Non-GAAP Financial Measures: SEC Staff Comments Focus on Compliance With 2016 Guidance
Apr 19, 2017
On April 19, 2017, Sullivan & Cromwell LLP issued an analysis of the comment letters released by the SEC staff to nearly 250 companies challenging the calculation and presentation of non-GAAP financial measures in filings made subsequent to the issuance of the 2016 guidance.
Based on their analysis of these comment letters, they have identified a number of areas of SEC staff focus during this period, in descending order of frequency:
- Failure to present GAAP measure with equal or greater prominence (C&DI 102.10)
- Inadequate explanation of usefulness of non-GAAP measure
- Misleading adjustments, such as exclusion of normal, recurring cash expenses (C&DI 100.01)
- Inadequate presentation of income tax effects of non-GAAP measure (C&DI 102.11)
- Individually tailored revenue recognition or measurement methods (C&DI 100.04)
- Misleading title or description of non-GAAP measure
- Use of per share liquidity measures (C&DI 102.05)
Review the publication on the Sullivan & Cromwell LLP's website.
