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ESMA publishes its second annual activity report on monitoring enforcement of IFRS in Europe.

21/10/2011

Friday, 21st October, 2011: The European Securities and Markets Authority (‘ESMA’), has today published its second annual activity report on monitoring enforcement of International Financial Reporting Standards (IFRS) in Europe.
 
This Report provides an overview of the monitoring and enforcement of IFRS in Europe in the year to 31 December, 2010 through the activities of the European Enforcement Co-ordination Sessions (‘EECS’) under the auspices of ESMA.    The main objective of EECS is to co-ordinate the enforcement activities of member states in order to foster and maintain investor confidence.
 
Summarising the Report, ESMA note that during 2010:
 
“About 1,700 financial reports were reviewed, of which 1,000 (compared to 1,200 in 2009) were subject to a full review and 700 (900 in 2009) to a partial review. These reviews resulted in around 700 (2009: 730) enforcement actions by national enforcers of which one out of five were subject to European co-ordination.”
 
  • IAASA is an active member of the EECS and during the period covered by the Report:
  • IAASA staff attended all 8 EECS plenary meetings and actively participated in the consideration of issues brought to the EECS by other members;
  • IAASA staff presented 12 enforcement decisions and 2 emerging cases to the plenary for discussion by members;
  • IAASA staff actively participated in 2 meetings held with the IFRS Interpretations Committee (formerly known as IFRIC) where 5 out of the 13 issues discussed related to enforcement decisions of IAASA. The subject matter of the issues discussed included:
 
i. impairment of assets and interaction with operating segments;
 
ii. discontinued operations – ‘major’ line of business or geographical area of operations;
 
iii. current/non-current classification of financial liabilities; and
 
iv. various aspects relating to IFRS 8;
 
 
In addition to IAASA’s participation in plenary related matters, the Authority’s Head of Financial Reporting Supervision is also a member of the EECS’
 
  • Agenda Group.
  • Sub-group on Materiality (as Chair), whose objective is to analyse and identify the principles of a common approach to be considered by European accounting enforcers.
  • Enforcement Methodology Group, which is charged by the plenary with the development of common review methodologies; and
  • Enforcement Actions Group, which is charged by the plenary with the examination of enforcement actions taken by EU national enforcers with the aim of providing an overview and analysis of actions taken by national enforcers across the EU.
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