On 12 December 2011, the Australian Securities and Investments Commission (ASIC) published guidance Regulatory Guide 230 (RG 230) on the use of financial information prepared other than in accordance with accounting standards; that is, non-International Financial Reporting Standards (IFRS) financial information.
RG 230 is effective from 31 December 2011.
Non-IFRS financial information includes profit information that is calculated on a basis other than IFRS, or is calculated according to IFRS but is adjusted (i.e. 'non-IFRS profit information') and financial information that is used to illustrate the effects of a proposed or completed transaction in transaction documents (i.e. 'pro forma financial information').
Non-IFRS financial information is often disclosed in financial reports; transaction documents (including prospectuses, product disclosure statements, scheme of arrangement documents and takeover documents); and other documents for example, documents accompanying financial reports (such as annual reports), market announcements, investor presentations and analyst briefings.
RG 230 provides (amongst other things) the following.
Non-IFRS financial information may only be included in financial statements as notes to the financial statements, where disclosure is necessary to provide a true and correct view of the entity's financial position and performance (which ASIC believes would only be in 'rare circumstances').
Non-IFRS financial information must not be included in transaction documents in a way that may mislead investors, for example, where there is no or inadequate disclosure of the basis of preparation of the non-IFRS financial information. RG 230 contains a table of prescriptive guidelines and helpful explanations for presenting pro-forma financial information in transaction documents, which directors, and their financial or accounting advisers, should follow carefully when disclosing non-IFRS financial information in transaction documents.
Where non-IFRS financial information is disclosed in documents such as annual reports, market announcements, investor presentations and analyst briefings:
Regard should now be had to RG 230 in the preparation of financial reports and other documents and the guidelines in RG 230 considered and worked through where a disclosure of non-IFRS financial information is involved. Whilst ASIC's Regulatory Guide is not mandatory, it is ASIC's opinion on the provisions of the Corporations Act, so any departure from what is recommended in Regulatory Guides runs the risk of being queried by ASIC.
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