The Act on the Supervision of Financial reporting [Wet toezicht financiële verslaggeving] (Wtfv) came into effect on 31 December 2006. This means that the Netherlands Authority for the Financial Markets (AFM) has supervised the financial reporting of Dutch listed companies as of financial years starting on or after 1 January 2006.
Pursuant to the Wtfv, the AFM is obliged to maintain a register which includes, among other things, the companies’ financial reports. With this in mind, companies have to submit their annual reports and annual accounts to the AFM within eights days of the annual accounts being adopted. Companies can submit the data as a hard copy or in digital form. Digital versions of the annual reports and annual accounts can be submitted easily via the AFM service desk. Companies submitting digital versions are required to use a DigiD access code. The AFM incorporates financial reports into the public register within five days following the working day on which it received said reports. This register can be consulted on the AFM website.
The AFM supervises compliance with the applicable standards for reporting. It does not perform any prior audits of financial reports. The Wtfv is based on retrospective supervision by the AFM, that is after the annual accounts have been adopted. Until and unless the AFM brings a case before the Enterprise Section of the Court of Appeal (Ondernemingskamer (OK)), the supervision will not be public. During this phase, the AFM and the company will have to reach agreement together, wherever such an agreement is possible. This will involve the AFM pointing out to the company its responsibility for the correct application of the appropriate reporting regulations. It is up to the company to actually take up this responsibility. If necessary, the AFM will initiate annual accounts proceedings at the Enterprise Section of the Court of Appeal based on its independent authority.
The supervision is not only of a repressive nature. For example, by executing and publishing the results of thematic inspections, the AFM ensures that more attention is focused on the application of a reporting regulation within a particular sector. Given both the preventive and repressive nature of the supervision, the AFM wants to encourage enterprises to improve the quality of financial reporting. In addition, the supervision of financial reporting is intended to ensure that the International Financial Reporting Standards (IFRS) are complied with. In this way, the supervision contributes to the public’s confidence in the functioning of the capital markets.