Fifteenth ESMA enforcement decisions report released

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10 Apr 2014

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 IFRS 3, IAS 36, IFRS 5, IAS 40, IAS 1/IAS 8/IFRS 11, IAS 32, IAS 39, and IAS 19/IFRIC 14.

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, fifteenth in the series and covering the period from December 2012 to November 2013, include:


IFRS 3 Business Combinations Classification of contingent consideration based on continuing employment – classification of contingent payments where the vendor is required to be employed over the earn-out period
IAS 36 Impairment of Assets Allocation of goodwill to cash-generating units (CGUs) – use of a method other than the using relative values of operations disposed of when allocating goodwill to disposed operations
Identification of a cash-generating unit (CGU) – whether each merchant and retail branch should be identified as a separate CGU
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations Sale of single licences presented as discontinued operations – whether a component of an entity can be a single CGU (producing oil and gas field, field under development, discovery licence)
IAS 40 Investment Property Determination of the fair value of land – treatment of land with unclear legal status as investment property under construction
IAS 1 Presentation of Financial Statements / IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors / IFRS 11 Joint Arrangements Change of presentation of the share in profit or loss of associates and joint ventures accounted for using the equity method – separate presentation of 'non-operating' associates and joint ventures
IAS 32 Financial Instruments: Presentation Cost of listing – allocation of amounts to the costs of issuing equity instruments
IAS 39 Financial Instruments: Recognition and Measurement Conditions for hedge accounting – assessment of effectiveness of hedging instrument
Hedging of presentation currency – cross-currency interest rate swaps involving subsidiaries
IAS 19 Employee Benefits / IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction Minimum funding requirements – whether a schedule of contributions governed by national law is a minimum funding requirement under IFRIC 14 when an issuer's pension scheme is in surplus

Click for access to the full report (link to ESMA website).

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