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IASB Chair: bringing more transparency and discipline to non-GAAP

International Accounting Standards Board Chair Hans Hoogervorst said that the Board will propose accounting standard changes that will improve transparency and discipline around companies' self-created performance measures, also called non-GAAP.

Speaking at the IFRS Foundation's annual international conference on 20-21 June, this year organised in London, Hoogervorst talked about the Board's work to maintain and strengthen the relevance of financial reporting.

He set out the Board's plans in two areas:

  • improving the primary financial statements to provide investors with more useful and comparable information, including more transparency and discipline around companies' self-defined management performance measures; and
  • updating and upgrading the Board's guidance to companies on writing management commentary sections of annual reports to give investors more useful information that provides context to the financial statements.

Hoogervorst said that the Board accepts that non-GAAP is here to stay. However, he expects its use and abuse will diminish over time as a result of the changes to IFRS Standards the Board proposes to make. 

He said: “The challenge for the Board is to build upon the success of IFRS Standards—one of the most successful standards in global finance. For us, that means improving the structure and quality of the financial statements and creating a better platform for broader developments in corporate reporting.”

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