In its supervision of financial reporting in 2012, the Netherlands Authority for the Financial Markets (AFM) will perform thematical reviews into four specific subjects: real estate, valuation of and transparency concerning sovereign debt, impairment of non-current assets and notes concerning minority interests. The selection of these subject was based in part on the debt crises and the published 2011 interim financial reporting of companies.
The AFM intentionally publishes these subjects of the thematical reviews at an early stage, so that listed companies can include these when drawing up their financial reporting for the 2011 calendar year.
Each year, the AFM publishes an activities report around the turn of the year containing the main findings of the regular and thematical reviews performed by it. In anticipation of the findings of regular supervision of financial reporting in 2010, the AFM will publish the main points for attention arising from regular supervision at the end of September. The findings of the 2011 thematical reviews will subsequently be published at the end of October.
Explanation to the 2012 thematical reviews:
The valuation of investment properties remains current, partly as a result of the current economic developments. This is reason for the AFM to designate the valuation of and notes to investment properties by investors in investment properties and financial institutions as 2012 thematical review. The AFM will devote special attention to the methods and main assumptions applied when determining the fair value of investment properties. In doing so, the AFM will monitor in particular the impact of so-called rent-free periods and vacancy levels and discount rates.
Valuation of and transparency concerning sovereign debt and other investment with nation risks
This is also a very current topic in view of the current problems faced by the so-called GIIPS countries. In the thematical review, the AFM devotes attention the valuation of these investments and it wants to assess to what extent financial institutions are transparent about their risks and exposures concerning sovereign debt and other investments with country risks.
Impairments of fixed assets and notes thereto
The interim financial reporting 2011 up to this date has shown that a large number of companies account for impairments on tangible and intangible non-current assets. In this thematical review, the AFM wants to focus in particular on changes in assumptions applied, the causes of the changes and the transparency applied in respect thereof.
Notes on minority interests
As part of the consolidation project of the International Accounting Standards Board (IASB), an amendment of the requirement to provide notes with respect to third-party interests (non-controlling interests) was made. These notes are intended to enable users of financial statements to acquire a better understanding of the effects of these non-controlling interests on the financial position, financial results and cash flows. The requirement to provide notes as provided for by IFRS 12 are more extensive than the requirements included in the current IAS 27. Usually it is impossible to derive from the financial statements to which items the minority interests relate. We know that investors are interested in an answer to this question, so that they can make an independent assessment of the effect of minority interests on various ratios. The AFM wants to perform a baseline measurement by means of this thematical review in order to establish how non-controlling interests are currently disclosed.
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.