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.