IOSCO issues Statement on Non-GAAP Financial Measures to assist issuers in providing clear disclosure for investors

IOSCO/MR/14/2016

   

Madrid, 7 June 2016

  

The Board of the International Organization of Securities Commissions (IOSCO) today issued the Statement on Non-GAAP Financial Measures.

  

The Statement is intended to assist issuers in providing clear and useful disclosure for investors and other users of financial measures other than those prescribed by Generally Accepted Accounting Principles (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, nonGAAP 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, wouldcontribute 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.  

 

 

NOTES TO THE EDITORS

 

1. IOSCO is the leading international policy forum for securities regulators and is recognized as the global standard setter for securities regulation.  The organization's membership regulates more than 95% of the world's securities markets in more than 115 jurisdictions and it continues to expand.

 

2. The IOSCO Board is the governing and standard-setting body of the International Organization of Securities Commissions (IOSCO), and is made up of 34 securities regulators. Mr. Ashley Alder, the Chief Executive Officer of the Securities and Futures Commission (SFC) of Hong Kong, is the Chair of the IOSCO Board.   The members of the IOSCO Board are the securities regulatory authorities of Argentina, Australia, Belgium, Brazil, China, Egypt, France, Germany, Hong Kong, India, Indonesia, Ireland, Italy, Jamaica, Japan,  Kenya, Malaysia,  Mexico,  Nigeria,  Ontario,  Pakistan, Peru, Quebec, Saudi Arabia, Singapore, South Korea, Spain, Sweden, Switzerland, the Netherlands, Turkey, the United, Kingdom, and the United States. 

 

3. The Growth and Emerging Markets Committee is the largest Committee within IOSCO, representing close to 80 per cent of the IOSCO membership, including 10 of the G20 members. Mr. Ranjit Ajit Singh, Chairman of the Securities Commission Malaysia and Vice Chair of the IOSCO Board, is the Chair of the GEM Committee. The Committee brings members from growth and emerging markets together and communicates members’ views and facilitates their contribution across IOSCO and at other global regulatory discussions. The GEM Committee’s strategic priorities are focused, among others, on risks and vulnerabilities assessments, policy and development work affecting emerging markets, and regulatory capacity building.  

 

4. IOSCO aims through its permanent structures:

·         to cooperate in developing, implementing and promoting adherence to internationally recognized and consistent standards of regulation, oversight and enforcement in order to protect investors, maintain fair, efficient and transparent markets, and seek to address systemic risks;

·         to enhance investor protection and promote investor confidence in the integrity of securities markets, through strengthened information exchange and cooperation in enforcement against misconduct and in supervision of markets and market intermediaries; and 

·         to exchange information at both global and regional levels on their respective experiences in order to assist the development of markets, strengthen market infrastructure and implement appropriate regulation.  

 

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