Report on IFRS enforcement in 2014: Companies should ensure that information on financial statements is clear and concrete
Listed companies have prepared consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS) since 2005, the year the Financial Supervisory Authority also initiated IFRS enforcement. The purpose of the EU’s IAS Regulation was to promote free movement of capital in the European internal markets and efficiency of capital markets. IFRSs fulfil investors’ requirements for high-quality, reliable, comparable and transparent information on financial statements.
As in the previous years, the challenging economic situation affected FIN-FSA’s IFRS enforcement. Since the onset of the financial crisis in 2008, IFRS enforcement has increasingly concentrated on companies in a weak financial position. In 2014, FIN-FSA made a review of listed companies’ financial reporting in an environment of economic and operational uncertainty. Companies in a weak financial position, in particular, should ensure that information on financial statements is clear and sufficiently concrete.
Almost every second enforcement observation gave cause for FIN-FSA to require corrections of shortcomings and errors in succeeding financial statements. In 2014, the observations focused on the following areas:
- Financial instruments: a great deal of shortcomings were detected also with respect to financial statements in which financial instruments account for a significant part of the statements
- Goodwill: further development is required as regards determination of bases for estimates of future cash flows and discount rates in impairment tests, as well as notes
- Related party disclosures: further development is required as regards processes for the collection of related party information to enable disclosure in line with IFRSs.
IFRS enforcement in 2014 is discussed in more detail in the IFRS enforcement report and in the presentation given in the event for listed companies.
For further information, please contact
- Tiina Visakorpi, Head of Division, tel. +358 10 831 5383
The report on IFRS enforcement was published in English on 30 April 2015.