IFRS and sustainability information enforcement

IFRS enforcement (supervision of listed companies’ compliance with the International Financial Reporting Standards, IFRSs), and the enforcement of sustainability information (supervision of listed companies’ compliance with the European Sustainability Reporting Standards, ESRSs, and information presented on the basis of Article 8 of the Taxonomy Regulation) are risk-based supervision. Based on separately specified risk factors, the FIN-FSA selects the companies whose financial statements, sustainability reports and other financial reports are subject to a full review at a given time. The FIN-FSA may also conduct a partial review, where reports are examined from the perspective of a separately specified theme. Such thematic reviews have been conducted by IFRS Enforcement in the case of goodwill impairment testing and corporate acquisitions, for example. Enforcement also includes reactive supervision where the FIN-FSA examines, based on stock exchange releases or complaints, the appropriateness of a given company’s financial statements or sustainability report.

The supervision focuses on listed companies’ and the FIN-FSA’s supervised entities’ financial statements, management reports (incl. sustainability reports) and interim reports.

The supervisory work also comprises reviews on various subjects in the financial statements and sustainability reports. We publish reports of our findings on our website. We also engage in discussions with listed companies, representatives of the auditing sector and other stakeholders.

What does IFRS enforcement mean for listed companies? (in Finnish)

Video script in English (pdf)

What does enforcement of sustainability information mean for listed companies?

Uniform enforcement in Europe is under preparation. ESMA will provide guidelines for national authorities on procedures for the enforcement of sustainability information. The Guidelines are based on the Guidelines on enforcement of financial information. Hence, the enforcement of sustainability information will be, as a rule, similar to the already well-established IFRS enforcement for listed companies. Sustainability reporting by listed and unlisted credit institutions, insurance companies, employee pension insurance companies as well as pension foundations and funds will be supervised by the FIN-FSA’s Banking Supervision and Insurance Supervision.

International cooperation

The FIN-FSA participates actively in cooperation among financial reporting supervisors in the EU. The Issuers Standing Committee (ISC), which is a permanent committee of the European Securities and Markets Authority (ESMA), coordinates supervision and other activities of its member organisations in matters related to financial and sustainability reporting by listed companies.

The objective of the cooperation is, on the one hand, to promote the harmonisation of supervision methods, and on the other hand, to promote the uniform application of the IFRSs, ESRSs, and taxonomy regulation. Supervisory cooperation and coordination are crucial as the regulation is European-wide, and supervisory solutions should therefore be consistent.

The ISC regularly arranges meetings for supervisors of financial reporting (European Enforcers Coordination Sessions, EECS) and supervisors of sustainability reporting (Sustainability Reporting Working Group, SRWG). The FIN-FSA takes part in the meetings of both working groups. ESMA maintains a common enforcement database for all key decisions on the supervision of financial and sustainability reporting taken by EU member state supervisors. ESMA publishes these decisions in an abbreviated format, approximately 1–3 times a year. The purpose of publishing the decisions is to provide market participants with information on where European supervisors have paid attention in the supervision of financial and sustainability reporting.

See also:

• IFRS press releases and publications
• IFRS regulatory framework
• Publications and releases on sustainability information
• Regulation of sustainability information
• Audit committees and auditing