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Fourteenth ESMA enforcement decisions report released

  • ESMA (European Securities and Markets Authority) (dark gray) Image

30 Oct 2013

The European Securities and Markets Authority (ESMA) has published further extracts from its confidential database of enforcement decisions taken by European national enforcers. This batch deals with decisions in relation to IAS 39, IFRS 7, IAS 7, IAS 1, IAS 27, IFRS 3/IAS 38, IAS 32, IAS 12, IFRS 8, and IAS 8.

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 decisions, 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, fourteenth in the series and covering the period from July 2012 to March 2013, include:


IAS 39 Financial Instruments: Recognition and Measurement Derecognition of financial assets and liabilities – transaction set up with the intention of being a ‘pass-through’ arrangement
Classification of financial assets as loans and receivables – investment of the proceeds of bonds issued to third party investors in the parent company of the issuer through a ‘silent contribution’ arrangement
Hedge accounting for an embedded floor in a loan portfolio – separation of the embedded floors and their measurement at fair value subsequent to initial assessment of embedded derivatives outside the case of a business combination
IFRS 7 Financial Instruments: Disclosures Nature and extent of risks arising from financial instruments – relevant quantitative and qualitative disclosures related to risks arising from holding financial instruments with regards to credit risk, ‘other price risk’ and concentration risk
IAS 7 Statement of Cash Flows Cash flow classification of amounts paid to vary the notional amount of a commodity contract – whether a one off payment to a bank to reduce the notional amount of a forward contract is a financing or operating outflow
IAS 1 Presentation of Financial Statements Presentation of cost of inventories in cost of goods sold – treatment of the fair value step-up of inventories acquired in a business combination on subsequent sale of those inventories
IAS 27 Consolidated and Separate Financial Statements Scope of consolidation – whether particular national law should be considered in determining whether or not consolidated financial statements should be prepared
IFRS 3 Business Combinations / IAS 38 Intangible Assets Identification of intangible assets in a business combination – whether an amount of a 'deposit surplus' arising on the acquisition of a distressed bank should be subsumed into goodwill or considered to be a separately identifiable intangible asset with a finite useful life
IAS 32 Financial Instruments: Presentation Contingent payments to acquire a non-controlling interest – whether contingent payments based on future EBITDA of an acquired business are to be considered contingent liabilities or recognised as financial liabilities
IAS 12 Income Taxes Deferred tax asset arising from tax losses carried forward – nature of convincing evidence showing that there would be taxable profits available in the future in order to recognise a deferred tax asset where sufficient taxable temporary differences are not available
IFRS 8 Operating Segments Segment disclosures – exclusion of goodwill from the geographical analysis of non-current assets
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors Disclosure of new standards that have been issued but are not yet effective – disclosures about new standards, interpretations and amendments to existing standards should not be limited to those pronouncements already endorsed for use in the European Union (EU)

Click for access to the full report.

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