FMA plans crackdown on misleading profit reporting
Consultation sought on plans to prevent reporting of "underlying profit" or "normalised profit" being used to "mask bad news".
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Scrutiny Week
The Financial Markets Authority will issue guidelines to prevent companies issuing "misleading" alternative performance measures used to "mask bad news".
Elaine Campbell, head of compliance monitoring at the FMA, said “The use of alternate performance measures such as ‘underlying profit’ and ‘normalised profit’ in public documents including annual reports, market announcements and transaction documents is becoming increasingly common in New Zealand."
The FMA plans to issue draft guidance for public consultation next year and an outline of the planned process can be found on their website.
Ms Campbell said alternate performance measures had their place, but could be misused. "These measures can provide useful information to investors, but they also have the potential to be misleading if used to mask bad news,” she said.
Matt Nippert
Fri, 11 Nov 2011
Fri, 11 Nov 2011
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FMA plans crackdown on misleading profit reporting
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