The IFRS police: how the European regulators work

In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please re-read the article before attempting the questions again.

  1. According to IAS 12 the existence of taxable temporary differences is merely an indicator, not actual evidence, that future taxable profits are probable. IAS 12 requires that there are future taxable profits. IAS 12 Income Taxes states that the existence of unused tax losses is a strong evidence that future tax profit may not be available. Because of the above, what does IAS 12 require as regards the disclosure of the deferred tax asset?

  2. ESMA and European enforcers identified enforcement priorities in advance of the preparation, audit and publication of the 2015 annual IFRS financial statements. Which of the following was not a priority identified by ESMA?

  3. The assessment on the application of the IAS 12 Income Taxes requirements relating to deferred tax assets and uncertain tax positions was based upon a sample of 73 issuers with material deferred tax assets or uncertain tax positions. Which of the following was not a finding by ESMA regarding the IAS 12 requirements?

  4. In 2015, European enforcers examined the interim or annual financial statements of approximately 1,200 issuers, which represented around 20 percent of all IFRS issuers. As a result, European enforcers took actions addressing material departures against 273 issuers. Which of the following deficiencies was not one identified by the European enforcers in their examination of the financial statements?

  5. In its 2014 European Common Enforcement Priorities, ESMA included specifically priorities relating to IFRS 10 Consolidated Financial Statements and IFRS 12 Disclosure of Interests in Other Entities, The areas selected were those areas where the application of these standards was expected to cause issues for entities. Which of the following areas was chosen by ESMA as one that was expected to cause issues for entities?