The European Securities and Markets Authority (“ESMA”) recently published a set of priority issues (the “Priority Issues”) to be used by EU national competent authorities when assessing the 2012 financial statements of listed companies.

These Priority Issues aim to promote the consistent application of European securities and markets legislation and IFRS.  The materials published in relation to the Priority Issues should be borne in mind by listed companies and their auditors when preparing and auditing the IFRS financial statements for the 2012 financial year.

The Priority Issues refer in particular to the application of IFRS in relation to:

  1. Financial assets;
  2. Impairment of non-financial assets;
  3. Defined benefit obligations; and
  4. Provisions, contingent liabilities and contingent assets.

The application of the Priority Issues will be monitored by ESMA and the relevant national competent authorities.  Data on how European listed entities have applied the IFRS requirements will be collected by ESMA and the results will be published.

It is expected that national competent authorities will publish guidelines appropriate to their jurisdictions alerting listed companies to additional matters regarding the application of IFRS and as such, the enforcement process will not be limited to those specific matters outlined above.

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