The European Securities and Markets Authority has published a statement on coordination of supervisory action on issuers’ accounting for lease modifications in light of the coronavirus pandemic. Issuers have encountered challenges in accounting for the large number of lease modifications granted in many jurisdictions. The International Accounting Standards Board issued an amendment to IFRS 16 in May 2020 which provided practical relief for lessees.

ESMA is recommending that national regulators in EU member states grant regulatory forbearance for the application of COVID-19 related lease modification requirements set out in the amended IFRS 16. The regulatory forbearance applies for financial periods ending on or before July 31, 2020, for issuers that account for the relevant transactions on the basis of the IFRS 16 amendment.

View ESMA’s statement.

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