OSC Releases Results of Non-GAAP Financial Measures and Additional GAAP Measures Disclosure Review

TORONTO, Dec. 11, 2013 /CNW/ - The Ontario Securities Commission (OSC) today published OSC Staff Notice 52-722 Report on Staff's Review of Non-GAAP Financial Measures and Additional GAAP Measures, which sets out the results of the OSC's recent disclosure review. The Notice provides further guidance on complying with staff's expectations as  outlined in CSA Staff Notice 52-306 Non-GAAP Financial Measures and Additional GAAP Measures. 

With the adoption of IFRS, staff have observed that issuers are increasingly using both Non-GAAP Financial Measures (NGM) and Additional GAAP Measures (AGM).

A NGM is a numerical measure generally derived from an entity's profit or loss determined in accordance with GAAP, which includes or excludes certain items to present supplemental information on an entity's financial performance.  NGMs are typically disclosed in public documents, including news releases, MD&A, prospectus filings, websites and marketing materials.  An AGM is a financial measure that is presented in an issuer's financial statements in the form of a line item, heading or subtotal.  AGMs should only be presented if they are relevant to an understanding of an issuer's financial statements.

In conducting the review, the OSC assessed the disclosure of 50 Ontario-based reporting issuers against how well they met staff expectations (from CSA Staff Notice 52-306). The results of the review were disappointing.  Many issuers needed to improve the quality of their disclosure related to NGM and AGM;  82 per cent of issuers in the review committed to disclosure enhancements in a future filing. The absence of needed improvements in these areas may potentially be misleading and cause investor confusion.

"Investors are entitled to clear and transparent information when Non-GAAP financial measures and Additional GAAP measures are presented. These measures must be easy to understand and be relevant," said Huston Loke, Director of Corporate Finance. "We encourage issuers and their advisers to refer to the guidance in this Notice as they prepare their annual and interim filings."

OSC Staff Notice 52-722 can be found on the OSC's website at www.osc.gov.on.ca.

SOURCE: Ontario Securities Commission

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