The review focused primarily on the Company's presentation of the revaluation deficit in profit and loss with accompanying notes and the disclosure of revenues.
The main topics addressed by the review:
Impairment testing of goodwill: Finanstilsynet requested OTS to review the impairment tests and provide sufficient evidence to support the assumptions taken in the impairment testing for year-end 2015 in order for the company's auditor to be able to do a sufficient audit of the carrying value of goodwill.
Use of revaluation model:
Presentation of revaluation deficit in profit and loss: It is Finanstilsynet's view that revaluation of an asset that is being used in the company's operation with effect over profit and loss, is an operating item in nature, and should be treated consistently with how impairment charges and reversals are presented under the cost model.
Disclosure requirements according to IFRS 13 Fair Value Measurement: According to IFRS 13.93 it is required to disclose additional information for recurring fair value measurements categorized within level 3 of the fair value hierarchy. In Finanstilsynet's view OTS did not disclose sufficient or detailed enough information as required.
Revenue disclosures: According to IFRS 8.32, an entity shall report revenues for each product or service. Finanstilsynet was of the opinion that since the vessels are treated as different classes of assets under IAS 16, revenues from these assets must also be disclosed separately to meet the requirements in IFRS 8.32. OTS initially expressed concerns about disclosing more detailed information due to potentially competitive harm. According to IFRS 8.BC44 a competitive harm exemption is inappropriate. The information was indirectly available for the public through the financial reporting of the special purpose vehicle owning the consolidated vessel, hence Finanstilsynet did not find it appropriate to put any emphasis on the competitive harm argument.