The European Securities and Markets Authority (ESMA) plans to conduct an assessment of the supervisory response in the financial reporting operation of BaFin and the Financial Reporting Enforcement Panel (FREP) to the events leading to the collapse of the German payments group Wirecard AG. The assessment is expected to complete on 30 October 2020.
The ESMA believes that the Wirecard’s collapse undermined investor trust and the assessment of the events will help restore the investors’ confidence.
The assessment will focus on the operation of BaFin and FREP in applying the Guidelines on the Enforcement of Financial Information (GLEFI). The two authorities were designed to supervise and enforce financial information in the Federal Republic of Germany under the Transparency Directive (TD).
The assessment will utilize GLEFI and ESMA’s Peer Review Methodology. ESMA issued the GLEFI in 2014 to promote consistent application and supervision of IFRS. In support of this, in 2017 ESMA launched a peer review in seven Member States focusing on three GLEFI guidelines – Guideline 2 Human and financial resources, Guideline 5 Selection Methods and Guideline 6 Examination procedures. The review concluded that there are significant differences in national approaches, allocated resources and actions taken in the enforcement of financial information. BaFin and FREP were included in the review which identified positive aspects of the German enforcement model but also a highlighted a few areas for improvement.
