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

    HKMA Publishes Hong Kong Taxonomy for Sustainable Finance

    The Hong Kong Monetary Authority (HKMA) published the Hong Kong Taxonomy for Sustainable Finance.

    May 21, 2024 WebPage Regulatory News
    News

    EU Taking Steps to Set Out and Enforce AI Regulations

    Many believe that the transformative power of generative artificial intelligence (GenAI) has potential to reshape the financial sector in the time to come.

    May 21, 2024 WebPage Regulatory News
    News

    ISSB Releases Digital Sustainability Disclosures Taxonomy

    The themes of the harmonization and interoperability of sustainability disclosure standards among various jurisdictions remain at the top-of-mind for international standard-setting bodies.

    May 21, 2024 WebPage Regulatory News
    News

    BCBS Report Studies Implications of Digitalization of Finance

    The Basel Committee on Banking Supervision (BCBS) published a report that examines the implications of the digitalization of finance for banks and supervisors.

    May 21, 2024 WebPage Regulatory News
    News

    BCBS Consults on Guidelines for Counterparty Credit Risk Management

    The Basel Committee on Banking Supervision (BCBS) is seeking comments, until August 28, 2024, on guidelines for counterparty credit risk management of banks.

    May 21, 2024 WebPage Regulatory News
    News

    BIS Paper Outlines Vision for Future Financial System

    In a recent paper, the General Manager of Bank for International Settlements (BIS) and the Indian entrepreneur (Infosys co-founder) Nandan Nilekani have laid out a vision for the Finternet, which is proposed to be a network of multiple financial ecosystems, much like the internet.

    April 29, 2024 WebPage Regulatory News
    News

    NGFS Outlines Options for Supervisory Review of Transition Plans

    The Network for Greening the Financial System (NGFS) recently published three reports on the use of transition plans to boost sustainable finance and manage climate-related financial risks.

    April 29, 2024 WebPage Regulatory News
    News

    BCBS Issues Discussion Paper on Climate Scenario Analysis

    The Basel Committee on Banking Supervision (BCBS) issued a discussion paper on the use of climate scenario analysis to strengthen the management and supervision of climate-related financial risks.

    April 29, 2024 WebPage Regulatory News
    News

    OSFI Issues Phase2 Consultation on Climate Scenario Exercise for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) recently announced a consultation on the second phase of the Standardized Climate Scenario Exercise (SCSE) for banks and other financial institutions it regulates in Canada.

    April 25, 2024 WebPage Regulatory News
    News

    CFIT to Chair Open Finance Taskforce Announced by UK Government

    The UK government announced the formation of an industry-led Open Finance Taskforce, chaired by the Center for Finance, Innovation, and Technology (CFIT).

    April 25, 2024 WebPage Regulatory News
    RESULTS 1 - 10 OF 8967