March 16 2018
Published: The Caq
Presenting themes that emerged at a series of 2017 roundtables, Non-GAAP Measures: A Roadmap for Audit Committees provides a set of key considerations for audit committees, including leading practices to assess whether a company’s non-GAAP metrics present a balanced representation of the company’s performance. GAAP information serves as a foundation for confidence in financial statements, but financial statement users also value non-GAAP financial measures, when presented appropriately.
caq_non-gaap_measures_roadmap_audit_committees_2018-03.pdf Download (.pdf / 946.91 KB)
The CAQ suggests that the audit committee:
– Put itself in the shoes of investors when evaluating if the presented non-GAAP measures and related disclosures align with the company’s overall strategy and performance.
– Ask management whether it has an internal policy that provides guidelines for determining how non-GAAP measures are generated, calculated, and presented.
– Discuss with management how the company makes changes to the non-GAAP measures it presents, and the rationale for why it would or would not make changes.
– Ask the organization to compare or benchmark its non-GAAP measures alongside its peers.
– Use outside auditors as a resource when evaluating non-GAAP measures.
– Discuss with investors directly or through investor relations to ensure that the presented non-GAAP measures aid investors’ understanding of the company’s performance.
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