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By David R. Jones
Feb. 23 — International financial reporting standards shouldn't bar the use of alternative performance measures (APMs) in the notes of financial statements, the International Accounting Standards Board said Feb. 19.
The preliminary decision on APMs came during the board's monthly meeting in London during which members discussed how non-IFRS information should be treated in the IASB's forthcoming Principles of Disclosure discussion paper.
APMs typically convey measure of performance “to which the entity gives more emphasis than it does to the IFRS measures,” IASB staff said in a document drafted for the meeting.
Commonly used APMs include underlying earnings, cash earnings and normalized profits.
“Most concerns we hear within the context of non-IFRS information relate to the presentation and disclosure of APMs,” the staff paper said.
The Principles of Disclosure paper could include efforts to address disclosure of financial information that falls outside generally accepted accounting principles and IFRS, IASB senior technical director Alan Teixeira told Bloomberg BNA Feb. 20.
“You can't block out non-GAAP numbers,” he said.
The board is assessing how to allow—but constrain—inclusion of non-IFRS information within IFRS reporting.
The discussion paper will be among IASB's early steps in implementing the disclosure initiative, which board chairman Hans Hoogervorst said last year is designed “to improve the effectiveness of disclosures by stimulating preparers to use more judgment in their decisions on disclosures”.
IASB will consider further topics for possible inclusion in the discussion paper at its March meeting in London.
The board plans to wrap up its discussions on the initiative by mid-2015, with the goal of publishing the discussion paper by the end of the year.
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Information on the Disclosure Initiative is available at http://www.ifrs.org/Current-Projects/IASB-Projects/Disclosure-Initiative/Pages/Disclosure-Initiative.aspx.
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