FRC Thematic Review on APM reporting by UK companies finds room for improvement

Released 07 October 2021

A review by the Financial Reporting Council (FRC) into the use of Alternative Performance Measures (APMs) by UK-listed companies has found that companies need to be more transparent about their use.

The FRC’s review found that, while companies generally provided good quality APM disclosures, their context needs to be better explained, particularly as profit-based APMs tended to be more favourable than their Generally Accepted Accounting Practice (GAAP) results. Companies should clearly define their APMs and explain why they are needed, but not give them greater focus than their GAAP equivalents. Relevant GAAP information can also be obscured by high usage of alternative measures; companies are encouraged to consider the number of APMs that they present.

Other aspects of APM reporting that the FRC expects companies to improve include:

providing an even-handed treatment of gains and losses when classifying amounts as adjusting items;

ensuring APM reconciliations and calculations are complete and transparent;

explaining terms used in describing APMs, such as providing ‘underlying results’ or adjusting for ‘non-recurring’ items; and

providing more detailed information about the cash and tax impact of adjusting items, and on the potential impact of adjustments for multi-year restructuring programmes on future results.

More information can be found at

Be the first to vote

Rate this article