11 Nov 2011

Reporting of profit measures to be tightened

1:40 pm on 11 November 2011

The Financial Markets Authority is planning to tighten the use of underlying and normalised profit by firms when reporting their results.

Some analysts are concerned that attempts by firms to give a more accurate picture of their financial performance by using what are called alternative performance measures, may be misleading investors.

Head of compliance monitoring Elaine Campbell says the FMA will consult with finance chiefs, accountants and analysts so it can eventually issue guidelines.

Broadly, she says, the alternative measures should not be misleading, must be able to reconciled with standard accounting measures, and any adjustment should not be made just to remove bad news.

She says the aim is to have the guidelines in place by the time the June 2012 financial year ends.

The Australian Securities and Investments Commission is also considering this issue and will report next month.