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SEC shifts non-GAAP focus to most serious violations

Tammy Whitehouse | December 7, 2016

Tension continues over proper use and especially prominence of non-GAAP accounting measures compared with GAAP measures, although the focus now seems to have shifted to the most egregious violations with possible enforcement actions.

At the national conference of the American Institute of Certified Public Accountants, staff from the Securities and Exchange Commission indicated companies have made improvements in their adherence to the guidelines around how they can use non-GAAP measures to explain the business to investors. “Over the years, some of the practices that had developed became troubling,” said Mark Kronforst, chief accountant in the Division of Corporation Finance at SEC. “Particularly with respect to prominence, that was the most widespread issue we addressed. Still, SEC’s Michael Maloney, chief accountant in enforcement, said the...

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