ASIC today released for consultation a draft regulatory guide on disclosing financial information prepared other than in accordance with accounting standards (non-conforming financial information).

Entities are including financial information in public documents more and more, including annual reports, market announcements and transaction documents that do not conform to accounting standards. In particular, it has become increasingly common for entities to present alternative profit disclosures.

ASIC Commissioner, Michael Dwyer, said ‘While non-conforming financial information can provide useful information to investors and differing users of financial information, it also has the potential to be misleading if for example it is used to mask bad news or to smooth results given undue prominence.’

‘The draft ASIC guide is intended to assist companies to reduce the risk that this type of information is misleading’, Mr Dwyer said.

Proposals include providing reconciliation to the statutory financial statements and being consistent in the modifications applied to the statutory financial information from year to year.

Draft Regulatory Guide: Disclosing financial information other than in accordance with accounting standards provides tailored guidance on the use of non-conforming financial information in each of the following three types of documents:

• financial reports

• documents accompanying a financial report (e.g. the directors' report), market announcements, presentations to investors and briefings to analysts; and

• transaction documents such as prospectuses.

Consultation Paper 150 seeks feedback on these proposals by 12 May 2011.

Download a copy of the consultation paper and draft regulatory guide