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May 28, 2012

FMA proposes guidance on non-GAAP information

The New Zealand Financial Markets Authority (FMA) has proposed guidance on the disclosure of non-GAAP financial information in corporate documents, such as transaction documents and market announcements.

In the proposed-guidance the FMA sets forth when non-GAAP financial information should be used and what additional disclosure to include helping to avoid misleading information being included.

The proposal deals with GAAP as defined under New Zealand law and including country equivalents to IFRSs. The draft is aimed at information such as the alternative performance measures of ‘underlying profit’ or ‘normalised profit’.

To ensure non-financial information is not misleading, FMA considers factors such as disclosure as to why the non-GAAP financial information is useful, how it is calculated, and the need for reconciliation to financial information included in the financial statements. 

The FMA also gives guidance on information included in transaction documents such as prospectuses and says financial information in these documents is required under New Zealand law to comply with GAAP in certain respects.

The deadline to comment on the consultation paper is 29 June.


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