As promised, the staff of the Securities and Exchange Commission has published new guidance on the use of non-GAAP financial information.

The Division of Corporation Finance staff has added more than 30 Compliance & Disclosure Interpretations comprising its interpretations of the rules and regulations on the use of non-GAAP financial measures.

As previously reported, Wayne Carnall, chief accountant in the Division of Corporation Finance, said in remarks at a November financial reporting conference that the staff would issue new interpretive guidance to clarify its expectations on the use of non-GAAP information, since some companies were construing the existing guidance as more restrictive than intended.

Topics addressed include disclosures in communications relating to business combination transactions; Item 10(e) of Regulation S-K; use of EBIT, or earnings before interest and taxes and EBITDA, or earnings before interest, taxes, depreciation, and amortization; Segment Information, Item 2.02 of Form 8-K, used by foreign private issuers; and application to voluntary filers.

QuinlivanFor the most part, the C&DIs codify existing practices as understood, but they also help clarify what is and isn't allowed in filings with respect to non-GAAP financial measures, notes Stephen Quinlivan, a shareholder in the law firm Leonard, Street & Deinard.

While non-GAAP financial information is generally allowed in SEC filings as long as it is reconciled to GAAP, "certain things aren't allowed, such as calling something non-recurring, infrequent, or unusual when it might occur again or certain per share amounts," says Quinlivan. "The staff's C&DIs simply make this clear."

He says the interpretations may signal that the SEC is positioning itself for future enforcement and positions in comment letters.

While there has only been one Reg G enforcement action to date (a November 2009 action against SafeNet), Quinlivan notes that SEC staff members in public remarks in recent months have said that the Corp Fin staff will check issuer Websites during filing to ensure that issuers are Reg G compliant and will issue comments when they believe they are not.

Quinlivan notes that the C&DIs "go a long way to provide help with segment information and what is and isn't allowed" and provide a "great review of the requirements for press releases, earnings calls, and the like as well."

He advises voluntary filers to note the staff's warning that, "while Reg G might not technically apply, the SEC indicates it provides difficult questions with respect to the anti-fraud rules."