ESMA’s 2026 enforcement priorities

Assess whether the annual report gives readers a clear picture of when financial liabilities fall due and how those obligations will be met. The guide looks at contractual maturity disclosures, the distinction between committed funding and financing still under negotiation, and whether cash is available for general group use. It also highlights the importance of covenant terms and timing: a waiver obtained after the reporting date does not change a liability’s classification at that date.

Geopolitical developments may affect cash-flow forecasts, discount rates, asset values and counterparty exposures. Preparers should consider whether assumptions remain supportable and whether the disclosures explain significant judgements and sensitivities in terms specific to the issuer. The guide also addresses Level 3 fair value measurements, planned market exits and, for banks, whether credit-loss models and overlays adequately reflect affected sectors, geographies and counterparties.

A decision to restructure does not, on its own, mean that a provision should be recognised. The assessment depends on whether a detailed formal plan has created a valid expectation among those affected, through implementation or communication of its main features. The guide considers the timing of that assessment, which expenditure belongs in a restructuring provision, and related effects such as impairment and employee benefits.

When borrowing terms change, the accounting assessment extends beyond the size of the change in cash flows. Preparers need to consider the 10 per cent test alongside qualitative factors, such as a change in the currency of the debt or the introduction of an embedded equity component, to determine whether the existing liability should be derecognised. The guide also considers how to explain the accounting policy, significant judgements and financial statement effects.

The directors’ report and financial statement notes should describe material developments consistently. Readers should be able to follow a relevant event through to the balance it affects, the judgement management made and the resulting disclosure. The guide’s separate checklists help preparers assemble that evidence and give audit committees focused questions to put to management and the external auditor.