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CSA provide updated guidance on non-GAAP financial measures

  • Securities - CSA Image

Jan 14, 2016

On January 14, 2016, the Canadian Securities Administrators (CSA) published CSA Staff Notice 52-306 (Revised), "Non-GAAP Financial Measures" (Notice 52-306) reflecting amendments to IAS 1, Presentation of Financial Statements (IAS 1) regarding additional subtotals presented in financial statements. Notice 52-306 also provides revised guidance on the use of non-GAAP financial measures aimed at ensuring that information disclosure by issuers does not mislead investors.

An issuer’s GAAP may require the presentation of additional subtotals in the financial statements when such presentation is relevant to an understanding of the issuer’s financial position or financial performance. An example of this requirement is found in paragraphs .55 and .85 of IAS 1. An issuer may choose to present these additional subtotals in a press release or some other location outside of its financial statements before filing on SEDAR its financial statements. In order to avoid any confusion about these additional subtotals, management should explain their composition. This may be accomplished by:

  • including a copy of the statement that contains these additional subtotals (for example, the statement of profit or loss and other comprehensive income), or
  • reconciling these additional subtotals to the most directly comparable line item specified or defined by IFRS that will be presented in financial statements (for example, profit or loss).

Notice 52-306 includes, among other things, specific guidance to issuers regarding GAAP measures required by IFRS and a list of suggested practices to help issuers address obligations in relation to GAAP measures.

Review the Notice on the CSA's Web Site.

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