Tag Archives: non-GAAP financial measures

Are “other key operating metrics” the new non-GAAP financial measures?

by Cydney Posner

As reported by BNA, the top accounting staff at the SEC are quite satisfied with companies’ responses to the SEC’s assault on abuses of non-GAAP financial measures. The staff’s concern was that companies’ reporting was often inappropriately painting, through the use of non-GAAP measures, healthier-than-justified pictures of companies’ performance, potentially misleading investors.  In response, the staff mounted a campaign against the non-GAAP practices that the staff viewed as abusive. At a 2017 Baruch College Financial Reporting Conference, Mark Kronforst, chief accountant at Corp Fin,  discussing the SEC’s effort, concluded  that “I have to say, I think it was a success.” Wesley Bricker, SEC chief accountant, concurred. Is the SEC now applying that same strategy to other reporting metrics? Continue reading

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Corp Fin suggests it will take a look at non-GAAP disclosure practices in the pharmaceutical industry

by Cydney Posner

Even important industry players can sometimes run up against brick walls at Corp Fin. In a recent give-and-take with the SEC, Allergan was scolded for its use of certain non-GAAP financial measures in its press releases.  While in its responses to the staff, the company cogently explained its reasoning, the staff did not ultimately agree with company’s view, putting to the test one of the staff’s most recent CDIs regarding performance versus liquidity per-share measures. Moreover, in conversations with the staff, the company apparently conveyed the impression that the practice disfavored by the staff was widely followed in its industry group, leading the staff to caution that it plans to evaluate practices in the pharmaceutical industry. Companies in that industry may want to pay attention. Continue reading

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SEC charges company with violations of the rules related to non-GAAP financial measures

by Cydney Posner

The Corp Fin staff have been dropping hints for quite a while about potential enforcement actions in connection with abuses of non-GAAP financial measures (see, e.g., this PubCo post), and an interesting one has now materialized.  In an Order released today, the SEC announced settled charges against MDC Partners, Inc., a publicly traded marketing firm, for failure to comply with the rules related to non-GAAP financial measures.  In addition, the company was charged with failure to disclose millions in perks awarded to its former CEO. Continue reading

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KPMG surveys audit committee concerns

by Cydney Posner

What are audit committee members’ greatest concerns? Audit committee members participating in KPMG’s 2017 Global Audit Committee Pulse Survey identified risk management as the biggest challenge for audit committees in 2017, with 42% of those surveyed characterizing their existing risk management programs as requiring “substantial work,” and a “similar percentage” indicating that it is “increasingly difficult to oversee those major risks.” However, only 51% indicated that they have the time to oversee major risks effectively and only 46% say they have the expertise.  Moreover, 39 % say it is increasingly difficult to find the necessary time and 43% say the same with regard to the necessary expertise. Also high on the list of challenges were legal/regulatory compliance, cybersecurity risk, the control environment in the extended organization and tone at the top. Continue reading

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SEC Chief Accountant and staff speak at AICPA National Conference

by Cydney Posner

Earlier this month, at the 2016 AICPA conference on current developments, the SEC’s Chief Accountant and several staff members of his office shared their insights on a variety of key accounting topics, among them the following: Continue reading

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Should non-GAAP financial measures be audited?

by Cydney Posner

At a meeting yesterday of the PCAOB’s Investor Advisory Group, two working groups reported on topics that might be of particular interest: non-GAAP financial measures and enhanced audit reports. Continue reading

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Establishing disclosure controls for non-GAAP financial measures

by Cydney Posner

With the spotlight now on non-GAAP financial measures, companies might find this article in CFO.com to be particularly useful.  The article provides practical guidance to help companies establish effective disclosure controls and procedures for non-GAAP financial measures. Continue reading

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