SEC Zooms In on Non-GAAP in Recent Comment Letters

The SEC’s Division of Corporate Finance has sent hundreds of comment letters this year questioning the prominence of non-GAAP figures in companies’ earnings releases and other filings in what experts said is an easy gotcha for the staff.

…In a review of comment letters sent to Russell 3000 companies between January 2022 and May 2023 dealing with non-GAAP metrics, public company intelligence provider MyLogIQ found that the most prevalent issue the SEC raised was the prominence of non-GAAP, cited in one-third of the letters. Recurring expenses was the second most common topic, cropping up in 20% of comment letters, according to MyLogIQ, followed by individually tailored accounting measures in 16% of the letters.