A 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 2015.
These focus areas include the way current financial market conditions affect the financial statements, as well as some recurring issues identified when IFRS requirements are applied – in particular, those on statements of cash flows and fair value measurement, as well as related disclosures.
ESMA has also issued a statement on improving the quality of disclosures, in which it urges companies and their auditors to improve the quality of disclosures in financial statements, paying particular attention to materiality and relevance.
ESMA has urged companies to consider the impact of new standards on their financial statements – in particular IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers, as these could have a significant impact.
Companies are reminded of the requirement to provide information enabling users to assess the impact that those new standards will have on their financial statements.
The statement also encourages companies to prepare for implementation, so that their reporting procedures and systems are ready when the new requirements become mandatory.
Listed companies and their auditors should continue to pay attention to the enforcement priorities published by ESMA in previous years, which remain relevant.
The 2014 and 2013 priorities covered areas such as consolidated financial statements, joint arrangements, 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 pay particular attention to the same topics.
|Area of focus||Specific points to consider|
|Impact of financial market conditions on the financial statements||
|Statement of cash flows and related disclosures||
|Fair value measurement and related disclosures||
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