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IASB Chairman discusses non-GAAP measures

  • IFRS - IASB Image
  • IFRS  - Speech Image

Mar 31, 2015

On March 31, 2015, Hans Hoogervorst, Chairman of the International Accounting Standards Board, in a speech given in Seoul, Korea, stressed that “greater discipline” is needed in the use of non-GAAP measures.

Mr Hoogervorst touched on several topics during his speech - including the Disclosure Initiative and the IFRS Taxonomy - but the main focus of his remarks were non-GAAP measures and their relation to IFRS financial statements.

In his speech, he admitted that alternative performance measures (or "non-GAAP measures") can be very helpful as IFRSs do not cater to individual sectors but aim at creating comparability across sectors. This makes them comparatively generic, and alternative performance measures can be used to provide investors with additional, more tailored insight into how a company is being run. Yet he also warned that alternative measures are not free of bias as even seemingly common measures such as EBITDA are often presented in an 'adjusted' or 'normalised' or otherwise modified form. In addition, non-GAAP measures are often presented with a prominence that obscures IFRS numbers.

Please click to download the full text of Mr Hoogervorst's speech from the IASB website.

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