ESMA’s key focus for 2014 financial statements

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. The European Securities and Markets Authority (ESMA) has published the European Common Enforcement Priorities 2014 that represent the key focus for examinations of the financial statements of listed companies by ESMA and European national enforcers. Which of the following is not deemed to be a priority for 2014

  2. The enforcement priorities were identified as a result of discussions with European national enforcers with a view to further increasing transparency in financial reports. What was the main reason behind the current topics being chosen as the enforcement priorities?

  3. ESMA defines the European common enforcement priorities in order to promote consistent application of the International Financial Reporting Standards (IFRS). What does ESMA feel is a continuing problem with financial statements?

  4. Control is defined as the situation when the investor is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Where are the principles relating to control are set out?

  5. IFRS 12 requires disclosures to enable users to understand the nature of the non controlling interests (NCI) in the group activities and cash flows. There is an expectation that disclosures will be sufficient which includes disclosure of the operating segments material NCIs have been allocated to. Which of the following is not a recommendation by ESMA re disclosure priorities?

  6. ESMA draws the attention of the issuer to specific disclosure requirements with respect to the nature of, and changes in, the risks associated with their interests in consolidated and unconsolidated structured entities. What is the definition in IFRS 12 regarding a structured entity?

  7. Which of the following features is not one of a structured entity -

  8. IFRS 11 sets out criteria which determines the classification of joint arrangements as either joint operations or joint ventures. What is the general basis of the classification of joint arrangements as joint operations or joint ventures?

  9. The first-time adoption of IFRS 10 and IFRS 11 might change the assessment as to how to account for an investee. Which of the following circumstances is not the cause of a potential policy change brought about by IFRS10 or IFRS11?

  10. The current economic climate could result in the recognition of tax losses or the existence of deductible temporary differences where perhaps impairments are not yet deductible for tax purposes. Under what circumstances can a deferred tax asset be recognised under IAS 12?