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SEC sees progress in non-GAAP accounting compliance

Tammy Whitehouse | November 15, 2016

Scrutiny over corporate use of non-GAAP accounting measures is still causing some heartburn for public companies, but the Securities and Exchange Commission is signaling it is encouraged by improvements in recent quarters.

At a conference on current financial reporting issues by Financial Executives International, SEC staff members indicated most companies have responded to SEC initiatives to bring non-GAAP accounting back inside the guardrails of what’s permitted for public companies. “We’ve seen a number of companies have made changes,” said Wes Bricker, interim chief accountant at the SEC. “We’ve seen changes in the prominence of GAAP and non-GAAP measures,” suggesting the SEC’s guidance has been effective.

Most companies communicate at least some information to investors that is not derived following Generally Accepted Accounting Principles because they believe it somehow explains something about the business that GAAP alone cannot convey. Non-GAAP information is...

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