ESMA has published details of the priorities to be considered by listed companies, and their auditors, when preparing and auditing their 2017 financial statements. The regulator stresses the need for high-quality implementation of IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers and for enhancing the communication of their expected impact.

Other priorities include specific issues relating to IFRS 3 Business Combinations and IAS 7 Statement of Cash Flows. In addition, this year’s priorities emphasise the importance of measurement and disclosure of non-performing loans by credit institutions, the ongoing relevance of the fair presentation of financial performance and the disclosure on the impact of Brexit.

ESMA also highlights that the 2017 year-end will be the first time that the requirements of the amended Accounting Directive to disclose non-financial and diversity information will become applicable for certain large groups and undertakings.

Steven Maijoor, ESMA chair, said: ‘This year’s enforcement priorities focus on new standards which are about to come into force and will introduce significant change to financial statements. ESMA expects that issuers affected by these changes will provide entity-specific quantitative and qualitative disclosures about the application of the new standards and in particular financial institutions for IFRS 9 and corporates for IFRS 15.

‘Investors increasingly value information on social and environmental impacts of issuers’ activities. Consequently, ESMA highlights that both financial and non-financial reporting requirements are essential to support sustainable and long-term investment decision-making in Europe.’

ESMA will collect data on how European listed entities have applied the priorities and provide details of its findings in its report on the 2017 enforcement activities.

Report by Pat Sweet