IOSCO issues final statement on non-GAAP financial measures

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The International Organization of Securities Commissions (IOSCO) has
finalised its guidance setting out IOSCO's expectations for issuers with
respect to the presentation of financial measures other than those prescribed
by Generally Accepted Accounting Principles (GAAP), so called 'non-GAAP financial measures'.

The IOSCO guidance is contained in the Statement on Non-GAAP Financial Measures, which
sets out IOSCO's expectations for the presentation of such measures by issuers,
including that sufficient information should accompanying non-GAAP financial
measures to aid in their understanding and that the measures should be
presented transparently and with disclosure of how they are calculated.

The statement provides specific
expectations in the following broad categories:

Defining the non-GAAP financial measure. This encompasses providing
a clear explanation of the basis of calculation, clearly labelling measures
such that they are distinguished from GAAP measures, explaining why the
measures are useful, and explicitly stating the non-GAAP measure does not have
a standardised meaning and may not be comparable between entities.

Unbiased purpose. This requires that non-GAAP financial measures should
not be used to avoid presenting adverse information to the market.

Prominence of GAAP measures versus non-GAAP financial measuress.
Non-GAAP measures and their most directly comparable GAAP measures should be
presented with equal prominence, or the GAAP measure given greater prominence,
and non-GAAP measures should not in any way confuse or obscure the presentation
of GAAP measures.

Reconciliation to comparable GAAP measures. Reconciliations should
be provided between non-GAAP financial measures and their most directly
comparable GAAP measure presented in the financial statements, with adjustments
explained and reconcilable to the financial statements or information about how
they are calculated provided.

Presentation of non-GAAP financial measures consistently over time.
Measures should generally remain consistent from period to period, include
comparative information, with any changes in composition explained and also
reflected in comparative information and discontinued use of a non-GAAP measure
sufficiently motivated.

Recurring items. Items that are reasonably likely to affect past
and future periods, such as restructuring costs and impairment losses, should
not be described as non-recurring, infrequent or unusual.

Access to associated information. The information that issuers
provide regarding non-GAAP financial measures should be readily and easily
accessible to third parties.

The statement is intended to be
used by entities applying International Financial Reporting Standards (IFRSs)
and other accounting principles.

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