The European Securities and Markets Authority (‘ESMA’) has published its annual priorities statement titled ‘European common enforcement priorities for 2020 annual financial reports. That Statement sets out the topics which European accounting enforcers believe those charged with governance should particularly consider when preparing, reviewing and auditing International Financial Reporting Standards (IFRS) financial statements for the year ending 31 December 2020.
ESMA and national accounting enforcers, including IAASA, will pay attention to these topics when examining companies’ financial reports in 2020
The ESMA common enforcement priorities related to IFRS financial statements for 2020 year-ends, set out in Section 1 of the Statement, relate to:
- IAS 1 Presentation of Financial Statements;
- IAS 36 Impairment of Assets;
- IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures; and
- IFRS 16 Leases.
The ESMA common enforcement priorities related to non-financial information for the 2020 year-ends are set out in Section 2 of the Statement and are:
- impact of COVID-19 on non-financial matters;
- social and employee matters;
- business model and value creation; and
- risk relating to climate change.
Section 3 of the ESMA Statement sets out brief considerations on the application of the ESMA Guidelines on Alternative Performance Measures (APM) in relation to COVID-19.
In setting these 2020 priorities, ESMA and European accounting enforcers have identified the need to provide transparency regarding COVID-19 which, due to its pervasive nature, is expected to affect many areas of 2020 annual financial reports published by companies.