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, covering the period from December 2016 to December 2018, include:

Click for access to the full report (link to ESMA website). The ESMA has also published an updated overview of all enforcement decisions ever published.

The statement provides issuers, auditors and audit committees with information related to two areas that European enforcers often challenge. These areas are:

• “The probability that future taxable profits will be available against which unused tax losses and unused tax credits can be utilised (paragraph 34 of IAS 12), assessed through the criteria provided by paragraph 36 of IAS 12;”
• “The ‘convincing other evidence’ that sufficient taxable profit will be available against which the unused tax losses or unused tax credits can be utilised by the issuer (paragraph 35 of IAS 12), in cases where the issuer has a history of recent losses.”

For more information, see the press release on the ESMA website.

The exposure draft addresses concerns and implementation challenges that were identified after IFRS 17 'Insurance Contracts' was published in 2017.

EFRAG is broadly supportive of the changes proposed; however, it has identified possible considerations for the IASB related to the (1) retrospective application of risk mitigation option on transition, (2) issuance of amendments to IFRS 4 which extends the optional deferral of IFRS 9 to allow adequate time for endorsement in Europe, (3) an exception for annual cohorts requirement for certain contracts, and (4) implementation challenges on the restrict use of the modified retrospective approach.

Comments on EFRAG's draft comment letter are requested by 2 September 2019. In addition, EFRAG is inviting users to express their views on the draft comment letter in a 30-minute interview; those interested in participating should contact EFRAG by 16 August 2019. For more in­for­ma­tion, see the press release and the draft comment letter on EFRAG website.

Ten of the sixteen members of EFRAG TEG will reach the end of their current term of ap­point­ment on 31 March 2020 and one of the country liaison members will reach the end of their current term on 31 October 2019. While all members are eligible for reap­point­ment, EFRAG welcomes all ap­pli­ca­tions and in par­tic­u­lar seeks can­di­dates from central and eastern Europe and other countries not yet represented on the EFRAG TEG.

EFRAG has extended its deadline for applications to 21 October to ensure that it reaches candidates from a wide range of backgrounds and geographical areas.

Click for:

• the original press release; and
• the press release announcing the extended deadline, both on EFRAG's website.

ED/2019/1 was published on 3 May 2019 with comments requested by 17 June 2019. Agenda papers for the meeting will be available in due course on the IASB website.

In addition to the completed questionnaire, ESMA has included a cover letter that notes the following points:

• Public financial disclosures should remain focused on depicting economic reality in a neutral way, while avoiding the possibility of giving rise to structuring opportunities.
• The current provisions in IFRS 9 already cater for an adequate depiction of financial instruments. Particularly, the economic characteristics of equity instruments would generally not be adequately reflected by cost-based measurement, especially when current value information is reliable and available.
• Concerns with respect to reported volatility are acknowledged, however, IFRS 9 provides an option to mitigate this volatility.
• It is not yet possible to assess any potential effects of IFRS 9 on long-term investment decisions.
• ESMA is not currently aware that the application of IFRS 9 has caused any obstacles to or provided disincentives to long-term investment decisions.
• Elaborating an alternative accounting model for equity and equity-type instruments, in advance of having identifed evidence of any concrete issues regarding long-term investment arising from the application of IFRS 9, may result in a solution that may ultimately not be effective.

ESMA concludes:

In line with the above-mentioned considerations, at this stage, ESMA does not support any of the alternative accounting solutions illustrated in EFRAG's background document.

Please clickt to access the cover letter and completed questionnaire on the ESMA website.

The report The Female FTSE Board Report 2019 (the Cranfield report”) indicates that over the past 12 months the percentage of women on FTSE 100 boards has increased from 29% to 32%. It indicates that “the 33% target set for 2020 is well in sight” for the FTSE 100 companies and with a “concerted push” the FTSE 250 could also reach the target.

The key findings in the Cranfield report are:

FTSE 100:

• The percentage of women on FTSE 100 boards has increased from 29% to 32%
• 48 companies having reached the target set for 33% women on their boards by 2020.
• 292 women hold 339 directorships on FTSE 100 boards.
• The percentage of female non-executive directors (NEDs) is at the all-time high of 38.9% however the report indicates that “the percentage of female executives remains worryingly low at 10.9%”

FTSE 250:

• For the FTSE 250, the reports indicates that “there has been progress”.
• The percentage of women on boards has increased from 23.7% to 27.3%.
• The number of companies with at least 33% women on their boards has increased from 59 to 88.
• There are only 3 all-male boards
• The percentage of female NEDs is 32.8% but the percentage of female executive directors (EDs) “remains low” at 8.4%.

The report also looks at the diversity characteristics of all the female directors of the FTSE 100 boards.

Click for: 

• Press release (link to Cranfield School of management website)
• The Female FTSE Board Report 2019 (link to Cranfield School of Management website)

The manual was originally published by ESMA in December 2017. It is intended to provide guidance on issues commonly encountered when generating Inline XBRL instance documents in compliance with the ESEF Regulation. Following feedback from market participants, ESMA decided to publish a revised version of the manual to expand existing guidance and update the guidance included in the original publication.

Please click to access the updated manual on the ESMA website.

The EFRAG analysis offered an assessment of the potential effects of the proposals in the discussion paper. It could inform and be one of the inputs to a more comprehensive impact analysis if the IASB were to further proceed with the project on financial instruments with characteristics of equity (FICE) in its current form. The early-stage analysis was also a pilot study into the assessment of potential wider effects during the development of new IFRS requirements.

The feedback statement describes the main comments received by EFRAG in response to its analysis.

Please click to access the feedback statement on the EFRAG website.

Local authorities in the United Kingdom are required to keep their accounts in accordance with 'proper practices'. This includes compliance with the terms of the Code of Practice on Local Authority Accounting in the United Kingdom prepared by the CIPFA/LASAAC Local Authority Accounting Code Board (CIPFA/LASAAC).

The changes and feedback requested in the Invitation to Comment (ITC) relate to the following:

• Clarity and streamlining principles, including amendments to the definition of materiality and checklist questions relating to the provision of disclosures.
• A review of disclosures to support clarity and streamlining, including specific areas such as capital, pensions and financial instruments.
• Accounting standards, including proposals to support the application of materiality in implementing Amendments to IAS 19: Plan Amendment, Curtailment or Settlement.
• Legislative changes, affecting the different government areas in the UK.
• Other areas, including service concession arrangements (PPP/PFI) relating to third party revenues and measurement of the liability; Housing Revenue Account debtor impairments, financial instruments presentation in the comprehensive income and expenditure statement; minor updates and insurance contracts for future years.

CIPFA/LASAAC consulted on the implementation plans for IFRS 16 Leases in 2018. The ITC does not specifically re-expose the proposals to consultation but does include the text approved by CIPFA/LASAAC for IFRS 16 Leases implementation as an Appendix.

Comments are requested by 27 September 2019.

Click for (all links to the CIPFA website):

• Press release
• The 2020/21 Code of Practice on Local Authority Accounting in the United Kingdom - Invitation to Comment