AN EXAMINATION of 189 listed securities issuers across 26 countries found more than 20% had some sort of shortcoming in complying with IFRS standards, according to the European Securities and Markets Authority’s annual report.
In all, enforcement action was taken against 40 issuers over problems in the disclosure of assumptions and judgements related to the: recognition, measurement and disclosures of deferred tax assets arising from tax losses; assessment of control over an entity in the absence of majority equity interest or majority shareholding rights; and classification of joint arrangements.
An issuer is a legal entity that develops, registers and sells securities for the purpose of financing its operations. Issuers may be domestic or foreign governments, corporations or investment trusts.
National enforcers also reviewed the interim or annual financial statements of around 1,200 issuers, representing approximately 20% of issuers of securities listed on EU regulated markets, which led to action against 273 (25%) of issuers examined.
Enforcers found the main deficiencies were related to the presentation of financial statements, impairment of non-financial assets and accounting for financial instruments.
ESMA chairman Steven Maijoor said: “2015 was the first year that ESMA’s guidelines on enforcement of financial information applied in the EU and marked an important milestone in strengthening the supervisory convergence of European accounting enforcement.
“We welcome the efforts issuers and enforcers have made to comply with ESMA’s statements and guidelines. However, we remain committed to further improving the transparency and relevance of financial information published to the market with the overall goal of contributing to market confidence and fostering investor protection.”
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