The European Securities and Markets Authority (ESMA) has issued a list of priorities that it wants national authorities in the European Economic Area (EEA) to focus on in their assessment of listed companies' 2013 financial statements, so as to promote the consistent application of IFRS across the European region.
ESMA says listed companies and their auditors should take account of the areas set out in the priorities when preparing and auditing the IFRS financial statements for the year ending 31 December 2013, to ensure that the IFRS recognition, measurement and disclosure principles are consistently applied.
The financial reporting topics which ESMA views as particularly important relate to impairment of non-financial assets; measurement and disclosure of post-employment benefit obligations; fair value measurement and disclosure; disclosures related to significant accounting policies, judgements and estimates; and measurement of financial instruments and disclosure of related risks.
Steven Maijoor, ESMA chair, said: 'Consistent application of accounting standards is a key factor in ensuring the transparency and accuracy of the financial information which investors rely upon, and ultimately contributes to the proper functioning of Europe's capital markets.'
Maijoor said listed financial institutions and their auditors should pay particular attention to properly measuring financial instruments and the accurate disclosure of related risks.
ESMA and the national competent authorities will monitor the application of the IFRS requirements outlined in the priorities, with national authorities incorporating them into their reviews and taking corrective actions where appropriate. National authorities are also free to focus on other locally relevant areas as part of their review, and are not limited to the specific issues highlighted by ESMA.
ESMA says it will be collecting data on how European listed entities have applied the priorities and will publish information on this in early 2015. Details of its findings regarding the 2012 priorities are expected to be released early next year.
In July 2013 ESMA launched a consultation on guidelines on the enforcement of financial information published by listed entities in the European Union. The proposed guidelines also called for a greater coordination of enforcement activities through the means of common enforcement priorities.
