What are the ESMA’s priorities for the 2025 financial statements?‎

ESMA is an independent EU authority that was established in 2011. ESMA’s mission is to enhance the protection of investors and promote stable and well-functioning financial markets in the European Economic Area (EEA).

The European national enforcers of financial information monitor and review financial statements published by issuers with securities traded on European Economic Area-regulated markets who prepare their financial statements in accordance with IFRS Accounting Standards and consider whether they comply with IFRS Accounting Standards and other applicable reporting requirements, including relevant national laws.

The European common enforcement priorities for 2025 corporate reporting are divided into three sections:

• Priorities related to IFRS financial statements
• Priorities related to sustainability statements
• Priority related to European Single Electronic Format (ESEF) reporting

Priorities related to IFRS financial statements

The common enforcement priorities related to the 2025 IFRS financial statements are as follows:

Priority 1: Geopolitical risks and uncertainties: Geopolitical risks and uncertainties are expected to be highly relevant for the 2025 financial statements due to their widespread and multifaceted impact on business performance, financial position and disclosures. The continued war in Ukraine, escalating tensions in the Middle East and increased trade frictions have led to persistent volatility in energy and commodity prices, supply chain disruptions and shifting global trade patterns. These developments could have direct financial reporting implications, including, but not limited to:

• potential asset impairments and write-downs,
• changes in revenue recognition patterns
• changes in recoverability of deferred tax assets,
• reassessment of provisioning needs,
• liquidity risks,
• valuation and risk profile of some financial instruments,
• compliance with debt covenants, and
• going concern assumptions.

Priority 2: Segment reporting

• General principles of identification and aggregation: ESMA calls on companies to ensure consistency between the segment information included in the management report, in the reporting to the Chief Operating Decision Maker (CODM) and in the financial statements. In addition, companies should provide entity-specific disclosures of all material factors used to identify their segments. Geopolitical and climate factors may impact segment definitions and revenue reporting, so companies should regularly reassess their segments accordingly.
• Disclosure of revenues and expenses for reportable segments: ESMA, among other things, emphasises that material items of income and expense that need to be disclosed in accordance with paragraph 23(f) of IFRS 8 are not limited to only unusual or non-recurring items.
• Information about geographical areas and major customers: ESMA emphasises the relevance of entity-wide disclosures on geographical areas and major customers required by paragraphs 33 and 34 of IFRS 8 in the current environment of trade barriers and geopolitical uncertainty.

Priorities related to sustainability statements

There are two common enforcement priorities related to the 2025 sustainability statements:

• Materiality considerations in reporting under European Sustainability Reporting Standards (ESRS)
• Scope and structure of the sustainability statement

Priority related to European Single Electronic Format (ESEF) reporting

For the examination of the 2025 annual financial reports that are subject to ESEF reporting requirements containing consolidated financial statements, ESMA and enforcers will target the five areas of common ESEF filing errors found in the statement of cash flows.

General considerations and reminders

Section 4 of the ESMA Statement offers general remarks on further topics, emphasising the importance of connectivity between financial and sustainability statements. Although these topics are not enforcement priorities for 2025, issuers are encouraged to consider them as additional areas of focus.

A public statement on the enforcement priorities for 2025 is available here.

Sources: www.iasplus.com, https://www.esma.europa.eu/