Developing and Reporting Supplementary Financial Measures

This guidance seeks to establish a benchmark for the use of supplementary financial measures, in order to improve understanding of an organization’s performance among management, investors, and other stakeholders. It provides principles regarding the qualities a measure should have and disclosures that should accompany them if reported externally. Building on the qualitative characteristics of useful financial information, the guidance recommends professional accountants consider a number of attributes when developing and reporting supplementary financial measures. The guidance also provides a number of tips for disclosure of supplementary financial measures.

The guidance is meant for all organizations that want to use supplementary financial measures, regardless of size or structure, private or public. Many such measures are widely used in both internal and external reporting, for example, Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA); Underlying Profit; and Free Cash Flow.