IOSCO Publishes Report on Non-GAAP Financial Measures

IOSCO issued its final report in response to comments it received on the Proposed Statement on Non-GAAP Financial Measures. The final report outlines IOSCO's expectations for issuers with respect to their presentation of financial measures other than those prescribed by Generally Accepted Accounting Principles ("GAAP"). The final report identified numerous elements that would contribute to the reliability and comparability of non-GAAP financial measures over time. These elements are designed to reduce the potential for misleading disclosures concerning qualitative reconciliation, adjustments to recurring items, and access to information.

In response to comments received on the initial proposal, the final report:

• narrowed its scope,

• established that non-GAAP financial measures should not be presented with more prominence than the most directly comparable measure calculated in accordance with GAAP; and

• emphasized the need to explain sufficiently why an item has been identified as non-recurring, infrequent or unusual, if it is reasonably likely to reoccur in the foreseeable future, or if it is an activity that affected the entity in the recent past.