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October 20, 2011

European IFRS enforcement levels up

The level of IFRS enforcement in Europe increased by 7% to 799 actions in 2010, according to a report by the European Securities and Markets Authority (ESMA).

ESMA reviewed about 1,700 financial reports in 2010 of which 1,000 were subject to a full review, a drop of 200 compared to 2009 while 700 were subject to a partial review.

These reviews resulted in around 799 enforcement actions by national enforcers, 730 in 2009, of which one in five were subject to European coordination.

“With increased responsibilities assigned, ESMA, together with national competent authorities will continue to further improve its activities ensuring consistent application of IFRS in Europe and ensure that accurate, clear and consistent information is provided to investors,” ESMA chairman Steven Maijoor said.

The main issues arising from the accountants subject to partial review and full review were in relation to: impairment of assets, financial instruments disclosure, operating segments, going concern and classification of liabilities.

Other accounting areas identified by enforcers were:

  • disclosure on impairment of non-financial assets;
  • measurement and presentation of non-current assets held for sale; and
  • discontinued operations or aspects related to share-based payments.

The enforcement actions taken by enforcers included actions requiring the issuance of revised financial statements, corrective notes and other public announcements. About 240 of the actions taken by enforcers required public corrective notes, issuance or revised financial statements.

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