By Judith Ugwumadu | 26 September 2014

A special accountancy committee has issued an international good practice guide that provides recommendations on how to use supplementary financial measures for high-quality reporting. 

Earlier this week, the Professional Accountants in Business (PAIB) committee, part of the International Federation of Accountants, published Developing and reporting supplementary financial measures aimed at helping accountants in organisations of all sizes including education, the public and not-for-profit sectors make more informed financial decisions.

IFAC said that, because supplementary financial measures fall outside the remit of Generally Accepted Accounting Principles (GAAP), they might lack transparency, comparability, and consistency.

To overcome this challenge, the PAIB committee’s guidance established a set of principles to develop and report useful measures in accordance with the qualitative characteristics of financial information.

PAIB committee chair Charles Tilley said: ‘Supplementary financial measures can provide stakeholders with a greater understanding of an organisation’s financial performance, helping them make more informed financial decisions.

‘Because supplementary financial measures are widely used, and can contribute to the overall picture of an organisation, our aim is to improve their quality and usefulness.’

Karyn Brooks, chair of the PAIB committee’s reporting advisory group, added: ‘All measures in a financial report, whether they are prescribed by GAAP or are supplementary, should be clearly defined to provide comprehensive understanding of an organisation’s financial performance.

‘This guidance will serve as a reference for the development, implementation, location and disclosure of supplementary financial measures.’