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Deloitte comment letter on the ESMA consultation on alternative performance measures

Published on: 14 May 2014

Deloitte Touche Tohmatsu Limited's European Economic Area member firms have submitted a letter of comment on the European Securities and Markets Authority (ESMA) consultation on Guidelines on Alternative Performance Measures published in February 2014.

We see the need to address the presentation of alternative performance measures (APMs) in various types of communications by issuers to the investors' community as we believe that APMs can add value to an entity's communication with investors if they are based on commonly shared guidelines regarding the presentation of and related disclosures about them.

We also note that the debate is not restricted to Europa alone and point to the IFAC's draft guide on the use of supplementary financial measures published in February 2014 and IASB's April 2014 decision to undertake a research project, as part of the disclosure initiative project, on the matter. We therefore recommend that ESMA ensures, if it has not done so already, that their proposals are shared with and supported by the IASB and other regulators within IOSCO before any final guidelines are published.

Regarding the proposed guidelines, our most significant concerns relate to the scope of documents to which the APM guidelines would apply as well as the type of APMs that would be captured in the proposed scope.

  • We understand that the proposed guidelines may apply to a scope of documents larger than those that National Competent Authorities (NCAs) would usually review. While we understand the desire that APM guidelines apply to any document used to communicate with the investors' community, we question how their application could be enforced if the scope of documents to which they apply goes beyond the reach of NCAs.
  • We also believe that the scope of the guidelines is too broad regarding the types of APMs that would be captured. We suggest that the guidelines are limited to the presentation of, and information about, APMs that are financial measures that have been prepared using financial data underlying the preparation of an entity's historic, current or future financial statements. To our mind this would support the primary objective of enhancing the quality of financial information provided to users.

In addition to our concerns regarding scope, we also believe that it is essential that users have transparent information on the level of external assurance, if any, attached to APMs presented.

The full comment letter is available for download below.

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