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KPIs are a useful tool that help investors understand and assess performance “through the eyes of management”, who use their discretion to determine which measures are key. Similarly, an increasing number of companies are using non-GAAP measures as KPIs (also referred to as alternative performance measures (APMs)) to explain company results which also carry a significant amount of management judgement.
The CRUF has identified barriers to investors’ understanding of the rationale for the KPIs, the appropriateness of the measures, and their alignment with company strategy and executive pay. Clarity on these measures – for example, through greater transparency or third-party assurance – is vital for investor confidence.
Click the tabs below to reveal what CRUF would like to see for each of these current problems
There can be concerns about appropriateness of certain KPIs.
Without an understanding of why a measure has been chosen, and whether or not it has been adjusted from a GAAP/IFRS measure, users may be unable to make an assessment on the appropriateness of the KPI.