MFSA Issue Circular on ESMA’s Opinion on accounting for Cash Contributions to the Deposit Guarantee Schemes

The Malta Financial Services Authority (MFSA) recently issued a circular on the opinion published by the European Securities and Markets Authority (ESMA) on the 25th September 2015 (Opinion 2015/1462). The said opinion relates to the application of the IFRS requirements with respect to the recognition of cash contributions to the Deposit Guarantee Scheme (DGS) in IFRS accounts and is limited to the accounting treatment of ex-ante non-refundable cash contributions to the DGS for which an event giving rise to an obligation to pay a contribution is identified at a single point in time.

In the opinion, ESMA has concluded that, based on the analysis of the existing IFRS requirements, the contribution must be recognised as an expense in full as soon as an event giving rise to an obligation to pay a contribution of a non-refundable cash contribution to a DGS is identified. National competent authorities are expected to take corrective actions whenever they come across material mis-statements in the application of these requirements.

Kindly find the link to the ESMA Opinion here whilst the link to the MFSA Circular can be found here.

For further information about how GVZH Advocates can help you with your Financial Services requirements kindly contact us here.