The Ontario Securities Commission (OSC) remains concerned about the risk of companies misleading investors with their use of non-GAAP financial measures, forthcoming new accounting standards and other financial reporting issues.

The OSC’s Office of the Chief Accountant (OCA) published a staff notice on Thursday that examines several financial reporting issues, including companies’ use of non-standard accounting metrics, and indicates that the use of non-GAAP measures remains an “ongoing area of focus” for the regulator.

Specifically, the OSC remains concerned about firms giving non-GAAP measures greater prominence than more conventional accounting metrics and the use of numerous non-GAAP numbers, among other things. These trends increase the “potential for investors to be confused and/or material information to be obscured,” the OSC’s notice says.

“Staff will be actively monitoring this area in the coming fiscal year, and caution reporting issuers about the potential for regulatory action if a reporting issuer discloses information in a manner considered misleading and therefore potentially harmful to the public interest,” the OSC’s notice says.

The notice also points out that the OSC is focused on the overall efficacy of financial disclosure. “When disclosing financial information, we encourage reporting issuers to take a ‘fresh look’ at their financial statement disclosures and consider how information could be more effectively and efficiently presented,” it says, adding that issuers should, “consider financial reports as communication documents as opposed to a ‘compliance exercise’.”

The OSC’s notice also sets out the regulator’s views on inadequate “going concern” disclosure; fair valuing practices; and expectations for implementation of several new accounting standards that have been issued by the International Accounting Standard Board (IASB) and are due to be implemented in 2018 and 2019.

“We intend to monitor the quality and extent of disclosure in financial reports leading up to the adoption of the new accounting standards, and may raise questions with reporting issuers if there is an inadequate level of transparency in this area,” the OSC’s notice says.