13 May 2014 — Consultation Response
On 13 May 2014, FEE issued a comment letter to ESMA on the ESMA consultation on Alternative Performance Measures (APMs).
FEE supports the acknowledgement from ESMA that APMs fulfil an important role in Corporate Reporting. We believe that APMs play an important role in Corporate Reporting as they can improve the communication between the entity and its stakeholders as long as they are reported in a transparent and unbiased manner.
FEE identifies six main areas that the [draft] guidelines should address regarding the reporting of APMs. These are:
1. The definition of APMs
2. The calculation of APMs,
3. Their reconciliation to financial information,
4. Their consistent application,
5. Benchmarking and industry comparisons, and
6. The “management’s interpretation” of APMs.
FEE supports the effort of producing this framework on the European level as it would contribute to enhancing the reliability, relevance and understandability of APMs. We note that in accordance with the ESMA regulation, National Competent Authorities (“NCAs”) should make every effort to comply with the [draft] guidelines and are expected to incorporate these guidelines into their supervisory procedures and practices, and monitor compliance. However FEE underlines that the ultimate enforcement of the [draft] guidelines lies with NCAs.
However, FEE believes that the scope of the [draft] guidelines and the definition of APMs are too wide and need to be revised. In addition, FEE suggests that the [draft] guidance should clarify how it would interact with other principles, guidance and rules that exist and govern the preparation and presentation of financial and non-financial information, for example accounting standards (i.e. IFRS) or local legislation.
For our detail comments please refer to the attached FEE comment letter.