IFRS enforcement

IFRS enforcement, i.e. supervision of listed companies’ compliance with the International Financial Reporting Standards (IFRSs), is risk-based supervision. Based on separately specified risk factors, the FIN-FSA selects the companies whose financial statements and other financial reports are from time to time subject to a full review. The FIN-FSA may also conduct a partial review, in which case financial statements and reports are examined partly in terms of some separately selected aspect of financial reporting. Such thematic reviews have been conducted in the case of goodwill impairment testing and corporate acquisitions, for example. IFRS enforcement also includes reactive supervision where the FIN-FSA examines, based on stock exchange announcements or complaints, the appropriateness of the individual accounting methodology selected by the company.

IFRS enforcement focuses on listed companies’ and supervised entities’ financial statements, management reports and interim reports. The scope of supervision comprises both consolidated financial statements and financial statements of separate companies.

The supervisory work also comprises reviews on various parts of the financial statements. We publish reports of our findings on our website. We also discuss with listed companies and other interested parties, including representatives of the auditing sector.

What does IFRS enforcement mean for listed companies? (in Finnish)

Video script in English (pdf)

International cooperation

The FIN-FSA actively participates in the cooperation between financial reporting supervisors in the EU. The Corporate Reporting Standing Committee (CRSC), which is a permanent committee of the European Securities and Markets Authority (ESMA), coordinates supervision and other activities of its member organisations in matters related to financial reporting of listed companies.

The CRSC has developed supervisory cooperation and harmonised supervisory methods for financial reporting in Europe. The objective of the cooperation is to promote uniform application of the IFRSs. Supervisory cooperation and coordination are crucial as the regulation is global, and supervisory methods should therefore be internationally sustainable.

The CRSC regularly arranges meetings for supervisors of financial reporting (European Enforcers Coordination Sessions, EECS), in which the FIN-FSA also takes part. The EECS maintains a common enforcement database for all key decisions on the supervision of financial reporting taken by EU member state supervisors. ESMA publishes these decisions 2-3 times a year. The purpose of publishing the decisions is to provide market participants with information on the European supervisors’ observations on financial reporting.

See also:

• Press releases and publications
• IFRS regulatory framework
• Audit committees and auditing