NON-GAAP PRESENTATION OF OPERATING SEGMENTS

INTRODUCTION

Financial statements represent only one of several reports used by entities to communicate decision-useful information. ‘Key performance measures’ beyond the ones reported in the financial statements add value to users and enhances the users’ ability to predict future earnings.

International Organisation of Securities Commission (IOSCO) guidelines require entities not to present Alternate Performance Measures (APMs), another way of describing Non-GAAP information, with more prominence than the most directly comparable GAAP measure. Additionally, APMs should not, in any way, confuse or obscure the presentation of the GAAP measures. The European Securities and Markets Authority (ESMA) has also issued similar guidelines. There are no guidelines issued by the Indian standard-setting authority on using Non-GAAP information in the financial statements. Financial statements presented under Ind AS and Schedule III framework will not comply with those frameworks if information not required therein is disclosed in the financial statements.

Interestingly, there is one exception to using Non-GAAP measures in financial statements. APMs that form part of segment disclosures under Ind AS 108 Operating Segments are excluded from these restrictions. Ind AS 108 allows the use