Transparency Law - CSSF Enforcement

The CSSF has published Press Release 16/02 for the attention of issuers of securities subject to the law of January 11th 2008 on transparency requirements for issuers of securities, as amended.

"The CSSF wishes to highlight to those issuers preparing their 2015 financial statements in accordance with International Financial Reporting Standards (“IFRS”) a number of points that shall be the subject of specific monitoring by the CSSF during 2016."

The first set of topics which will be included in the CSSF 2016 enforcement campaign are European common enforcement priorities which were defined by ESMA in a public statement on October 27th 2015. These topics are:

  • the impact of the financial market conditions on the financial statements;
  • the statement of cash flows and related disclosures; and
  • the fair value measurement and related disclosures.

Also included in the CSSF’s enforcement campaign are a number of topics identified directly by the CSSF as being items of interest. These topics are the following:

  • IFRS standards on consolidation

Newly issued or amended standards relating to consolidation are mandatory since January 1st 2014 and based on 2015 campaign on the application of these standards, the CSSF identified some specific issues regarding these.  These    were, first, the growing importance of judgment in determining control according to IFRS 10 “Consolidated Financial Statements” especially when the analysis of other facts and circumstances is necessary; second, the investment entity’s status and its impact on the consolidation of data and the adequacy of disclosures about, in particular, the fair values; or lastly, the potential difficulty in classifying joint arrangements as either joint operations or joint ventures based on existing rights and obligations and the impact on the accounting for these transactions. The CSSF will pay close attention again this year to how these standards are applied.

  • Deferred tax assets according to IAS 12 “Income taxes”

As it also did last year the CSSF will closely monitor the recognition and measurement of deferred tax assets, with a particular focus on the recognition of deferred tax assets following deductible tax losses as well as the existence and valuation of future taxable profits; and

  • The quality of disclosures in financial statements

The CSSF intends to pay special attention to the relevance and specificity of the information to be provided by issuers under IFRS in their financial statements. While ESMA and IASB (International Accounting Standards Board) have each taken initiatives through publishing statements and conducting projects to improve the quality of disclosures, the CSSF has confirmed that it considers that the existing IFRS already ensure the relevance and specificity of information to be provided