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These priorities are set out in the annual Public Statement on European Common Enforcement Priorities (Statement), which promotes the consistent application of the IFRS and other financial and non-financial reporting requirements.
The 2018 enforcement priorities for IFRS financial statements, reflecting the relevance and magnitude of the change introduced by new reporting standards, and taking into account issues identified by NCAs through their enforcement activities, are:
- the application of IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments, for the first-time in the 2018 IFRS financial statements: Issuers should in particular focus on identification and satisfaction of performance obligations, disaggregation of revenue and the disclosure of significant judgements related to recognition of revenue. For credit institutions, ESMA highlights the application of the new expected credit loss model (ECL) and, in particular, careful consideration and disclosure of significant inputs used in the assessment of a significant increase of credit risk and in the determination of ECL; and
- disclosure on the implementation and expected impact of IFRS 16 Leases coming into force in 2019: The publication of financial statements will happen after the entry into effect of IFRS 16 and all issuers should be in a position to disclose the expected impact. Issuers that will be significantly impacted are also encouraged to consider what information would enable analysts and other users to update their models.
In addition, the statement highlights the requirements to disclose non-financial information, with a focus on environmental matters, and specific aspects of ESMA’s Guidelines on Alternative Performance Measures.