Report on IFRS enforcement in 2012: the aim is to ensure the availability of sufficient information on companies' financial position in an uncertain market situation
The effects of the euro crisis and companies' weaker economic operating environment were reflected in the IFRS enforcement. In the enforcement of IFRSs in listed companies in 2012, FIN-FSA devoted increasing attention to the companies' financial situation. For this reason, enforcement focused on financial instruments, goodwill impairment testing and disclosures about going concern. In addition, a new focus area of IFRS enforcement was the related party disclosures of key management personnel1). FIN-FSA's study indicated that there was a need for improvement in the disclosures and that reporting deficiencies hampered comparisons of management compensation between companies.
Along with the enforcement work, IFRS enforcement procedures were also developed. For example, access by audit committees of company boards to information on enforcement was improved by providing them with the opening and closing enforcement letters in connection with full reviews of financial statements. The aim of the new enforcement procedures is to promote mutual interaction between FIN-FSA and the various parties involved in financial reporting, such as audit committees, auditors and supervisors of auditors, with a view to increasing efficiency of enforcement.
European supervisory cooperation has an increasing impact on IFRS enforcement. In late 2012, the European Securities and Markets Authority (ESMA) introduced a new operational approach under which enforcers will jointly decide on the following year's priorities.
ESMA requires submission, by national enforcers, of IFRS reports on the activities in the previous year. FIN-FSA's report on IFRS enforcement includes links to issues and material communicated on IFRS enforcement during 2012.
For further information, please contact
- Tiina Visakorpi, Head of Division, tel. +358 10 831 5383
- Virpi Haaramo, Senior Accounting Expert, IFRS, tel. +358 10 831 5355
Annex
The report on IFRS enforcement was published in English on 16 April 2013.
1) Related party disclosures in respect of key management personnel are employee benefits received by the management from the company and business transactions between the management and the company.