ESMA is an independent EU authority that was established on 1 January 2011. ESMA’s mission is to enhance the protection of investors and promote stable and wellfunctioning financial markets in the European Union (EU).

ESMA and the accounting enforcers in the EU are regularly examining compliance of financial information provided by listed issuers on regulated markets with the applicable financial reporting framework (IFRS).

In 2017, European enforcers examined the financial statements of about 1,100 issuers representing an average examination rate of 19% of all IFRS issuers with securities listed on regulated markets (2016: 21%). These examinations resulted in 328 actions taken to address material departures from IFRS (2016: 311). As in 2015 and 2016, the main deficiencies were identified in the areas of financial statements presentation, impairment of non-financial assets, and accounting for financial instruments.

In 2017, ESMA and European enforcers evaluated the level of compliance with IFRS in the areas identified as common enforcement priorities for 2016 annual IFRS financial statements on a sample of 204 IFRS financial statements examined by European enforcers. This assessment related to:

• Presentation of financial statements (IAS 1);
• Distinction between equity instruments and financialliabilities (IAS 32); and
• Transitional disclosures of the expected impact of IFRS 9Financial Instruments in the financial statements of nonfinancialinstitutions.

Furthermore, ESMA, together with European enforcers, identified a set of common enforcement priorities highlighting topics significant for European issuers when preparing their 2017 IFRS financial statements. ESMA included:

• Disclosure of the expected impact of implementation of major new standards in the period of their initial application (IFRS 9, IFRS 15 and IFRS 16);
• Specific recognition, measurement and disclosure issues of IFRS 3; and
• Specific issues relating to IAS 7 such as reconciliation of liabilities arising from financing activities.

ESMA and European enforcers furthermore note that other issues such as the presentation of financial performance, the disclosures on the impact of Brexit and the disclosure of non-financial information and APMs will also be assessed. ESMA also published a fact-finding exercise on disclosure of the impact of the new accounting standards (IFRS 9 and IFRS 15) in the 2016 annual and 2017 interim IFRS financial statements with the objective of assessing the level of transparency and effectiveness of disclosure on the impact of the implementation of the new standards.

ESMA Report on Enforcement and Regulatory Activities of Accounting Enforcers in 2017 is available on the ESMA website.