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IOSCO issues final report on non-GAAP financial measures

  • IOSCO (International Organization of Securities Commissions) (dark gray) Image

Jun 08, 2016

The International Organization of Securities Commissions (IOSCO) has issued a final report, “Statement on Non-GAAP Financial Measures,” which sets out IOSCO's expectations for the presentation of non-GAAP measures by issuers.

For instance, the report indicates that disclosures about non-GAAP financial measures should contain enough information for “investors and other users” to understand “the messages that the measures are intended to convey” and that presentation of the measures should be transparent and include dis­clo­sure of how they are cal­cu­lated.

The report, which is intended to be used by entities applying IFRSs and other accounting principles, divides IOSCO’s ex­pec­ta­tions regarding disclosures about non-GAAP financial measures into the following broad cat­e­gories:

  • Defining the non-GAAP financial measure.
  • Unbiased purpose.
  • Promi­nence of GAAP measures versus non-GAAP financial measures.
  • Rec­on­cil­i­a­tion to com­pa­ra­ble GAAP measures.
  • Pre­sen­ta­tion of non-GAAP financial measures con­sis­tently over time.
  • Recurring items.
  • Access to as­so­ci­ated in­for­ma­tion.

For more information, see the press release and final report on IOSCO’s Web site.

Similarly, the SEC has taken steps in response to its increasing concerns that non-GAAP measures may be misleading, more prominent than comparable GAAP measures, or inconsistently presented from period to period. See Deloitte’s May 23, 2016, Heads Up for more information.

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