Today the European Securities and Markets Authority (‘ESMA’) published its annual statement titled European common enforcement priorities for 2018 annual financial reports which sets out those topics which company directors, Audit Committees and auditors should particularly consider when preparing, reviewing and auditing International Financial Reporting Standards (‘IFRS’) financial statements for the year ending 31 December 2018.
The three 2018 prioritised topics are:
specific issues related to the application of IFRS 15 Revenue from Contracts with Customers;
specific issues related to the application of IFRS 9 Financial Instruments; and
disclosure of the expected impact of implementation of IFRS 16 Leases.
ESMA selected these topics based on the anticipated significant changes that the new requirements have introduced.
ESMA emphasises the importance of:
disclosure in financial reports being tailored to the specific circumstances of the entity; and
providing explanations and descriptions of matters that are relevant to a user’s understanding of the company’s financial performance and financial position.
European national accounting enforcers, including IAASA, will use the ESMA topics in their examinations of companies’ 2018 financial statements with the aim of promoting consistent application of IFRS by European companies in their financial statements.
Each of these topics is elaborated on in ESMA’s public statement which is available here.
In addition to these common priorities, many European national accounting enforcers also set additional enforcement priorities for their country focusing on other relevant topics. The IAASA document, Observations on selected financial reporting issues – Issuers' financial years ending on or after 31 December 2018, which was published on 11 September 2018, is available here.
Finally, in addition to the three 2018 prioritised topics identified, the ESMA paper highlights a number of other financial reporting considerations, namely: