The IOSCO issued a Statement on Non-GAAP Financial Measures to assist issuers in providing clear disclosure for investors and other users of financial measures other than those prescribed by GAAP, and in reducing the risk that such measures are presented in a way that could be misleading.
Non-GAAP financial measures can be useful to issuers and investors because they can provide additional insight into an issuer’s financial performance, financial condition and/or cash flow. The use of non-GAAP financial measures also can provide issuers with flexibility in communicating useful, entity-specific information. Problems can arise, however, when non-GAAP financial measures are presented inconsistently, defined inadequately, or obscure financial results determined in accordance with GAAP. Furthermore, non-GAAP financial measures typically lack standardized meanings, making them difficult to compare from one issuer to another.
To address these concerns, in its Statement, IOSCO has identified 12 elements that compose a frame of reference for the disclosure of non-GAAP financial measures, based on the collective experience of its members with issuer reporting of non-GAAP financial measures.
These elements, if present, would contribute to the reliability and comparability over time of non-GAAP financial measures and reduce the potential for misleading disclosure. In preparing the Statement, the IOSCO Board considered the comment letters it received during the three-month consultation. The accompanying Feedback Statement summarizes the comments received on its Consultation Report and describes the Board´s responses to them.
Full press release
Full Statement
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