The Canadian Institute of Chartered Accountants (CICA), through its Canadian Performance Reporting Board (CPRB), has published guidance for reporting financial measures outside of Generally Accepted Accounting Principles (GAAP), specifically earnings before interest, taxes, depreciation and amortization (EBITDA) and free cash flow.

CICA says these measures are widely used by preparers, but few rules govern their construction and disclosure. The lack of standards makes it difficult for investors and analysts to compare performance between entities.

“Financial reporting has become very complex,” says Dave Pollard, vice president of knowledge development at CICA. “The CICA is responding to investors who have requested more standardization and disclosure in reporting non-GAAP financial measures.”

The CICA believes the standardization and enhanced disclosure provided in this guidance will improve financial reporting and make it easier to compare entities. This would be especially helpful in today’s financial reporting environment where analysts’ reports are demanded immediately after publication of an entity’s results.

“Free cash flow and EBITDA are widely used non GAAP financial measures which do not have accepted definitions”, says CPRB member Fred Pynn, president and chief investment officer of Bissett Investment Management. “The CPRB guidance defines the calculation of free cash flow and EBITDA which will lead to increased comparability of these measures between firms.”

“Improved Communication With Non-GAAP Financial Measures – General Principles and Guidance For Reporting EBITDA and Free Cash Flow” is published for comment until April 30, 2008. The document can be obtained from CICA’s Performance Reporting Resource Centre at ww.cica.ca/cpr.

CICA represents a membership of approximately 72,000 CAs and 10,000 students in Canada and Bermuda.