ESMA announces enforcement priorities for 2014 financial statements, publishes final accounting enforcement guidelines in all official languages of the EU

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28 Oct, 2014

The European Securities and Markets Authority (ESMA) has announced the priority issues that the assessment of listed companies' 2014 financial statements will focus on. At the same time, ESMA has made available the 'Guidelines on enforcement of financial information' in all official languages of the European Union.

ESMA considers the following key topics to be especially relevant for the examinations of listed companies' financial statements:

  • preparation and presentation of consolidated financial statements and related disclosures;
  • financial reporting by entities which have joint arrangements and related disclosures; and
  • recognition and measurement of deferred tax assets.

ESMA notes that these topics are especially important, as they either introduce significant changes to accounting practices following the implementation of new standards, or because the current economic environment poses particular challenges to issuers in the application of certain IFRS requirements, notably when forecasting future taxable profits in periods of low economic growth.

In addition to these priorities, ESMA and the national enforcers expect EU listed banks to provide relevant information in relation to material impacts resulting from the European Central Bank's Comprehensive Assessment of the banking sector and on any changes in the level of regulatory capital required. ESMA also considers that findings included in the 2013 ESMA report on comparability of financial statements of financial institutions continue to be of high relevance for the 2014 annual reports.

ESMA and European national enforcers will monitor and supervise the application of the IFRS requirements outlined in the priorities, with national authorities incorporating them into their reviews and taking corrective actions where appropriate. ESMA will collect data on how European listed entities have applied the Priorities and will publish its findings in early 2016.

The common enforcement action in the EU is supported by ESMA's Guidelines on enforcement of financial information published in July 2014 in an English language version and now available in all 24 official languages of the EU. The guidelines will become effective two months after their publication today.

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