The Professional Accountants in Business (PAIB) Committee of the International Federation of Accountants^® (IFAC^®) today issued International Good Practice Guidance, Developing and Reporting Supplementary Financial Measures. The guidance provides recommendations for the use of supplementary financial measures as part of high-quality financial reporting in organizations.

Since supplementary financial measures fall outside the remit of Generally Accepted Accounting Principles (GAAP), they may lack transparency, comparability, and consistency—essential qualities for investors and other stakeholders wanting to assess financial performance. To address this challenge, the PAIB Committee’s guidance establishes a set of principles that allows professional accountants to develop and report useful measures in accordance with the qualitative characteristics of financial information.

“Supplementary financial measures can provide stakeholders with a greater understanding of an organization’s financial performance, helping them make more informed financial decisions,” said Charles Tilley, Chair of the PAIB Committee. “Because supplementary financial measures are widely used, and can contribute to the overall picture of an organization, our aim is to improve their quality and usefulness.”

The guidance builds on the qualitative characteristics of useful financial reporting: relevant and faithful representation, as well as comparability, verifiability, timeliness, and understandability.

“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 organization’s financial performance,” said Karyn Brooks, Chair of the PAIB Committee’s Business Reporting Advisory Group. “This guidance will serve as a reference for the development, implementation, location, and disclosure of supplementary financial measures.”

As part of IFAC’s commitment to strengthen financial reporting practices and the PAIB Committee’s efforts to support professional accountants in business, this guidance reinforces accountants’ ability to produce high-quality reports that enable sound decision making about organizations.

About International Good Practice Guidance
International Good Practice Guidance issued by the PAIB Committee cover areas of international and strategic importance in which professional accountants in business are likely to engage. In issuing principles-based guidance, IFAC seeks to foster a common and consistent approach to those aspects of the work of professional accountants in business not covered by international standards. IFAC seeks to clearly identify principles that are generally accepted internationally and applicable to organizations of all sizes in commerce, industry, education, and the public and not-for-profit sectors. Previously issued guidance is available on the IFAC website, including Preface to IFAC’s International Good Practice Guidance.

About the PAIB Committee
The PAIB Committee serves IFAC member bodies and professional accountants worldwide who work in commerce, industry, financial services, education, and the public and the not-for-profit sectors. Its aim is to promote and contribute to the value of professional accountants in business by increasing awareness of the important roles professional accountants play, supporting member bodies in enhancing the competence of their members, and facilitating the communication and sharing of good practices and ideas.

About IFAC
IFAC is the global organization for the accountancy profession, dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. It is comprised of 179 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

IFAC submitted a comment letter to the Financial Services and the Treasury Bureau (FSTB)'s Consultation Paper, Proposals to Improve the Regulatory Regime for Listed Entity Auditors. IFAC commends the FSTB on issuing a very thorough and thoughtful consultation paper that addresses a range of matters that aims to improve the regulatory regime for listed entity auditors in Hong Kong.

The SMP Committee submitted this comment letter to the IAASB in response to their Exposure Draft: Proposed Changes to the International Standards on Auditing (ISAs): Addressing Disclosures in the Audit of Financial Statements.

IFAC^® SMP Committee Chair, Giancarlo Attolini, spoke at the Conferência Brasileira de Contabilidade e Auditoria Independente, hosted by IBRACON, about IFAC’s activities to support small- and medium-sized practices (SMPs), including:

• supporting the implementation of international standards;
• providing input to the development of international standards; and
• contributing to the content and strategy for the Global Knowledge Gateway.

He also shared insights from the last IFAC SMP Quick Poll, which is conducted annually in over 15 languages to take a snapshot of the issues, trends, and current state of SMPs and their small business clients.

During the annual meeting of International Organization of Supreme Audit Institutions (INTOSAI)’s Subcommittee on Internal Control Standards, IFAC Senior Technical Manager Vincent Tophoff gave a presentation on the International Framework Good Governance in the Public Sector, a joint project of IFAC and the Chartered Institute of Public Finance and Accountancy (CIPFA) published in July 2014.

The presentation discusses the key definitions, structure, and guiding principles of the Framework, as well as its purpose and development process.

The SMP Committee submitted this comment letter to the International Ethics Standards Board for Accountants in response to their Exposure Draft, Proposed Changes to Certain Provisions in the Code Addressing Non-Assurance Services for Audit Clients. 

The International Framework: Good Governance in the Public Sector, jointly developed by IFAC and the Chartered Institute of Public Finance and Accountancy (CIPFA) to help improve and encourage effective public sector governance. The Framework encourages better governed and managed public sector organizations by improving decision making and the efficient use of resources.

The IFAC website is now using Google Translate, which makes the entire site available in 80 languages. The Google Translate button is located on the upper right of the IFAC website, near the search field.

Please note, if you wish to reproduce or translate materials published by IFAC, you must still submit a request to the Translations & Permissions Department.

Argentina’s most recent default adds to the long list of government defaults, bailouts, and restructurings over the years. It also serves to highlight that sovereign debt problems evident during the recent global financial crisis continue to exist.

Like many countries, Argentina does not prepare accrual-based financial statements, which are essential for effective financial management. Accrual-based financial statements show a government’s total assets, liabilities, and cash flows, and provide other important disclosures about future commitments and contingencies—all essential information for making proper decisions and ensuring that there is sound financial management for today, tomorrow, and for a long-term sustainable future. Many countries around the world—including many in Europe, that received multi-billion dollar bailouts over the last few years—are also in need of better government financial reporting.

According to Standard & Poor’s (S&P), Argentina has about $200 billion in foreign-currency debt, including $30 billion of restructured bonds. That’s important to know. But what are the Argentinian government’s total liabilities? That is, its liabilities other than debt, including social security and pension obligations, which are long-term commitments that burden future generations.

“Countries continue to default on their debt, yet aren’t pushed by governments, credit rating agencies, or financial commentators to significantly improve public sector financial reporting,” said Fayezul Choudhury, Chief Executive Officer of IFAC. “These same countries require private sector companies in their jurisdictions to publish audited, accrual-based, financial statements when raising funds in capital markets. What justifies the double standard whereby a government compels private companies to be transparent and accountable, when it avoids using accrual accounting itself—despite having bonds traded on the capital markets?”

Last year, the G-20 Finance Ministers and Central Banks Governors declared a “goal of strengthening the public sector balance sheet” and of “looking at transparency and comparability of public sector reporting, and monitoring the impact of financial sector vulnerabilities on public debt.”  IFAC strongly recommends that the G-20 makes enhanced public sector financial management a key priority this year and in the future.

“It is critical that the G-20 focuses on initiatives to improve governments’ financial management and reporting practices. This means making accrual-based financial reporting in accordance with high-quality, globally accepted standards, such as the International Public Sector Accounting Standards™ (IPSASs™), a key objective,” said Mr. Choudhury. “In fact, IFAC urges the G-20 to promote greater adoption of IPSASs, by adding these standards to the Financial Stability Board’s list of standards that are designated as deserving of priority implementation.”

In a related matter, the U.S. Securities and Exchange Commission (SEC) this week charged Kansas with failing to disclose a multibillion-dollar pension liability to bond investors. Choudhury commented, “We applaud the SEC for compelling states and localities to properly disclose liabilities and risks and provide a complete picture of financial condition to investors and other stakeholders. This is imperative so that the $3.7 trillion municipal bond market can operate efficiently and effectively.”

About IFAC
IFAC is the global organization for the accountancy profession, dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. It is comprised of 179 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.