01 September 2016

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. 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?

  2. In 2015, ESMA analysed a sample of 189 issuers from 26 EEA countries selected for examination by European enforcers. The assessment related to three specific areas. Which of the following was not an area selected for examination by ESMA?

  3. 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?

  4. 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?

  5. ESMA looked at a sample of 103 issuers who had holdings in entities where the determination of control was highly judgemental and/or who had recognised material non-controlling interests in their 2014 consolidated financial statements. The results were interesting. In 11.55 percent of cases, the issuers consolidated entities on which they had less than a majority of voting rights held. Which of the following was not a justification used by entities for consolidating entities in which they held less than a majority of voting rights?

  6. 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?

  7. Where the disclosures required by IFRS 12, together with the disclosures required by other IFRSs, do not meet the certain objectives, there are additional disclosure requirements placed upon an entity. Which of the following was not a finding of ESMA when it examined entity financial statements?

  8. 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?

  9. The objective of IFRS 12 is to require the disclosure of information that enables users of financial statements to evaluate the nature of, and risks associated with, its interests in other entities and the effects of those interests on its financial position, financial performance and cash flows. Where the disclosures required by IFRS 12, together with the disclosures required by other IFRSs, do not meet the above objective, what is the entity required to disclose?

  10. As regards the first application of IFRS 11 Joint Arrangements and IFRS 12, in 2015, the assessment of compliance with these standards was undertaken on a sample of 54 issuers for which joint arrangements were material. Which of the following was not a finding made by ESMA?

Related topics

Read the article