On Tuesday May 17, 2016, the staff of the SEC’s Division of Corporation Finance issued new C&DIs relating to Regulation G (which governs use of non-GAAP financial measures in public disclosures generally) and Item 10(e) of Regulation S-K (which governs use of non-GAAP financial measures in filings with the SEC and, in part, to earnings releases). These interpretations are the latest development in a recent resurgence of concern about the misuse of non-GAAP financial measures reflected in statements by Chair Mary Jo White and SEC staffers and in prominent press articles. These statements have suggested a trend toward additional scrutiny, the potential for an increase in SEC comments in this area and the possibility of rulemaking. Given this climate of scrutiny, Companies and audit committees should quickly familiarize themselves with the new guidance and engage in a thorough review of their practices relating to use of non-GAAP measures.
View full memo, SEC Staff Updates Guidance on Use of Non-GAAP Financial Measures
