The European Securities and Markets Authority (ESMA) has published a report that provides an overview of the application of the fair value measurement and disclosure requirements provided for by IFRS 13 Fair Value Measurement as applied by European issuers with the objective of assessing their level of compliance and comparability.
The overview builds on a desktop review of the 2015 annual reports of a sample of 78 issuers and on the evidence from enforcement actions taken by European enforcers on financial statements relating to financial years between 2013 and 2015.
Among other things ESMA highlights to issuers that merely ‘ticking the box’ and providing the minimum specified disclosure requirements in IFRS 13 may not automatically comply in full with the IFRS 13 disclosure objectives. It is ESMA’s expectation that issuers focus on providing information that is relevant for users and exercise greater care to avoid the use of boilerplate language and the presentation of unnecessarily voluminous disclosures. In addition, as fair value measurement is pervasive in IFRS financial statements, ESMA encourages issuers to pay particular attention to the location of fair value disclosures to ensure that users can clearly and easily access the fair value information.
ESMA expects issuers and their auditors to consider the findings of this review when preparing and auditing financial statements.