Legal Framework

Consob warning notice no. 8/20 of 16 July 2020

Subject: COVID 19 - Drawing attention to financial reporting

On 9 April 2020, Consob drew the attention[1] of the members of the management and control bodies and the managers responsible for drafting the company's financial documents to the need for complying with the principles that govern the process of producing financial information, in consideration of the impacts that the effects associated with COVID-19 may have with reference, in particular, to the verifications concerning business continuity[2] as well as the evaluations of the assets (impairment test).

As shown in the annual and quarterly reports published, the half-yearly financial reports as at 30 June 2020 – prepared by the listed issuers with Italy as their home Member State to be published in accordance with art. 154-ter, paragraphs 2, 3 and 4 of Italian Legislative Decree no. 58/1998 and by the issuers of financial instruments disseminated to the public to a significant extent pursuant to art. 116 of Italian Legislative Decree no. 58/1998 – constitute, for the majority of issuers, the time when more complete information will be available on the effects of the COVID-19 pandemic.

In this regard, the attention of the actors involved in the process of producing financial information is drawn to the recommendations provided by ESMA in the Implications of the COVID-19 outbreak on the half-yearly financial reports” public statement [3] of 20 May 2020, which should be considered fully incorporated within this document[4].

In line with the abovementioned public statement, the evaluations that directors are required to make pursuant to IAS 36 “Impairment of assets”(IAS 36, paragraphs 9 and 12) are particularly important in the preparation of their next half-yearly reports. In particular, it must be assessed whether the effects of the COVID-19 epidemic constitute indicators of impairment such as to require specific checks to be carried out on the recoverability of assets.

Particular attention should be paid to the description of the significant uncertainties and risks associated with COVID-19, especially where they are such as to jeopardise the business continuity of the issuers[5].

With reference to the description of the impact of the COVID-19 outbreak on the income statement, issuers should provide information, including on a quantitative basis, in a single note in their interim financial statements, in order to enable readers of those statements to understand the overall impact of the pandemic on the economic performance of the period.

Lastly, Consob, in relation to the disclosure to be made in the interim reports on operations, recommends that issuers provide, where available, detailed and specific information in relation to the impacts, including future impacts, of COVID-19 on strategic planning and plan targets, economic performance, financial position and cash flows. Particular emphasis should be placed on the description of the measures adopted or planned to address and mitigate the impacts of COVID-19 on assets and economic results, indicating the status of their implementation.

Paolo Savona

[1] Consob reminder no. 6/2020 of 9 April 2020. (

[2] In relation to the going concern assumption, IAS 1 states, in paragraph 26 that “[i]n determining whether the going concern assumption is applicable, management shall take into account all available information about the future. Such information shall at least cover, but not be limited to, twelve months after the end of the financial year. The degree of analysis depends on the specific circumstances of each case”.

[3] ESMA32-63-972 of 20 May 2020 ( In particular, the press release accompanying the publication of the document states that “ESMA and European national enforcers will monitor and supervise the application of the IFRS requirements as well as any other relevant provisions outlined in the Statement, with national authorities incorporating them into their examinations and taking corrective actions where appropriate”.

[4] On 29 May 2020, the International Organization of Securities Commissions (IOSCO) also published the “Statement on Importance of Disclosure about COVID-19” which underlines the importance of timely and high-quality information on the impacts of COVID-19 for investors (

[5] IAS 1 paragraphs 25 and 26.