Morrison & Foerster's new report: "Non-GAAP Explained" covers the gamut of topics practitioners need to get up to speed on all of the pertinent non-GAAP regulatory disclosure requirements and expectations - inclusive of SEC Staff formal and informal (e.g., conference remarks) guidance, and areas of comment letter and enforcement focus. The report is capped off by a series of sound recommendations, including this one that - particularly given Staff's frequently-iterated emphasis on audit committee oversight - companies may wish to consider:
Appropriate controls on the use of non-GAAP financial measures should be considered and established by companies. A company’s audit committee should carefully oversee and monitor the use of non-GAAP financial measures and disclosures and this particular function of the audit committee should be expressly included in the audit committee’s charter. The audit committee should include, as a regular topic for discussion with the auditors, the company’s use of non-GAAP financial measures. The audit committee should ask management to explain the utility of non-GAAP financial measures in the company’s public disclosures.
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This post first appeared in this week's Society Alert! Access numerous additional non-GAAP resources on our website here.
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