In responding to regulatory pushback to uses of non-GAAP accounting, the majority of companies made changes to how prominently they displayed such figures, according to a recent analysis of non-GAAP disclosures by S&P 500 companies.

A new report from Audit Analytics based on second-quarter 2015 filings shows 202 companies among the S&P 500 presented one or more data points derived following non-GAAP accounting more prominently than the accepted GAAP number. That’s a violation of the provisions that allow companies to present non-GAAP data in ways that would not be misleading to investors.

The Securities and Exchange Commission began calling out excessive use of non-GAAP metrics in communications to investors, especially where companies were presenting such measures in ways that would potentially pull the wool over the eyes of financial statement users. SEC staff updated its Compliance & Disclosure Interpretations in May 2015 to reign in what it regarded as wayward, even possibly abusive, uses of non-GAAP numbers.

One of the areas of focus in that staff guidance was prominence. The questions and answers reminded companies that non-GAAP measures may not be displayed more prominently than their GAAP counterparts.

In comparing non-GAAP disclosures from the second quarter to the third quarter of 2015, following the SEC’s guidance, AA found a steep drop in instances where non-GAAP was more prominent than GAAP. The analysis found only 28 instances compared to more than 200 the quarter before.

At a recent national accounting conference, SEC staff indicated prominence was one of the most serious concerns around non-GAAP reporting, and the issue has largely been addressed. Mark Kronforst, chief accountant in the Division of Corporation Finance, said many individual instances of companies reporting non-GAAP data more prominently than GAAP data added up to a significant concern across capital markets.

After many companies made changes, the staff continues to work with a handful of outliers, Kronforst said. Another SEC staff member in enforcement indicated at the same conference that some non-GAAP abuses may become targets for disciplinary action.

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