Defining Issues  |   May 2016
 

SEC staff warns about non-GAAP financial measures

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KPMG reports on SEC’s warning of prohibited practices in filings and press releases. SEC enforcement action will be taken against registrants that don’t comply with the rules on presenting non-GAAP financial measures.

Applicability

SEC Q&A

  • SEC filers that disclose non-GAAP financial measures

Relevant dates

  • Effective immediately

Key impacts

  • Companies may have to revise or eliminate certain non-GAAP financial measures in filings and press releases, particularly those that include adjustments to revenue
  • Management should reassess the controls and oversight procedures that it applies to non-GAAP financial measures
  • Audit committees should pay close attention to non-GAAP financial measures, including related disclosures, and consider what measures are appropriate and reliable

Report Contents

  • Misleading financial measures
  • Per share non-GAAP liquidity measures
  • Tax expense adjustments
  • Recent SEC and IASB comments
  • Non-GAAP financial measure disclosures

 

 

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