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AcSB - Framework for Reporting Performance Measures [Completed]

Next steps:

The AcSB will: (i) continue to review and revise the Framework as needed, based on feedback and developments in practice and regulatory requirements; (ii) continue to interact with groups and associations interested in leveraging the Framework; and (iii) provide resources, such as targeted webinars and podcasts.

Last updated:

December 2018

Overview

In June 2018, the Accounting Standards Board (AcSB) issued a Draft Framework for Reporting Performance Measures to enhance the relevance of financial information for all entities – from public and private companies, to not-for-profit organizations and pensions plans.

The AcSB wanted to discuss and improve financial and non-financial performance measures reported outside of financial statements.

In introducing the framework, the AcSB noted concerns that are often mentioned in connection with performance measures:

  • the quality of performance measures being reported;
  • the lack of consistency, transparency and comparability of performance measures reported period to period;
  • the “expectation gap” about the governance practices of entities over how performance are developed and reported, and whether those measures are subject to assurance, and
  • the limited guidance available on how to develop and report performance measures not usually subject to assurance.

Consequently, the framework was intended to be a tool to guide:

  • management in developing and assessing how effectively they report financial and non-financial performance measures;
  • directors and others charged with governance in fulfilling their responsibilities when assessing management’s processes and reporting of performance measures; and
  • investors, contributors, lenders and other resource providers in setting expectations and seeking compliance with the framework as part of obtaining the information they need.

This Framework applies to a performance measure that is reported separately from and is not part of a set of financial statements (including note disclosures) prepared in accordance with an accounting framework, such as Canadian GAAP, IFRS® Standards or US GAAP; and is:

  • a non-GAAP financial measure that is an adjustment to a GAAP financial measure*, such as funds from operations and adjusted earnings;
  • another financial measure that is a financial measure and is not a GAAP or non-GAAP financial measure, such as dollars of order backlog and cost per dollar raised; or
  • a non-financial measure or operational measure that reports physical or non-financial data, such as number of volunteers, employees, members, active users or new stores, and performance ratings on client service, safety and reliability.

In December 2018, the AcSB released the Framework for Reporting Performance Measures, a voluntary guidance to enhance the relevance of financial reporting.

The Framework was created to help entities – from public to private companies, to not-for-profits and pension plans – improve the quality of financial and non-financial performance measures they choose to report outside of the financial statements. The Framework sets out best practice guidance for:

  • selecting, developing and reporting performance measures; and
  • implementing and maintaining controls and governance practices.

 

Other developments

December 2018

On December 12, 2018, in order to help enhance the relevance of financial information, the AcSB released a framework responding to the needs of stakeholders about the performance measures reported by entities. The framework is aimed at enhancing the usefulness and transparency of performance measures for users when management chooses to report them outside financial statements.

July 2018

On July 19, 2018, the AcSB issued a stakeholder survey related to its Draft Framework for Reporting Performance Measures requesting stakeholders to join the discussion and help improve financial and non-financial performance measures reported outside of financial statements.

June 2018

On June 14, 2018, the AcSB issued a Draft Framework for Reporting Performance Measures to enhance the relevance of financial information for all entities – from public and private companies, to not-for-profit organizations and pensions plans. Comments are requested by September 17, 2018.

 

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