelines and prepare further guidance if needed.

Full press release

Full annual report

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