Dr. Hanne Böckem
Partner, Audit, DPP
KPMG AG Wirtschaftsprüfungsgesellschaft
On 24 October 2024, the European Securities and Markets Authority (ESMA) issued its European common enforcement priorities for the upcoming audit season.
The financial reporting topics identified together with the European national enforcers, such as the Federal Financial Supervisory Authority (BaFin) in Germany, should be given particular consideration by capital market-oriented companies and their auditors when preparing and auditing their IFRS financial statements for 2024.
This year's European common enforcement priorities for the IFRS financial statements 2024 are
- Liquidity considerations
ESMA draws particular attention to new mandatory disclosures in connection with supplier finance arrangements. In addition, issues relating to contracts with covenants in the context of IAS 1 are part of this year’s enforcement. In addition ESMA has identified problem areas in connection with cash flow statements as a third sub-focus area. - Accounting policies, judgements and significant estimates
ESMA emphasises general requirements for the presentation of significant accounting policies, judgements and sources of estimation uncertainty.
In addition, in connection with the assessment of control, joint control and significant influence, ESMA refers to necessary disclosures on significant judgements and assumptions underlying the assessment.
ESMA also states that disclosure requirements regarding significant judgements may also be necessary in connection with revenue from contracts with customers.
ESMA has defined the following priorities with regard to sustainability statements:
- Materiality considerations
ESMA states that conducting a thorough materiality assessment is the starting point for determining the information to be disclosed in sustainability reporting. ESMA also attaches particular importance to the relevant disclosures. - Scope and structure of the sustainability statement
ESMA addresses key requirements in relation to the scope and structure of the sustainability statement and, among other things, encourages issuers to apply the detailed structure as illustrated in Appendix F of ESRS 1. - Disclosures in the context of the EU taxonomy (Article 8)
In the context of the taxonomy, ESMA refers to its recommendations it made in 2023.
With regard to ESEF (European Single Electronic Format) reporting, the focus is on common errors that have been identified in the preparation of ESEF documents. From ESMA's perspective, these include the following:
- Use of the correct markup elements
- Use of extension taxonomy elements and anchoring
- Consistent and completeness of mark-ups
- Use of the correct sign, scaling and accuracy
- Consistent calculation
ESMA also refers to other relevant topics, in particular the link between financial and non-financial reporting.
The Public Statement is available on the ESMA website.
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