Staff members at the Securities and Exchange Commission are signaling to public companies that they still have concerns over uses of non-GAAP measures that seem to thumb their nose at GAAP.

At a springtime meeting of the Center for Audit Quality’s SEC Regulations Committee, staff members discussed with the committee concerns over non-GAAP financial measures that involve “individually tailored accounting principles.” These are non-GAAP measures that are calculated by, essentially, following a preferred or alternative method for arriving at a GAAP number.

Kendra Decker, partner-in-charge of SEC regulatory matters at Grant Thornton and a member of the CAQ SEC Regulations Committee, said the discussion built off an earlier staff presentation at a year-end national accounting conference. Patrick Gilmore, deputy chief accountant at the SEC, had said non-GAAP adjustments should generally involve inclusion or exclusion of GAAP amounts to comply with SEC guidelines. Where a company develops a non-GAAP measure by changing the accounting policy or the GAAP method of recognizing a number, that might become misleading to investors, he said.

Gilmore’s remarks provided some examples. Where a number shifts the measure from accrual to cash basis of accounting—such as a company presenting cash receipts or billings when it recognizes revenue over time for subscriptions—that might raise an eyebrow among SEC staff. In addition, if a company provides a gross number for revenue when it acts as a principal or a “middle man” in a business arrangement and therefore normally recognizes revenue on a net basis, that might also raise concern.

To comply with SEC guidance on permitted uses of non-GAAP measures, companies are supposed to provide information to investors that is consistent with how management understands and manages the business, says Heather Winiarski, shareholder at Mayer Hoffman McCann. “They’re finding that some companies are starting to, essentially in non-GAAP disclosures, modify how they’re measuring revenue items,” she said.

Public companies adopted massive new standards on recognizing revenue at the start of 2018, changing the pattern of recognition for some companies, depending on how they recognized revenue under historic standards. That may be prompting some companies to, while complying with the new GAAP method in financial statements, harken back to old or preferred approaches in non-GAAP measures.

Gilmore’s remarks provided a few more examples for companies to consider. If an adjustment reflects part, but not all, of an accounting concept, that might become misleading, he said. Similarly, if an adjustment would cause the measure to become inconsistent with underlying economics, that would also be regarded as misleading.