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CESR: Compliance with explanation requirements pursuant to IFRS leaves room for improvement

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Financial institutions do not always provide sufficient information about the valuation of and risks inherent in the financial instrument they hold. This was the conclusion of the Committee of European Securities Regulators (CESR) on the basis of an investigation into the financial reporting of 96 listed banks and insurance companies in Europe.

The report, which was published on Monday, shows that a significant number of the investigated enterprises do not provide sufficient information on some aspects of the financial instruments. IFRS 7 provides that financial enterprises have to include comprehensive information in their annual accounts concerning the valuation of and risks related to financial instruments. The lack of this information could be of influence on the decisions made by those who use annual accounts.

The European Supervisors meet periodically to discuss the application of and compliance with IFRS rules and to coordinate their respective positions. On 3 and 4 November, they will discuss, inter alia, the application of the rules on valuation of financial instruments (IAS 39) in Amsterdam.

You can read the CESR press release by following this link: http://www.cesr.eu/popup2.php?id=6155.

The AFM promotes fairness and transparency within financial markets. We are the independent supervisory authority for the savings, lending, investment and insurance markets. The AFM promotes the conscientious provision of financial services to consumers and supervises the honest and efficient operation of the capital markets. Our aim is to improve consumers’ and the business sector’s confidence in the financial markets, both in the Netherlands and abroad. In performing this task the AFM contributes to the prosperity and economic reputation of the Netherlands.

The AFM is committed to promoting fair and transparent financial markets.

As an independent market conduct authority, we contribute to a sustainable financial system and prosperity in the Netherlands.

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