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SEC Chief Accountant Credits Interpretive Guidance for Curbed Misuse of Non-GAAP Measures

Securities and Exchange Commission (“SEC”) Chief Accountant Wesley Bricker is crediting the reduced misuse of non-GAAP measures to the Compliance and Disclosure Interpretations (“C&Dis”) issued in May 2016. Bricker said the interpretive guidance for Regulation G, regulation covering non-GAAP financial information, has helped companies become better disciplined and disclose to investors the use of non-GAAP measurements.

Bricker spoke on the C&DIs in October at the National Association of Corporate Directors’ Global Board Leader’s Summit. He remarked that since the C&DIs were issued, public companies have quit highlighting non-GAAP measures more predominately than their audited results. Companies have also established policies to identify and disclose changes in their non-GAAP measurements from one period to the next.

While Bricker doesn’t anticipate the interpretive guidance to be updated during the current reporting cycle, he advised companies to continue disclosing non-GAAP measures in a fair matter. He also recommended that complete internal controls and processes will affirm that the numbers are not used in a distorted way.

Another piece of advice shared was for companies to be attentive to any U.S. GAAP changes the Financial Accounting Standards Board makes. Bricker said companies need to consider the impact those changes could have in their main GAAP statements, with respect to whether the non-GAAP change should be the same, amended, or is even necessary.

 

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