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Journal entry — SEC staff issues updates to C&DIs on non-GAAP financial measures

Published on: May 19, 2016

The SEC published updates this week to certain of its Compliance and Disclosure Interpretations (C&DIs) related to non-GAAP financial measures.1

The updated C&DIs discuss the following:

  • When a non-GAAP measure may be misleading or prohibited,2 such as measures that:
  • Exclude normal, recurring cash operating expenses necessary to run a business.
  • Adjust an item in the current reporting period but do not adjust for a similar item in the prior period, without appropriate disclosure. 
  • Exclude nonrecurring charges but do not exclude nonrecurring gains.
  • Include individually tailored accounting principles, including non-GAAP performance measures that accelerate revenue recognition.
  • Include the presentation of certain per-share non-GAAP measures.
  • The continued acceptability of funds from operations (FFO) as defined by the National Association of Real Estate Investment Trusts (NAREIT) and adjustments to FFO.3
  • Disclosures that would cause a non-GAAP measure to be more prominent.4
  • The determination and presentation of the tax impact of adjustments made to a GAAP measure in the calculation of a non-GAAP measure.5

The updated C&DIs are available on the SEC’s Web site.

For additional information about the changes and a discussion of other recent developments related to non-GAAP measures, see Deloitte’s upcoming Heads Up newsletter.


1 C&DIs are not rules, regulations, or statements of the SEC; instead, they provide general guidance on the views of the SEC staff on a variety of issues.  

2 See C&DIs 100.01–100.04, 102.05, 102.07, and 103.02.

3 See C&DIs 102.01 and 102.02.

4 See C&DI 102.10.

5 See C&DI 102.11.


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