ESMA comments on International Financial Reporting Standards

The European Securities and Markets Authority (ESMA) has today published a Public Statement which aims to promote the consistent application of International Financial Reporting Standard (IFRS) 15, Revenue from Contracts with Customers, by issuers listed on regulated markets.

In light of the expected impact and importance of the implementation of IFRS 15, ESMA highlights the need for consistent and high-quality implementation of IFRS 15 and the need for transparency on its impact to users of financial statements.

Issuers of securities admitted to trading on regulated markets and their auditors should take this Public Statement into consideration in their respective work during the implementation of IFRS 15, notably when disclosing and auditing its [expected] effects in IFRS financial statements. In this respect, ESMA expects that, where relevant, quality of the implementation of IFRS 15 will be closely monitored by audit committees. Furthermore, ESMA highlights that some matters discussed below might not be relevant for some issuers and that the level of detail provided should be adapted depending on the significance of the matter to the financial statements.

ESMA expects that this Public Statement will be taken into account and reflected in the 2016 and 2017 annual and 2017 interim financial statements, thereby enhancing the comparability of IFRS financial statements in the EU. ESMA together with national competent authorities will monitor the level of transparency that issuers provide in their financial statements about the implementation of IFRS 15, changes in accounting policies resulting from this implementation and information relevant to assessing its possible impact on the issuers’ financial statements in the period of initial application.

Following the endorsement of IFRS 15 by the European Union, IFRS 15 will apply from 1 January 2018 to all issuers. As IFRS 15 establishes a new, comprehensive framework for determining and recognising revenue, ESMA urges European issuers to provide relevant and transparent information about the expected impact this standard will have on their IFRS financial statements.

The ESMA statement is available here.

Lavanya Rathnam

Lavanya Rathnam is an experienced technology, finance, and compliance writer. She combines her keen understanding of regulatory frameworks and industry best practices with exemplary writing skills to communicate complex concepts of Governance, Risk, and Compliance (GRC) in clear and accessible language. Lavanya specializes in creating informative and engaging content that educates and empowers readers to make informed decisions. She also works with different companies in the Web 3.0, blockchain, fintech, and EV industries to assess their products’ compliance with evolving regulations and standards.

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