Do large Australian companies emphasise non - GAAP financial measures over statutory net profit (GAAP) in annual reports?

Abstract

Large companies' frequent focus on non-GAA P financial measures ('pro forma' earnings), rather than statutory net profit or GAA P measures, raises concerns about the potential for misinformed financial decision-making. Despite recommendations by AS IC and Finsia, in Australia there is no consistency in the calculation of non-GAA P financial measures or in their reconciliation to statutory net profit. Our study of the disclosures and the reconciliation to GAA P earnings by the largest 50 Australian listed non-mining companies finds considerable variations in reporting practices from highly transparent reconciliations to what appears to be considerable secrecy.