CSA keeps adjusted EBITDA under non-GAAP rules as IFRS 18 nears
Here’s the snag. NI 52-112 defines a non-GAAP financial measure as, among other things, one that isn’t disclosed in the financial statements. The CSA said that without the amendments, measures such as adjusted net income and adjusted EBITDA would fall outside the rule once they moved into those notes. The fix folds management-defined performance measures into the definition.
“Under the Amendments, issuers will not be required to materially change their reporting practices for non-GAAP financial measures disclosed outside the financial statements,” the notice said.
What banks, insurers and wealth firms need to know
Financial institutions keep a familiar break. Relief once found in blanket orders and Ontario Rule 52-503 is now in the rule itself, covering reporting issuers that are, or have a subsidiary or affiliate that is, a financial institution subject to guidelines from the Office of the Superintendent of Financial Institutions or Quebec’s Autorité des marchés financiers. The measure must follow the guideline, which the issuer must name near the measure’s first mention. In British Columbia, BC Instrument 52-513 continues to apply instead.
Registered firms keep their carve-out for client documents, like analyst reports on unrelated companies, when the figures don’t relate to the firm’s own financial performance, position or cash flow. The companion policy also lists assets under management, meaning client-owned assets not reported in the issuer’s primary financial statements, as an example of a figure outside the non-GAAP definition.
Additional subtotals, extra lines a company adds to its main financial statements, can appear in other documents only alongside the most directly comparable measure and with no more prominence. Companies can also point to the notes instead of repeating details on management-defined performance measures. That shortcut doesn’t cover the required reconciliation in earnings releases, which the CSA described as “one of the most critical documents relied upon by investors.”
