CESR consults on recommendations on the use of alternative performance measures to ensure best practice by companies in the information prepared for investors. European listed companies use widely differing alternative performance measures, most commonly used for revenues, earnings and earnings per share. The draft recommendation contains several proposals for establishing some clear principles that companies should consider in the preparation and disclosure of this information.
The adoption of International Financial Reporting Standards (IFRS) in Europe will bring about the elimination of binding formats for consolidated financial statements, as set out in the 7th Accounting Directive, and is likely to increase the use of alternative performance measures in the future.
The main recommendations include among others that companies should respect the IFRS principles for financial statements for all types of financial information. Issuers should present alternative performance measures only in combination with defined measures and should explain the differences between both measures. To ensure the information is reliable, comparable and consistent, CESR recommends that the management of the company considers involving the auditor in relation to the preparation and presentation of alternative performance measures.
Deadline for comments is 11 July 2005.
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© CESR - Committee of European Securities Regulators
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