Have you been confused about the appropriate or inappropriateness of the various non-GAAP measures reported by companies in their quarterly and/or annual press releases, earnings statements, and various presentations to investor groups.
Yeah me too.
Well, PWC has prepared an insightful publication, To GAAP or non-GAAP? The SEC is Watching, summarizing the current SEC views about non-GAAP reporting.
The brief, 11 page document, is issued by their Governance Insight Center and is directed to financial professionals, including accountants, investors, and audit committee members. As a result it’s written in a clear, non-technical manner, which makes it understandable to financial statement users and other nonaccounting professionals interested in public company financial information.
In general, the publication points out that the confusion over the SEC views about reporting non-GAAP measures results from the 3 separate areas of SEC guidance addressing the issue – Regulation G, Item 2.02 of Form 8-K, and Item 10(e) of Regulation S-K.
These separate areas of guidance address separate regulatory reporting requirements and, as a result, offer some consistent guidance and some unique guidance associated with their separate objectives.
As a guide, though, the publication provides a simple table summarizing similarities and differences among the 3 guiding regulations. It’s an excellent starting point for those less familiar with the SEC requirements in this area. Of course, as the publication notes, for a thorough understanding of the SEC requirements, one must refer the specific regulations. These are available at the SEC website (www.sec.gov).