There’s a growing tendency to bury the IFRS numbers, but does this simply obscure company performance and lead to less consistency across financial reporting under IAS 1, Presentation of Financial Statements, asks Andrew Marshall FCA, senior technical partner at KPMG UK
Understanding reported earnings should be simple. It is the bottom line, isn’t it? However, the number of listed companies which start their narrative reporting using the International Financial Reporting Standards (IFRS) numbers in their income statement continues to diminish. Instead we see a proliferation of measures: underlying earnings, adjusted earnings, EBITDA, earnings before acquisition items, earnings before special items, earnings before exceptionals, etc.
The list is endless, as is the range of items which companies determine they need to adjust for to explain what their performance in the period ‘really was’. What do they all mean? At the same time, in some sets of accounts you may to turn through many pages before you can find reference to IFRS numbers.
