Question 4 - Part a

In this lesson

1. 0:00 Question four: Additional disclosures beyond IFRS
2. 0:41 Why companies disclose additional information
3. 2:03 Concerns with additional disclosures
4. 3:01 Reconciliation and comparability issues
5. 4:04 Bias and audit transparency concerns
6. 6:56 How the framework guides disclosure boundaries
7. 9:10 Cost-benefit considerations in disclosure
8. 10:22 Part B: Understanding underlying profit calculation
9. 12:03 What EBITDA measures and its purpose
10. 13:17 Controversies around EBITDA methodology
11. 15:19 Non-recurring items and normal business practice
12. 17:29 Evaluating each adjustment to underlying profit
13. 22:07 Calculating underlying profit: worked example

About this lesson

The first part of the question asks you to discuss why entities disclose information beyond IFRS requirements and whether the conceptual framework helps set boundaries. You'll learn that while there's no specific guidance, additional disclosure is justified when it enhances relevance. The video covers the main concerns: reconciliation difficulties, comparability issues between periods and entities, potential bias (companies highlighting exceptional items to show better performance), and the importance of clearly labelling non-IFRS information so users understand what's been audited. You'll also see how the framework addresses these issues by emphasising that financial statements should provide useful information to investors, lenders and creditors, while considering the cost-benefit of additional disclosures. The second part focuses on underlying profit—a non-GAAP measure companies often use to show "normal" operating performance. You'll work through a detailed calculation comparing EBITDA (profit adjusted for interest, tax, depreciation and amortisation) with various add-backs: non-recurring items like impairments and one-off costs, plus items that are non-cash or not expected to repeat. The video critically examines each adjustment—why some are appropriate (property impairment, debt issue costs) and why others are questionable (restructuring charges are normal business costs; intangible asset impairments happening in both years suggest poor acquisition decisions). You'll see the complete spreadsheet calculation showing how underlying profit is derived, and learn to recognise when companies may be using these adjustments to mask weaker performance.

Duration: 29m