The European national enforcers monitor and review financial statements published by issuers with securities traded on a regulated market who prepare their financial statements in accordance with IFRS and consider whether they comply with IFRS and other applicable reporting requirements, including relevant national law.
Operating under ESMA, EECS is a forum that promotes a high level of harmonisation in the application of IFRS and consistency amongst enforcers in decision taken when reviewing the IFRS financial statements. A key function of EECS is the analysis and discussion of decisions taken, or to be taken, by national enforcers in respect of IFRS financial statements. According to the ESMA Regulation, new legal instruments, such as opinions can be used to achieve consistency in enforcement.
In taking enforcement decisions, European national enforcers apply their judgement, knowledge and experience to the particular circumstances of the cases that they consider. Relevant factors may include other areas of national law beyond the accounting requirements. Interested parties should therefore consider carefully the individual circumstances when reading the cases. As IFRS are principles based, there can be no one particular way of dealing with numerous situations which may seem similar but in substance are different.
Consistent application of IFRS means consistent with the principles and treatments permitted by the standards.
Decisions taken by enforcers do not provide generally applicable interpretations of IFRS, which remains the role of the IFRS Interpretations Committee (IFRS IC).
ESMA has developed a confidential database of enforcement decisions taken by individual European enforcers as a source of information to foster appropriate application of IFRS. ESMA is committed to publish extracts of the database to provide issuers and users of financial statements with similar assistance.
Publication of enforcement decisions will inform market participants about which accounting treatments European national enforcers may consider as complying with IFRS; that is, whether the treatments are considered as being within the accepted range of those permitted by IFRS. Such publication, together with the rationale behind these decisions, will contribute to a consistent application of IFRS in the EEA.
Decisions that deal with simple or obvious accounting matters are normally not published, even if they related to material breaches leading to sanctions. The selection criteria are based on the above stated objectives, and accordingly, only decisions providing market participants with useful guidance will be published.
On this basis, all cases submitted to the enforcement database are considered as appropriate for publication, unless:
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similar decisions have already been published by ESMA, and publication of a new one would not add any substantial value to the fostering of consistent application;
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the decision deals with a simple accounting issue that, even having been considered a material infringement, does not in itself have any accounting merit;
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there is no agreement between European enforcers to support the submitted decision; and
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a particular European national enforcer, on a grounded and justified basis, believes that the decision should not be published.
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