Previous News Items in 2011
ESMA publishes a Consultation paper on ‘Considerations of materiality in financial reporting’Thursday, 10th November, 2011: The European Securities and Markets Authority (ESMA) has published a consultation paper, the purpose of which is to seek comments from interested parties on their understanding of various aspects of materiality in an effort to contribute to a consistent application of this important concept in financial reporting. The Authority’s Head of Financial Reporting Supervision, Michael Kavanagh, is Chair of the ESMA sub-group on materiality which produced the consultation paper. A recurring theme of discussions at the European Enforcers Coordination Sessions (a forum in which all European National Enforcers of financial information meet to exchange views and discuss experiences of enforcement of IFRS) is the apparent differing views regarding the practical application of the concept of materiality amongst preparers, auditors, possibly users of the financial reports and, in some instances, accounting enforcers. The objective of financial statements is to provide information to a range of users for the purpose of economic decision making. To be useful, such statements must present fairly the financial position, performance and cash flows of the reporting entity. Where information which is required by the relevant financial reporting framework is omitted or misstated and such information could influence the economic decision-making of a user, financial statements cannot be said to achieve a fair presentation. The concept of ‘materiality’ is used to describe such information. The consultation paper by ESMA can be accessed here. ESMA publishes its second annual activity report on monitoring enforcement of IFRS in Europe.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; • IAASA staff presented on the IAASA’s ‘Observations on Selected Financial Reporting Issues’ to the plenary and on its publication ‘Observations on Materiality in Financial Reporting’; and • conducted research and analysis, from an Irish perspective, on the compliance of European financial institutions with financial reporting disclosure requirements relating to financial instruments for collation at EU level by ESMA; 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. The Report can be accessed here. In addition, ESMA’s associated press release can be accessed here. Opportunity for accounting professionalFriday, 30th September, 2011: The Authority wishes to recruit an experienced accounting professional for its Regulatory & Monitoring Supervision Unit. The advertisement for the post as it appeared in national media can be viewed here. Further details of the post on offer can be downloaded here. This closing date for applications under this competition has now passed. Late applications will not be considered. ESMA publishes eleventh extract from its database of enforcement decisions taken by EU national supervisors of financial information (IFRS)Tuesday, 16th August, 2011: The European Securities and Markets Authority (ESMA) has published an eleventh extract from its database of enforcement decisions taken by EU national supervisors of financial information that participate in the European Enforcer Coordination Sessions (EECS). EU national supervisors monitor and review the financial statements of issuers and consider whether they comply with International Financial Reporting Standards (IFRS) and other applicable reporting requirements, including relevant national law. This extract can be accessed here. The EECS is a forum in which all EU/EEA national supervisors of financial information, whether ESMA members or not, meet to share the reasons underpinning their accounting enforcement decisions, canvas members’ views on issues currently being dealt with and to identify issues which do not appear to be covered by financial reporting standards or which may be affected by conflicting interpretations for referral to standard setting or interpretive bodies such as the International Accounting Standards Board (IASB) or the International Financial Reporting Interpretations Committee (IFRIC). ESMA through its predecessor organisation CESR has developed a confidential database of enforcement decisions taken by individual EU national supervisors as a source of information to foster appropriate application of IFRS. All decisions submitted to the database are considered as appropriate for publication, unless: • similar decisions have already been published by ESMA, and publication of a new decision would not add any substantial value to the fostering of consistent application; • the decision deals with a simple accounting issue that, even having been considered a material infringement, does not in itself have any accounting merit; • there is no consensus within the EECS to support the submitted decision; • a particular EU National enforcer, on a grounded and justified basis, believes that the decision should not be published. In response to concerns about confidentiality and privacy laws, which vary between EU jurisdictions, extracts do not, usually, include the name of the issuer or the enforcer or any other details that would enable the issuer or its jurisdiction to be identified. IAASA is a member of the EECS and the Authority’s Head of Financial Reporting Supervision is also a member of the EECS’ Agenda Group. The most recent material published by ESMA can be accessed here. ESMA Statement on disclosures related to sovereign debt to be included in IFRS financial StatementsFriday, 29th July, 2011: As a result of recently increased market interest in sovereign debt, the European Securities and Markets Authority (‘ESMA’) has issued a statement concerning disclosures related to sovereign debt to be included in IFRS financial statements. ESMA would like to stress the need for enhanced transparency in European listed issuers’ interim and annual financial statements using International Financial Reporting Standards (IFRSs). ESMA underlines that an appropriate application of relevant IFRS is essential in order to ensure adequate disclosures by listed companies of their exposures to sovereign debt and related instruments. The public statement in full can be accessed here Authority publishes fifth Annual ReportTuesday, 12th July, 2011: The Authority has today published its 2010 Annual Report. The Report can be accessed here. The associated Press Statement can be accessed here. Accounting Standards Board publishes tentative decisions regarding the future of Irish GAAPFriday, 17th June, 2011: The Accounting Standards Board (‘ASB’) has today published the outcome of its meeting of 16 June, 2011, at which the following tentative decisions were made: 1. To remove from Financial Reporting Exposure Drafts (FREDs) 43 & 44 the previously proposed requirement for ‘publicly accountable entities’ to prepare their financial statements in accordance with EU-adopted IFRS. As a consequence, under the ASB’s revised proposals the requirement to prepare financial statements in accordance with EU-adopted IFRS will not be extended beyond the current requirements in EU law; 2. To change the principles for amending the IFRS for SMEs to permit or require accounting options that exist in current UK & Republic of Ireland Financial Reporting Standards at the transition date that align with EU-adopted IFRS; and 3. To defer the proposed effective date to 1 January, 2014. The ASB deferred a decision on whether to introduce the proposed reduced disclosure framework set out in FRED 43. The ASB requested that its staff undertake further work on the proposals in light of its decision to change the principles for amending the IFRS for SMEs. The ASB agreed to consider at its next meeting: 1. Any further changes that would be required to FRED 44 given its expanded scope following its decision above; this might include increased disclosures for financial institutions and publically held companies; 2. The role of Statements of Recommended Practice (SORPs); 3. Initial findings in relation to the ASB’s proposals and UK company law; and 4. How its tentative decisions would affect its draft impact assessment. The tentative decisions outlined above would have significant implications for a number of categories of Irish entities including Credit Unions, certain Irish funds or issuers of debt having listed securities, which, under the ASB’s revised proposals, would be eligible to apply the Financial Reporting Standard for Medium-sized Entities (‘FRSME’) as opposed to full IFRS as was originally proposed. Pursuant to its statutory function of co-operating in the development of accounting standards, IAASA has observer status at ASB meetings. Further information can be found here. Authority publishes Information Note on financial reporting considerations relevant to the making of distributionsTuesday, 14th June, 2011: Based on certain issues that have been identified during the course of the Authority’s financial reporting review activities, the Authority has published an Information Note on financial reporting considerations relevant to the making of distributions. The purpose of the Note is to assist issuers’ directors to comply with their financial reporting related obligations in this area, which are set out in the Companies (Amendment) Act, 1983 (as amended). • Information Note: Financial reporting considerations relevant to the making of distributions ESMA publishes tenth extract from its database of enforcement decisions taken by EU national supervisors of financial information (IFRS)Tuesday, 8th March, 2011: The European Securities and Markets Authority (ESMA) has published a tenth extract from its database of enforcement decisions taken by EU national supervisors of financial information that participate in the European Enforcer Coordination Sessions (EECS). EU national supervisors monitor and review the financial statements of issuers and consider whether they comply with International Financial Reporting Standards (IFRS) and other applicable reporting requirements, including relevant national law. This extract can be accessed here. The EECS is a forum in which all EU/EEA national supervisors of financial information, whether ESMA members or not, meet to share the reasons underpinning their accounting enforcement decisions, canvas members’ views on issues currently being dealt with and to identify issues which do not appear to be covered by financial reporting standards or which may be affected by conflicting interpretations for referral to standard setting or interpretive bodies such as the International Accounting Standards Board (IASB) or the IFRS Interpretations Committee (formerly known as IFRIC). Following a decision by the European Union, the Committee of the European Securities Regulators (CESR) has been transformed into the European Securities and Markets Authority (‘ESMA’) with effect from 1 January 2011. As the successor organisation to CESR, ESMA will complete all the engagements entered into by CESR in existence at the transition date ESMA through its predecessor organisation CESR has developed a confidential database of enforcement decisions taken by individual EU national supervisors as a source of information to foster appropriate application of IFRS. All decisions submitted to the database are considered as appropriate for publication, unless: • similar decisions have already been published by ESMA, and publication of a new decision would not add any substantial value to the fostering of consistent application; • the decision deals with a simple accounting issue that, even having been considered a material infringement, does not in itself have any accounting merit; • there is no consensus within the EECS to support the submitted decision; • a particular EU National enforcer, on a grounded and justified basis, believes that the decision should not be published. In response to concerns about confidentiality and privacy laws, which vary between EU jurisdictions, extracts do not, usually, include the name of the issuer or the enforcer or any other details that would enable the issuer or its jurisdiction to be identified. IAASA is a member of the EECS and the Authority’s Head of Financial Reporting Supervision is also a member of the EECS’ Agenda Group. The most recent material published by ESMA can be accessed here. Authority finds that the Institute of Chartered Accountants in Ireland failed to comply with its approved investigation and disciplinary proceduresMonday, 7th March, 2011: Following the completion of a statutory Enquiry under section 23 of the Companies (Auditing and Accounting) Act 2003, the Authority has determined that, with respect to the matters detailed in the Decision, the Institute of Chartered Accountants in Ireland failed to comply with its approved investigation and disciplinary procedures. The Authority’s determination in this regard and associated sanctions were confirmed by the President of the High Court on 17 January, 2011. The full text of the Decision can be accessed here. An overview of the statutory Enquiry process under section 23 of the Companies (Auditing and Accounting) Act 2003 can be downloaded here. Queries regarding the Decision should be directed to Mr. Fergal Ó Briain at 045 983 600. Opportunities for accounting professionalsFriday, 11th February, 2011: The Authority wishes to recruit a number of key professional staff. The advertisement for the post as it appeared in national media can be viewed here. Further details of the post on offer can be downloaded here. This closing date for applications under this competition has now passed. Late applications will not be considered. European Commission publishes summary of responses received to the Green Paper on audit policyTuesday, 8th February, 2011. The European Commission has published a summary of responses received to the recent Green Paper on audit policy. The summary can be accessed here. Individual responses to the Green Paper can be accessed on the Commission’s website by following this link. Authority publishes observations on selected year end financial reporting issuesMonday, 24th January, 2011: The Authority has today published observations on selected year end financial reporting issues affecting entities whose securities are listed on a regulated market and whose home Member State is Ireland. The document can be accessed here. Authority publishes Guide to the Statutory Audit Directive RegulationsFriday, 7th January, 2010: The Authority has published a detailed Guide to the provisions of the European Communities (Statutory Audits) (Directive 2006/43/EC) Regulations 2010. The Guide can be accessed here. |
Irish Auditing & Accounting |
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