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SEC fines company over non-GAAP prominence issue

Tammy Whitehouse | January 10, 2019

Still on its soap box over misuses of non-GAAP measures, the Securities and Exchange Commission issued an enforcement action against home security company ADT.

The company agreed to a $100,000 penalty over allegations that it reported non-GAAP accounting metrics more prominently than their GAAP counterparts, which is a violation of Regulation S-K. The SEC flagged the issues in the company’s fourth-quarter and year-end filings for fiscal year 2017 and again in the first-quarter filing of 2018.

Companies are required to follow Generally Accepted Accounting Principles as described in the Accounting Standards Codification and SEC reporting rules when filing their financial statements. SEC rules permit use of individually tailored accounting metrics that companies use to manage their businesses, but within guidelines. Among the guidelines, non-GAAP metrics may not be presented...

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