
On Nov. 14. The Financial Accounting Standards Board (FASB) released an Invitation to Comment (ITC) to solicit feedback on key financial performance indicators (Financial KPIs). Comments on the ITC are due by April 30, 2025.
The FASB staff is issuing this ITC to solicit added feedback on possible standard setting for financial KPIs such as the following:
• Should Financial KPIs be standardized and, if so, which ones?
• Should Financial KPIs be required or permitted to be disclosed in an entity’s generally accepted accounting principles (GAAP) financial statements and if so, when and for what types of entities?
For the ITC, financial KPI is a measure that calculated the financial statements and/or underlying accounting records not presented in the GAAP financial statements. This includes measures derived from amounts presented in the financial statements, measures derived from adjusting amounts presented in the financial statements and measures derived from or calculations based on other information included in the financial statements or other financial records, according to FASB.
Financial KPIs include earnings before interest, taxes, depreciation and amortization (EBITDA), free cash flow (FCF), organic sales growth and adjusted net income.
This ITC was issued as part of the board’s research project about critical financial performance indicators for business entities. This Invitation to Comment (ITC) is being issued as part of the FASB research project on financial KPIs for business entities. Responses to the questions in this ITC will help the Board determine whether to add a project on Financial KPIs to its technical agenda and, if added, to determine the objective and scope of the project.
In previous outreach, including the 2021 Invitation to Comment, Agenda Consultation, the FASB received feedback that a project on Financial KPIs should be considered. However, respondents had different views about the nature and extent of the perceived issues, whether the Board should add a project to its technical agenda, and, if a project is added, its objective. While investors often talked about a possible project on Financial KPIs, preparers rarely mentioned it as a priority.
Comments could be submitted by one of the following methods:
• Emailing comments to director@fasb.org, File Reference No. 2024- ITC100 or
• Sending a letter to “Technical Director, File Reference No. 2024-ITC100, FASB, 801 Main Avenue, PO Box 5116, Norwalk, CT 06856-5116.”