FASAC Members Want More Transparency on Non-GAAP Measures
During talks last month on possible uniform non-GAAP measures in companies’ financial statements, several members of the Financial Accounting Standards Board’s (“FASB”) Financial Accounting Standards Advisory Council (“FASAC”) advocated requiring companies to provide more details about their non-standard earnings metrics. Indiana University professor Patrick Hopkins acknowledged that some non-GAAP measures allow companies to disclose industry-specific information not reflected in accounting standards. He also argued that if the FASB or Securities and Exchange Commission required more transparency regarding how measures are defined, investors and analysts could better understand the information.
Supporting Hopkins’ call for increased transparency was Douglas Oare, managing director of BlackRock Inc. Oare suggested that if a metric is going to be disclosed, companies should provide a description of how the metric was achieved.