As noted in an IASB newsletter, Investor Update, the international standard-setter and related regulators are as concerned as their U.S. counterparts about the proflieration of “unconventional” financial reporting metrics being presented with traditional financial statement information. However, unlike the guidance in U.S. GAAP, IASB standards does provide some leeway for presenting and disclosing “non-IFRS” sub-totals along with standard IFRS-based financial information.
As pointed out in the Investor Update:
“Applying IAS 1, companies are permitted to present line items and subtotals in the financial statements (in the statement of profit or loss or the notes) that are relevant to understanding financial performance. This does not mean that the presentation can take on a ‘Wild West’ approach and still satisfy IFRS requirements. No—to satisfy IAS 1 amendments, ‘non-IFRS’ subtotals and totals cannot be accorded special treatment or given more prominence than subtotals and totals set out in IFRS Standards. The ‘non-IFRS’ numbers must be: · verifiable—line items must be required or permitted by IFRS Standards; · transparent—the presentation and labelling must enhance understandability; and · consistent—the presentation must be consistent from period to period.” (IASB Investor Update, July 2016, p. 3).
In addition to providing a perspective on IFRS guidance related to non-IFRS reporting, the Investor Update provides some advice to investors when they are assessing the non-IFRS financial metrics provided by management.
Further, the Investor Update discusses proposed guidance to be issued later in 2016 addressing non-IFRS financial metrics reported in IFRS-based financial reports.
Lastly, the Update lists publications issued by international regulatory bodies on non-IFRS financial metrics (also called “alternative” performance measures”), such as the final regulations issued by the European Securities and Markets Authority (“ESMA”), an independent EU Authority established to support EU efforts to safequard the EU financial system.