Featured Product

    IOSCO Statement Highlights Importance of Disclosures on COVID Impact

    May 29, 2020

    IOSCO issued a statement highlighting the importance of having timely and high-quality information about the impact of COVID-19 on the operating performance, financial position, and prospects of issuers. The statement specifies that it is the responsibility of management to develop well-reasoned and supportable estimates, establish and maintain effective internal controls over financial reporting, and provide reliable financial information and transparent, entity-specific disclosures about the current and potential effects of COVID-19 pandemic on the issuer.

    The pandemic and the related uncertainties have material implications for financial reporting and auditing, including issuers’ disclosures of current and reliable information material to investment decisions. In its statement on the importance of disclosure about COVID-19, IOSCO: 

    • Reiterates the importance of disclosure of the impact on amounts recognized, measured and presented in the financial statements. Given the greater degree of difficulty that may exist in determining various financial statement amounts in the current environment, it is important that issuers utilize appropriate skills and competencies in areas such as fair value measurement and impairment assessments.
    • Highlights the importance of transparent and complete disclosures, noting that in an environment of heightened uncertainty, disclosures should be entity-specific and transparent, particularly when involving significant judgments and estimates. Disclosures should explain the material impact on specific assets, liabilities, liquidity, solvency, and going concern issues as relevant, along with any significant uncertainties, assumptions, sensitivities, underlying drivers of results, strategies, risks, and future prospects.
    • Restates that, in the current environment, it is important that issuers are mindful of the elements of reliable and informative non-generally accepted accounting principles (non-GAAP) measures. Given the uncertainty in the current environment, issuers should carefully evaluate the appropriateness of an adjustment or alternative profit measure.
    • Notes that interim financial information will require more robust disclosures of material information and management’s response to the changing circumstances. Issuers are reminded that interim financial reporting is intended to provide an update focusing on changes in the entity’s financial position and results of operations since the last annual period. While requirements for interim reports may contain fewer required disclosures than is the case for annual reports, where an interim report is the first report to be published since the COVID-19 pandemic, it will be relevant to include more detailed disclosure on these matters and their material effect on the issuer.
    • Reminds auditors of their responsibilities to report on Key Audit Matters, including how the auditor addressed the matters. For annual reporting, the external auditor’s report may also provide additional information to investors during the COVID-19 pandemic. Auditors should modify their reports when the standards require to do so (for example, if there is a material uncertainty about the entity’s ability to continue as going concern and this uncertainty has not been adequately indicated in the notes or the management commentary).
    • Encourages issuers to balance the flexibility provided by regulators extending the period to file financial information with the responsibility to provide timely and comprehensive financial information that includes reasonable and supportable judgments. Where more time is taken, issuers should consider informing the market about the reasons for the delay, how the matters will be addressed and the expected reporting date.

    In the case of annual financial reporting, a high-quality audit conducted by an independent auditor is a critical part of the ecosystem that provides reliable, high-quality financial information to investors. This should be complemented by active oversight of the financial reporting and audit processes by the issuer’s audit committee or those charged with governance, which further supports the provision of reliable, high-quality information to investors.


    Related Links

    Keywords: International, Securities, Banking, COVID-19, Disclosures, Financial Statements, Transparency, Operational Risk, Non-GAAP Measures, IOSCO

    Featured Experts
    Related Articles
    News

    ECB Amends Guideline on Temporary Collateral Easing Measures

    ECB published Guideline 2021/975, which amends Guideline ECB/2014/31, on the additional temporary measures relating to Eurosystem refinancing operations and eligibility of collateral.

    June 17, 2021 WebPage Regulatory News
    News

    EIOPA Releases Report on Artificial Intelligence Governance Principles

    EIOPA published a report, from the Consultative Expert Group on Digital Ethics, that sets out artificial intelligence governance principles for an ethical and trustworthy artificial intelligence in the insurance sector in EU.

    June 17, 2021 WebPage Regulatory News
    News

    HKMA to Increase Focus on Suptech and Regtech Cloud Adoption

    HKMA published the seventh and final issue of the Regtech Watch series, which outlines the three-year roadmap of HKMA to integrate supervisory technology, or suptech, into its processes.

    June 17, 2021 WebPage Regulatory News
    News

    EC Consults on Improving Transparency in Secondary Markets for NPLs

    EC launched a targeted consultation to improve transparency and efficiency in the secondary markets for nonperforming loans (NPLs).

    June 16, 2021 WebPage Regulatory News
    News

    BIS and Nordic Central Banks Launch Innovation Hub in Stockholm

    BIS, Danmarks Nationalbank, Central Bank of Iceland, Norges Bank, and Sveriges Riksbank launched an Innovation Hub in Stockholm, making this the fifth BIS Innovation Hub Center to be opened in the past two years.

    June 16, 2021 WebPage Regulatory News
    News

    FDIC Tech Sprint Aims to Explore Technologies to Reach Unbanked

    FDITECH, the technology lab of FDIC, announced a tech sprint that is designed to explore new technologies and techniques that would help expand the capabilities of community banks to meet the needs of unbanked individuals and households.

    June 16, 2021 WebPage Regulatory News
    News

    EC Releases Sustainable Finance Taxonomy Compass

    EC released the EU Taxonomy Compass, which visually represents the contents of the EU Taxonomy starting with the EU Taxonomy Climate Delegated Act.

    June 16, 2021 WebPage Regulatory News
    News

    FDIC Proposes Amendments to Real Estate Lending Standards

    FDIC is seeking comments on a rule to amend the interagency guidelines for real estate lending policies—also known as the Real Estate Lending Standards.

    June 15, 2021 WebPage Regulatory News
    News

    EIOPA to Consider Liquidity Risk in Stress Test for 2021

    EIOPA published its annual report, which sets out the work done in 2020 and indicates the planned work areas for the coming months.

    June 15, 2021 WebPage Regulatory News
    News

    ESRB Paper Discusses Measurement of Impact of Bank Failure via Lending

    The ESRB paper that presents an analytical framework that assesses and quantifies the potential impact of a bank failure on the real economy through the lending function.

    June 15, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7116