Reminder – Disclosing non-GAAP financial information
Reminder – Disclosing non-GAAP financial information
With many entities in the process of drafting financial statements for annual reporting periods, this is a timely reminder for entities providing non-GAAP financial information in annual reports that care needs to be taken that this non-GAAP information is:
- Clearly defined
- Clearly labelled
- Does not cause confusion with GAAP information
- Adequately reconciled to the most directly comparable GAAP financial information presented
- Not presented with undue and greater prominence, emphasis or authority than the most directly comparable GAAP financial information
- Consistent from period to period
- Unbiased, and
- Not described as one-off or non-recurring if there is a reasonable likelihood the item will reoccur in a future period.
We highly recommend that entities presenting non-GAAP financial information reconsider whether disclosures conform with the requirements for disclosing non-GAAP financial information as set out in the FMA’s guidance note, Disclosing non-GAAP financial information.
Presentation of additional line items, headings and subtotals within the financial statements
In addition, if an entity elects to include additional line items, headings and/or subtotals in the statement of financial position and/or statement of profit or loss and other comprehensive income, as a reminder, this may only occur when such presentation is relevant to an understanding of the entity’ s financial position or financial performance respectively.
When an entity presents such additional subtotals, care must be taken to ensure that those subtotals:
- Are comprised of line items made up of amounts recognised and measured in accordance with NZ IFRS;
- Are presented and labelled in a manner that makes the line items that constitute the subtotal clear and understandable;
- Are consistent from period to period; and
- Are not displayed with more prominence than the subtotals and totals required in NZ IFRS for the statement of financial position and/or the statement of profit or loss and other comprehensive income.
(NZ IAS 1 paragraphs 55, 55A, 85 and 85A)
More information
You can access further information about disclosing non-GAAP financial information in the FMA’s guidance library here.
Need help?
Please contact our IFRS Advisory team if you require assistance in determining the appropriateness of non-GAAP financial information in your financial reports.
For more on the above, please contact your local BDO representative.