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CAQ offers audit committees tool to assess non-GAAP use

Tammy Whitehouse | July 5, 2016

A new tool from the Center for Audit Quality will help audit committees assess management’s presentation outside of audited financial statements of performance measures that do not comply with Generally Accepted Accounting Principles. The 8-page, quick read is meant to assist audit committees in determining whether non-GAAP indicators provide investors with meaningful financial information.

Management use of non-GAAP measures to explain the business to investors is not explicitly prohibited by any regulator, but the Securities and Exchange Commission provides rules to assure they are not used to obscure the truth. The use of non-GAAP measures has amped up in recent years, prompting the SEC to issues stern warnings to companies to assure their use has not gotten out of hand.

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