The Professional Accountants in Business (PAIB) Committee of the International Federation of Accountants® (IFAC®) today issued International Good Practice Guidance, Developing and Reporting Supplementary Financial Measures. The guidance provides recommendations for the use of supplementary financial measures as part of high-quality financial reporting in organizations.
Since supplementary financial measures fall outside the remit of Generally Accepted Accounting Principles (GAAP), they may lack transparency, comparability, and consistency—essential qualities for investors and other stakeholders wanting to assess financial performance. To address this challenge, the PAIB Committee’s guidance establishes a set of principles that allows professional accountants to develop and report useful measures in accordance with the qualitative characteristics of financial information.
“Supplementary financial measures can provide stakeholders with a greater understanding of an organization’s financial performance, helping them make more informed financial decisions,” said Charles Tilley, Chair of the PAIB Committee. “Because supplementary financial measures are widely used, and can contribute to the overall picture of an organization, our aim is to improve their quality and usefulness.”
The guidance builds on the qualitative characteristics of useful financial reporting: relevant and faithful representation, as well as comparability, verifiability, timeliness, and understandability.
“All measures in a financial report, whether they are prescribed by GAAP or are supplementary, should be clearly defined to provide comprehensive understanding of an organization’s financial performance,” said Karyn Brooks, Chair of the PAIB Committee’s Business Reporting Advisory Group. “This guidance will serve as a reference for the development, implementation, location, and disclosure of supplementary financial measures.”
As part of IFAC’s commitment to strengthen financial reporting practices and the PAIB Committee’s efforts to support professional accountants in business, this guidance reinforces accountants’ ability to produce high-quality reports that enable sound decision making about organizations.
About International Good Practice Guidance
International Good Practice Guidance issued by the PAIB Committee cover areas of international and strategic importance in which professional accountants in business are likely to engage. In issuing principles-based guidance, IFAC seeks to foster a common and consistent approach to those aspects of the work of professional accountants in business not covered by international standards. IFAC seeks to clearly identify principles that are generally accepted internationally and applicable to organizations of all sizes in commerce, industry, education, and the public and not-for-profit sectors. Previously issued guidance is available on the IFAC website, including Preface to IFAC’s International Good Practice Guidance.
About the PAIB Committee
The PAIB Committee serves IFAC member bodies and professional accountants worldwide who work in commerce, industry, financial services, education, and the public and the not-for-profit sectors. Its aim is to promote and contribute to the value of professional accountants in business by increasing awareness of the important roles professional accountants play, supporting member bodies in enhancing the competence of their members, and facilitating the communication and sharing of good practices and ideas.
About IFAC
IFAC is the global organization for the accountancy profession, dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. It is comprised of 179 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.