Seeing as the dust hasn't quite settled around IFRS 9, 15 and 16, it can be easy to focus all your attention on compliance with these standards and to sweep everything else under the rug for now.

Good news: to a limited extent, you can! ESMA has indeed announced that their main enforcement priorities will involve the three standards mentioned above. However, these certainly won't be the only priorities—companies still need to keep various other developing areas in mind, including a few that interest other regulatory bodies as well as the end-users of financial statements.

Three such areas are non-financial information, alternative performance measures, and Brexit.

Non-financial information

With the increasing focus on corporate social responsibility, and particularly on global footprints and sustainability, ESMA will at some point shift their magnifying glass towards disclosures of non-financial information required by certain large undertakings and groups, with a particular focus on environmental and climate change matters as well as key performance indicators relating to non-financial policies. This also ties in with the CSSF's press release 18/04 which highlighted the requirements of disclosure of non-financial and diversity information brought about by the Law of 23 July 2016. The main takeaways are that organizations must:

  • disclose the name of the specific disclosure framework applied
  • disclosure the policies applied and the outcomes of those policies (including the rationale for not developing or pursuing certain policies)
  • disclose non-financial KPIs including the reasons why they were deemed relevant
  • focus on relevant, material, and entity-specific matters

A useful guide for companies in this respect is the publication, by the European Commission, of non-binding guidelines on environmental and social disclosures as a common voluntary framework in order to facilitate the comparison of such information at a European level. One point of attention, though: it is not sufficient to simply copy-paste from a general disclosure framework! Use it as a basis, but tailor it to the specificities of your organization.

Alternative performance measures

ESMA also re-iterates its continued interest in alternative performance measures (APMs), concentrating on the adequate definition and explanation of APMs and their prominence in relation to IFRS measures. (For a more detailed overview on APMs, have a look at this blog article).

One detail to keep in mind is that, if the application of IFRS 9 and 15 had a material impact on your accounting, then your APMs are likely to change. This should be highlighted to a sufficient extent for users to understand the change from the prior periods.


Lastly, ESMA stresses the importance of adequate disclosure about Brexit and the potential impacts and consequences it could have for an entity. You should be thinking along the lines of risk, sources of estimation uncertainty, exposures, and impacts on activities, at least.

As details surrounding the exit scenario could become more clear by the time companies publish their 2018 financial statements, there is a clear expectation that management should sufficiently highlight their considerations of these, as well as provide sufficient transparency in their disclosures to allow users to assess and understand how the entity would be affected and (in more serious cases) how management expects to respond to the effects of Brexit.

Keep reading

If you would like an overview of ESMA's priorities regarding IFRS 9, 15 and 16, read Georgina's article here. The topics on ESMA's watch list are by no means exhausted, so keep returning for updates as we continue to break down the details of IFRS 9 and 15.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.