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Regulation White Collar Crime

SEC Keeping Eye On Non-GAAP Financial Disclosures

The SEC’s Division of Corporation Finance continues to provide comments to issuers about non-GAAP financial measures, and the SEC’s Division of Enforcement continues to investigate the accuracy of such non-GAAP metrics and, when necessary, will enforce charges against a company for providing misleading non-GAAP financial measures.

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Financial statements are one mechanism in which to provide insight into a company’s financial health. However, management may not be satisfied that this information clearly reflects their business, including how it is run. Therefore, to supplement financial statements, management may provide another view of their company by disclosing alternative financial measures. This alternative information cannot be used to distort reality and must be presented in accordance with specific rules and guidelines.

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