ESMA publishes EU enforcement report with its findings for 2022

ESMA (Eu­ro­pean Se­cu­ri­ties and Mar­kets Aut­ho­rity) publis­hed on March 29, 2023, a re­port on the en­force­ment ac­tivi­ties car­ried out wi­thin Eu­rope and the re­sults of the re­view of com­pli­ance with the ac­coun­ting and re­por­ting re­qui­re­ments ap­plica­ble in 2022 of the fi­nan­cial state­ments of com­pa­nies whose se­cu­ri­ties are ad­mit­ted to tra­ding on a re­gu­la­ted mar­ket in Eu­rope or are in the pro­cess of being ad­mit­ted.

The na­tio­nal en­force­ment bo­dies ex­ami­ned a to­tal of 640 IFRS is­su­ers in 2022 (in 2021: 711 IFRS is­su­ers); this cor­re­sponds to ap­pro­xi­mately 16 % (in 2021: 17 %) of all IFRS is­su­ers. Of these, a to­tal of 425 un­li­mited scope ex­ami­na­ti­ons were per­for­med. The au­dits re­sul­ted in 225 (in 2021: 250) en­force­ment ac­tions where ma­te­rial de­par­tures from IFRS were iden­ti­fied.

As in the past, de­fi­ci­en­cies were iden­ti­fied in par­ti­cu­lar in the fol­lo­wing areas con­cerning ac­coun­ting and mea­su­re­ment:

  • fi­nan­cial in­stru­ments (24 %),
  • fi­nan­cial state­ment pre­sen­ta­tion (13 %),
  • im­pair­ment of non-fi­nan­cial as­sets (10 %),
  • re­ve­nue re­co­gni­tion (8 %) and
  • fair va­lue mea­su­re­ment, lea­ses (5 % each).

The main short­com­ings in terms of dis­clo­sure re­qui­re­ments lar­gely con­cern the same areas:

  • fi­nan­cial state­ment pre­sen­ta­tion (16 %),
  • fi­nan­cial in­stru­ments (15 %),
  • im­pair­ment los­ses on non-fi­nan­cial as­sets (11 %) and
  • re­ve­nue re­co­gni­tion and seg­ment re­por­ting (9 % each).

The re­port also con­ta­ins in­for­ma­tion on the au­dit of non-fi­nan­cial re­por­ting. A to­tal of 403 is­su­ers were au­di­ted (in 2021: 711 is­su­ers). The au­dits re­sul­ted in 100 en­force­ment ac­tions (25 %; in 2021: 10 %), re­la­ting in par­ti­cu­lar to dis­clo­sures un­der Ar­ti­cle 8 of the Ta­xo­nomy Re­gu­la­tion and key per­for­mance in­di­ca­tors.

The ESMA en­force­ment re­port also ad­dres­ses ESEF re­por­ting with re­gard to the pre­sen­ta­tion of an­nual fi­nan­cial re­ports in ac­cor­dance with the XHTML ru­les or the la­be­ling of IFRS con­so­li­da­ted fi­nan­cial state­ments in ac­cor­dance with the iX­BRL ru­les. The en­force­ment ac­tions af­fect 252 is­su­ers.

Note: The full re­port is avail­able in Eng­lish on ESMA’s web­site and can be ac­ces­sed at the fol­lo­wing link: [­­fault/files/2023-03/ESMA32-63-1385_2022_Cor­po­rate_Re­por­ting_En­force­ment_and_Re­gu­latory_Ac­tivi­ties_Re­port.pdf].

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