IASB proposes changes to financial reporting

The International Accounting Standards Board (IASB) has proposed improvements to the way information is communicated in financial statements, with a focus on financial performance.

The accounting body said that in response to investor demand, the proposals would require more comparable information in the statement of profit or loss and a more “disciplined and transparent” approach to the reporting of management-defined performance measures (‘non-GAAP’).

Companies would be required to provide three new profit subtotals, including ‘operating profit’. Operating profit is commonly reported by companies but is currently not defined by IFRS Standards, making meaningful comparisons between companies difficult.

Companies would also be required to disclose management performance measures—subtotals of income and expenses that are not specified in IFRS Standards—in a single note to the financial statements.

Hans Hoogervorst, chair of the IASB, said: “These proposals represent a game changer in the comparability and usefulness of financial statements.”