Background
On 17 December 2021, the CSSF has published a press release for the attention of issuers of securities subject to the law of 11 January 2008 on transparency requirements for issuers of securities, as amended (the "Transparency Law") and their auditors (the "Press Release").
The CSSF wishes to highlight, in the context of the preparation of the financial statements of issuers for the financial year ending 31 December 2021 in accordance with the International Financial Reporting Standards (the “IFRS”) and/or the preparation of the non-financial report of issuers in accordance with the law of 23 July 2016, a number of points that shall be subject to specific monitoring by CSSF during 2022.
European common enforcement priorities
ESMA together with the European national accounting enforcers, including the CSSF, have identified European common enforcement priorities (the "ECEPs") for the 2021 annual reports which are detailed in ESMA's public statement of 29 October 2021 available at this link. In that public statement, ESMA also sets priorities in relation to non-financial statements and addresses some points regarding alternative performance measures.
Other focus points of CSSF enforcement campaign
In addition to the ECEPs, the CSSF 2022 enforcement campaign will focus on the following topics:
- Classification and measurement requirements under IFRS 9
The CSSF will pay close attention to (i) the disclosure of accounting policies for financial instruments, in particular for those requiring significant judgement, and (ii) the assessment of the “Solely Payment of Principal and Interest” for loans or bonds with interest rates linked to sustainability targets.
- Interest rate benchmark reform
The CSSF will continue to monitor the impact of the interest rate benchmark reform on issuers’ financial statements, which was triggered by the introduction of Regulation (EU) 2016/1011 of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds.
- Presentation of primary financial statements
The CSSF notes that the International Accounting Standard Board (the "IASB") is currently working on proposals to set out new requirements for presentation and disclosure in financial statements. In the context of the tentative decisions of the IASB already available as part of the project "Primary financial statements", the CSSF encourages issuers to undertake a comprehensive review of presentation of profit and loss and challenge the subtotals presented.
In light of IASB proposals, the CSSF also intends to perform a thematic review on the presentation of the statement of profit and loss.
Upcoming entry into force of new requirements
Finally, the Press Release reminds issuers of the entry into force of the following new requirements:
- as from financial year 2021, issuers shall prepare their annual financial statements in compliance with European single electronic format (ESEF).
- as from 1 January 2022, issuers will need to comply with the new disclosure obligations under Article 8 of Regulation (EU) 2020/852 of 18 June 2020 on the establishment of a framework to facilitate sustainable investment (Taxonomy Regulation).
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