A couple of years ago, the SEC made a big push—through a
series of staff oral admonitions and written guidance, as well as
one enforcement action—toward requiring issuers to be more
transparent and more consistent in the use of non-GAAP financial
measures and to avoid altogether non-GAAP measures that were
misleading. For example, companies were advised that they needed to
present GAAP measures with equal or greater prominence
relative to the non-GAAP measures. (See, e.g.,
this PubCo post.) And, as this article revealed, according to Audit
Analytics, in 2016, over 25% of the companies in the S&P 500
index had shifted their presentations to put GAAP at the
top of their quarterly earnings releases and 81% made GAAP numbers
most prominent, compared with only 52% for the prior quarterly
earnings releases. (See
this PubCo post.) By the end of 2017, the SEC was apparently
sufficiently satisfied with the response that the pendulum had
swung back, and there was less staff
