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ESMA statement – Focus areas for regulators

ESMA statement – Focus areas for regulators

European authority highlights 2014 priorities for reviewers of IFRS financial statements.



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The priorities reflect accounting changes and prevailing economic conditions.

Priorities for national regulators

statement issued by the European Securities and Markets Authority highlights the areas of focus for European national regulators when reviewing IFRS financial statements for the year ended 31 December 2014.

ESMA’s priorities reflect a number of EU-endorsed IFRSs and amendments that have come into effect in 2014, as well as prevailing economic conditions, focusing on consolidated financial statements, joint arrangements and deferred tax assets.

The statement also stresses the general need to improve the quality of disclosures in financial statements, particularly in view of the significant new disclosures required by these newly effective standards, and the IASB’s disclosure initiative.

Additional disclosures for EU-listed banks

Meanwhile, EU-listed banks are expected to provide relevant information on material impacts of the European Central Bank’s comprehensive assessment of the banking sector, and on any changes in the level of regulatory capital required.

ESMA also expects banks to continue to improve their disclosures, in response to the findings of its 2013 report on the comparability of banks’ financial statements.

Previous years’ priorities remain relevant

Listed companies and their auditors should continue to pay attention to the enforcement priorities published by ESMA in previous years, which remain relevant.

The 2013 and 2012 priorities covered areas such as the impairment of financial and non-financial assets, fair value measurement, and disclosures on risks arising from financial instruments.

Although the topics included in the statement are those deemed to be most relevant at a European level, regulatory bodies outside of Europe are also likely to take notice, and to pay particular attention to the same areas of focus.

Areas of focus

Areas of focus Specific points to consider
Consolidated financial statements
  • Application of the control principle
  • Disclosure of non-controlling interests and materiality assessment
  • The nature of risks associated with a company’s interests in structured entities
Joint arrangements
  • Classification of joint arrangements
  • Disclosures related to joint arrangements, including summarised financial information
  • Significant changes resulting from the first-time adoption of IFRS 10 Consolidated Financial Statements and IFRS 11 Joint Arrangements
  • Aggregation of disclosures 
Deferred tax assets
  • Recognition of deferred tax assets arising from carried forward unused tax losses
  • Assessment as to whether future taxable profits exist 
  • Disclosure of judgements and significant assumptions made when recognising deferred tax assets 
  • Disclosure of accounting policies related to uncertain tax positions

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