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This report contains data on enforcement activities performed at national level, where European enforcers examined approximately a quarter of the IFRS interim or annual financial statements of the 6400 issuers listed on EU regulated markets. Following these examinations, to address material failures enforcers took action against 306 (22%) of the issuers subject to ex-post examinations, representing approximately 5% of issuers listed on regulated markets.
The report also includes quantitative and qualitative results of the review of the 2013 interim and annual IFRS financial statements of 176 issuers in the EU and examines the level of compliance with IFRS in the areas identified as common enforcement priorities. This concerned notably forbearance practices, fair value measurement and impairment of non-financial assets.
Although the assessment showed improvements in the quality of application of IFRS, ESMA identified room for improvement where insufficient information was provided relating to forbearance practices in financial statements as well as the lack of disclosure of key assumptions when performing impairment tests for non-financial assets with an indefinite useful life.
Steven Maijoor, ESMA Chair, said:
“Today’s report presents a comprehensive picture on enforcement activities and actions taken across EU member states in relation to IFRS financial statements. Its results can help issuers to further increase their compliance with IFRS, improve the transparency of financial statements and increase investor protection and confidence.
“2015 will be the first full year of application of the ESMA Guidelines on Enforcement of Financial Information. These Guidelines will further contribute to enhancing the key strategic objective of supervisory convergence in the area of enforcement of financial information.”
In 2014, ESMA published the final Guidelines on enforcement of financial information, which entered into force on 29 December 2014. The Guidelines constitute a key step in strengthening supervisory convergence across the EU by further building a common approach to the enforcement of financial information and reinforcing coordination among European enforcers.
The report also analyses ESMA’s contribution to the endorsement of IFRS through its participation in the reformed EFRAG and ARC and by ESMA’s active participation in the standard-setting process, which has been reinforced by the signature of a joint Statement of Protocols with the IFRS Foundation.