Defining Issues | February 2020

SEC issues MD&A guidance on KPIs and metrics

The SEC has issued guidance that provides disclosure considerations and reminds registrants to maintain effective disclosure controls and procedures when disclosing metrics in MD&A.


SEC Release No. 33-10751; 34-88094; IC-33795; FR-87

  • Public companies

Relevant dates

  • The guidance is effective February 25, 2020

Key impacts

The SEC has issued guidance highlighting disclosure considerations when discussing key performance indicators and other metrics in MD&A.

The SEC generally expects disclosures to include:

  • A clear definition of the metric and how it’s calculated
  • A statement indicating why the metric is useful to investors
  • A statement indicating how management uses the metric in managing or monitoring the company’s performance.

Companies should also consider whether disclosure of the estimates or assumptions related to the metric or its calculation is necessary for the metric not to be materially misleading. If the method of calculating or presenting the metric changes, the company should consider the need to disclose:

  • Differences in the metric’s calculation or presentation as compared to the prior year
  • Reasons for and effects of such changes
  • Any other differences in methodology and results that would reasonably be expected to be relevant to an understanding of the company’s performance
  • Whether prior metrics should be recast to conform to current presentation.

The guidance also reminds registrants of the requirement to maintain effective disclosure controls and procedures when disclosing material KPIs or metrics in MD&A.



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