The European Securities and Markets Authority (ESMA) has warned financial regulators they must guarantee that companies publish the actuarial assumptions underlying their pension liabilities to ensure a consistent approach to reporting across the European Economic Area (EEA).

Publishing the European Common Enforcement Priorities for 2013, ESMA chairman Steven Maijoor noted that a consistent approach was important to allow the accuracy on which investors relied.

“Considering the focus on asset quality in the financial sector, listed financial institutions and their auditors should pay particular attention to properly measuring financial instruments and the accurate disclosure of related risks,” he added.

The regulator said in its statement that it would like to remind issuers of the “importance of disclosing the significant actuarial assumptions” used to calculate the present value of any defined benefit (DB) obligations incurred by the company.

“As the discount rate is usually considered a significant actuarial assumption, ESMA expects issuers to disclose any significant judgements that management has made in its determination in accordance with paragraph 122 of IAS 1 – Presentation of Financial Statements,” it said.

“In addition, issuers should provide disaggregation information on plans and fair value of the plan assets when the level of risk of those plans is deemed to be different as required by paragraphs 138 and 142 of IAS 19.”

The regulator further noted that the financial impact of IAS 19 revisions – which saw changes introduced that affected how companies could smooth expected returns of DB funds – should be disclosed in an additional statement.