The CSSF draws the attention of issuers subject to the Transparency Law preparing their IFRS financial statements to a number of issues that will be the subject of specific monitoring during its 2017 enforcement campaign, based on ESMA’s Common Enforcement Priorities for the 2016 financial statements.

  • Presentation of financial performance: the CSSF will (i) take into account the changes introduced by Amendments to IAS 1 “Presentation of Financial Statements”; (ii) ensure the application of CSSF Circular 16/636 implementing the “ESMA Guidelines on Alternative Performance Measures”; and (iii) examine other significant areas where financial performance is presented.

  • Financial instruments: distinction between equity instruments and financial liabilities: the CSSF will mainly focus its review on areas where issues had been encountered in the past, including, in particular, the review of the characteristics of compound financial instruments with equity and liabilities components and of clauses for rights attached to preference shares.

  • Business combinations: the CSSF will (i) have a special focus on the recognition of assets acquired (and liabilities assumed), implying the identification of intangible assets previously not recognised and their measurement at fair value in accordance with IFRS 13 “Fair value measurement” as well as the measurement method chosen to recognize non-controlling interests acquired and (ii) emphasize on the most meaningful disclosures omitted in the past (e.g. omission of the qualitative description of the factors that make up a goodwill or a bargain purchase recognized, the miscellaneous disclosures on the amounts of revenue and profit or loss of the acquire).

  • Continued uncertainty in financial markets conditions: the CSSF (i) will make sure that an appropriate level of disclosure allows users of financial information to understand the challenges an entity faces when navigating uncertain times and (ii) encourages issuers potentially affected by the Brexit to assess and disclose risks and expected impacts that the referendum may have on their activities.

  • Disclosures of the impact of the new standards on IFRS financial statements: the CSSF will monitor how issuers start preparing for the new IFRS standards which will come into force at the beginning of 2018/2019 and how they provide already additional disclosures on expected impacts in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”.

The CSSF press release on this subject can be found here.