ESMA publishes more enforcement decisions

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11 Oct, 2012

The European Securities and Markets Authority (ESMA) has published another batch of extracts from its confidential database of enforcement decisions taken by European national enforcers. This batch deals with decisions in relation to IAS 38, IAS 27, IAS 40/IAS 1, IAS 18, IFRS 8, and IAS 36.

The European national enforcers of financial information monitor and review financial statements published by issuers with securities traded on a regulated European market and who prepare their financial statements in accordance with International Financial Reporting Standards (IFRS) and consider whether they comply with IFRS and other applicable reporting requirements, including relevant national law.

ESMA has developed a confidential database of enforcement decisions taken by individual European enforcers as a source of information to foster appropriate application of IFRS.

The publication of enforcement decisions is designed to inform market participants about which accounting treatments European national enforcers may consider as complying with IFRS, i.e. whether the treatments are considered as being within the accepted range of those permitted by IFRS.   ESMA considers the publication of the decision, together with the rationale behind them, will contribute to a consistent application of IFRS in the European Union.

Topics covered in the latest batch of extracts, twelfth in the series, include:


IAS 38 Intangible Assets Capitalisation of intangible assets — recognition of a 'candidate database' intangible asset related to identifying and recruiting candidates
IAS 27 Consolidated and Separate Financial Statements Control over a subsidiary — more than one entity controlling a subsidiary
IAS 40 Investment Property and IAS 1 Presentation of Financial Statements Fair value of investment property: Disclosure — description and disclosures related to the methods and significant assumptions applied in determining the fair value of investment properties,
IAS 18 Revenue Revenue recognition — transfer of land to a housing cooperative
IFRS 8 Operating Segments Identification of chief operating decision maker (CODM) and one operating segment — identifying the entire board of directors as the CODM and only one operating segment for an overall business
IAS 36 Impairment of Assets Discount rate used in determining value in use — treatment of cash flows denominated in a foreign currency, determination of market risk premium, use of beta, calculation of the cost of debt, determination of the debt/equity ratio and the determination of a discount rate for each CGU.
IAS 36 Impairment of Assets Reasonable changes in estimates — disclosure of the sensitivity to key assumptions used in the impairment test of goodwill
IAS 36 Impairment of Assets Impairment testing of goodwill — justification of the assumptions used based on reasonable and supportable assumptions, cash flow projections used by the issuer taking into account investments in working capital or in operating assets to maintain the cash-generating units (CGUs) in their current condition
IAS 36 Impairment of Assets Disclosure of cash-generating units — confidentiality not a valid reason for not disclosing the carrying amounts of goodwill and intangible assets with indefinite useful life by CGU

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