Transparent and consistent

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) have recently published its annual statement defining the European common enforcement priorities for 2013 financial statements. Which of the following financial reporting topics is not considered an enforcement priority by ESMA?

  2. The European common enforcement priorities will be incorporated into the reviews performed by national regulators who will take corrective actions whenever material misstatements are identified. Which of the following statements is correct regarding the regulatory nature of the priorities?

  3. ESMA has included the impairment of non-financial assets in the common enforcement priorities with a focus on certain specific areas. Which of these areas is not one which ESMA feels is a priority?

  4. In measuring value-in-use, cash flow projections should be based on reasonable and supportable assumptions that represent the best estimate of the range of future economic conditions. What does IAS 36, Impairment of Assets, say is important when determining the best estimate of cash flow projections?

  5. IAS 19, Employee Benefits requires the discount rate applied to post-employment benefit obligations to be determined using market yields based on high quality corporate bonds. IAS 19 requires that the depth of the bond market should be assessed. At what level should the depth of the bond market be assessed?

  6. IAS 19, Employee Benefits requires the discount rate applied to post-employment benefit obligations to be determined using market yields based on high quality corporate bonds. What discount rate should be use in jurisdictions where there is no deep market in these bonds?

  7. IFRS 13 requires all valuation techniques to maximise the use of relevant observable inputs, which should be consistent with the characteristics of the asset or liability. ESMA emphasises the need to provide the disclosures related to fair value. Why is it particularly important to disclose the details of level 3 inputs to fair valuation?

  8. ESMA expects issuers to focus on the quality and completeness of disclosures that are relevant to the entity’s financial statements. These should be entity specific, and not boilerplate. Which of the following areas is not one of those listed by ESMA in terms of the need for improvement of disclosure?

  9. ESMA states that issuers should ensure that they meet the IFRS 7 requirements for qualitative and quantitative disclosures and assess whether there is objective evidence of impairment. What does ESMA feel is the main purpose of these disclosures?

  10. ESMA expects disclosure of the accounting policies applied to financial assets that have been assessed individually for impairment but for which no objective evidence of impairment was available. What is the main purpose of this disclosure?