The CSSF has published Press Release 19/02 (the “Press Release”) for the attention of issuers of securities subject to the Law of January 11th 2018 on transparency requirements for issuers of securities, as amended. The CSSF wishes to highlight to those issuers and auditors preparing and auditing, respectively, financial statements for the year ending December 31st 2018 (the “2018 Financial Statements”) under the International Financial Reporting Standards (the “IFRS”), a number of points that shall be subject to specific monitoring by CSSF during 2019. The European Securities and Markets Authority (the “ESMA”), together with the European national accounting enforcers, including the CSSF, have identified European common enforcement priorities for the 2018 Financial Statements. Having assessed these common priorities, the CSSF declares in the Press Release, that its enforcement campaign will focus on the following:
- Application of IFRS 15 Revenue from Contracts with Customers.
The CSSF will monitor specific issues related to the application of IFRS 15 as well as issuers’ overall first-time application process.
- Application of IFRS 9 Financial Instruments.
The CSSF elaborates on the disclosures required under IFRS 9 and emphasises (i) that boilerplate descriptions should be avoided when making the disclosures on the assessment of significant increase in credit risk and expected credit losses and (ii) that such disclosures should be entity-specific.
- Impact of the implementation of IFRS 16 Leases.
The CSSF reminds issuers to pay particular attention to the key aspects of IFRS 16 when determining the impact on their 2018 Financial Statements.
- Disclosure of non-financial and diversity information in the management report.
The CSSF will continue to monitor the implementation of the Law of 23 July 2016 on disclosure of non-financial and diversity information for certain large undertakings and groups and ensure that issuers provide useful and meaningful information to users of financial statements.
- Alternative Performance Measures (APMs).
The CSSF will continue to monitor how issuers comply with the ESMA Guidelines on APMs in their published financial information. The CSSF reminds issuers that the ESMA Guidelines on APMs apply to prospectuses and regulated information, including management reports (disclosed under the Directive 2004/109/EC on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market) and ad hoc disclosures (made pursuant to Article 17 of Regulation (EU) No. 596/2014 on market abuse).
- Hyperinflationary economy - Argentina.
In light of the classification of Argentina as a hyperinflationary economy as of July 1st 2018, the CSSF reminds issuers, having business operations and/or subsidiaries in Argentina to consider the application of paragraph 43 of IAS 21 The Effects of Changes in Foreign Exchange Rates, when having subsidiaries whose functional currency is Argentinian peso, and IAS 29 Financial Reporting in Hyperinflationary Economies.
In light of expectation that the United Kingdom will leave the European Union on March 29th 2019, the CSSF emphasises that, to the extent that further details on the Brexit agreement are available at the time the 2018 Financial Statements are being prepared, these further details should be reflected therein.