Continue Use of Alternative Performance Measures: Investors

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By Steven Marcy

Dec. 7 — Investors have implored the International Accounting Standards board to continue to allow alternative financial reporting measures to be used to depict a company’s performance, IASB member Mary Tokar told an accounting conference.

Investors say “there are some very good performance measures that are not specifically mandated” by international financial reporting standards “and please do not ban them—they’re useful,” Tokar told the American Institute of CPAs annual conference on Securities and Exchange Commission and Public Company Oversight Board developments Dec. 7.

Regulator Scrutiny

The use of unaudited alternative performance measures (APMs) that are not closely tied to generally accepted accounting principles has drawn increasing attention from regulators and standard setters, who are wary they can distort a company’s true financial performance.

The SEC has said it will continue to watch their use closely. IASB later this month plans to consider whether to launch a peformance-reporting project. IASB Chairman Hans Hoogervorst told the conference Dec. 6 the board wouldn’t seek to ban APMs.

Use Powers for Good

“I think the challenge—as with many comic superheroes—is to use their powers for good and not for evil,” Tokar said of the APMs. “That is what we were trying to encourage people to do” with the December 2014 changes to International Accounting Standard 1.

“Evil” uses of APMs in Tokar’s perspective would be ones that are “lopsided and always flattering, inconsistently calculated or being unclear about what adjustments are being made,” she said.

Recognize and Reconcile

The IAS 1 2014 changes gave permission to separate out performance factors from the financial statement “if this disaggregatation results in line items that are all recognized and measured in accordance with IFRS,” Tokar said.

The APMs must be “clear” and “be reconciled” to the “subtotals” within the actual financial statements, Tokar said. The y also “should have no greater prominence than those exclusively-required IFRS line items,” she said.

To contact the reporter on this story: Steven Marcy in Washington at

To contact the editor responsible for this story: S. Ali Sartipzadeh at

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