More NewsFSA keeps watch on indicators

FSA keeps watch on indicators

Alternative profit measures under the microscope

The Financial Services Authority has advised companies using alternative
profit measures in their IFRS accounts to ‘use them properly’ or face the City
watchdog’s full force.

‘We are responsible for ensuring that the information companies prepare for
the market is not misleading,’ an FSA spokeswoman said. ‘The headings under IFRS
are less defined, but if alternate profit measures are used we will check that
they are used properly.’

Since the introduction of IFRS, companies have had to include the impacts of
pension expenses, financial instrument revaluations and stock options costs in
their accounts.

Certain groups have responded by producing alternative profit indicators,
ignoring these factors, in an effort to produce a clearer picture of underlying
performance.

Some experts are concerned about the comparability of statements between
companies using disparate non-statutory indicators.

Peter Elwin, head of accounting and valuation at Cazenove, said it was too
early to tell if there would be a widespread move to providing alternate
measures, but added that financial instrument impacts was one area where
companies would diverge.

‘The market is likely to exclude fair value movements on financial
instruments from earnings per share estimates. Many companies are likely to
provide a profit measure excluding these figures,’ said Elwin.

Earlier this week France’s stock market regulator, Autorité des Marchés
Financiers, said it was considering reminding companies to present clear figures
under IFRS.

Related Articles

Amazon UK halves its corporation tax bill despite increased turnover

More News Amazon UK halves its corporation tax bill despite increased turnover

4m Alia Shoaib, Reporter
Increase in UK business confidence despite Brexit, according to ICAEW

More News Increase in UK business confidence despite Brexit, according to ICAEW

7m Alia Shoaib, Reporter
Live blog: Spring Budget 2017

Corporate Tax Live blog: Spring Budget 2017

9m Accountancy Age editorial
The Curious Incident of the Insolvency Sector in the Light of Economic Turbulence

Insolvency The Curious Incident of the Insolvency Sector in the Light of Economic Turbulence

11m Accountancy Age editorial
Leonard Curtis called in as administrators for builders Boshers

Legal Leonard Curtis called in as administrators for builders Boshers

11m Stephanie Wix, Writer
New Year Honours of 2017

Accounting Standards New Year Honours of 2017

11m Stephanie Wix, Writer
"Not enough time" to implement MTD by 2018, says Tyrie

Corporate Tax "Not enough time" to implement MTD by 2018, says Tyrie

1y Stephanie Wix, Writer
Colin: A spoonful of investment...

Governance Colin: A spoonful of investment...

1y Stephanie Wix, Writer