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ARTICLE · 30 OCTOBER 2018

From Non-GAAP Measures to KPIs…

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In a recent speech, Commissioner Kara Stein addressed a number of disclosure related concerns, including cyber disclosures and ESG disclosures.

United StatesAccounting and Audit
Anna T. Pinedo
Anna T. Pinedo
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In a recent speech, Commissioner Kara Stein addressed a number of disclosure related concerns, including cyber disclosures and ESG disclosures. Just as many of us had been reading about a decline in the number of SEC Staff comments regarding the use of non-GAAP measures in SEC filings, Commissioner Stein's remarks seemed to focus renewed attention on this issue. Commissioner Stein cited studies that show that approximately 97% of S&P 500 companies cite at least one non-GAAP metric in their reports. In addition to echoing prior Staff concerns regarding the possibility that the use of non-GAAP measures may be misleading or may "disguise financial performance," Commissioner Stein raised a new issue—the lack of uniform standards for non-GAAP measures. Hopefully, such concerns can be allayed with more detailed disclosures, rather than prescriptive standards regarding frequently used non-GAAP measures. Commissioner Stein also focused on "key performance indicators" (KPIs).

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