Insight

Reporting non-GAAP financial and operational measures

Four steps companies can take to mitigate risk.

Including non-GAAP (generally accepted accounting principles) financial and operational measures in your earnings releases and other informational material can be a double-edged sword. On one hand, it provides richer insights to those who rely on financial statements and other information, for example, investors, analysts, venture capital firms, and bankers. On the other hand, incomplete or inaccurate information may damage your company’s reputation in the eyes of the investor community.

As a result, if your company has been reporting non-GAAP financial measures, you may face the risk of having to:

  • Eliminate certain non-GAAP financial measures in earnings releases and company disclosures
  • Revise your calculations and reporting of non-GAAP financial measures
  • Face enforcement actions by the SEC or other federal and state regulatory authorities.

In this article, we take a closer look at non-GAAP financial and operational measures and offer steps that companies can take to improve the quality of the reported information.

Reporting non-GAAP financial and operational measures

Four steps companies can take to mitigate risk
Companies should first understand the other information being reported, including how operating metrics are defined. Companies then should have adequate disclosure controls and procedures in place. In some respects, these other reporting processes may require more steps than some GAAP processes, not fewer.
- Wesley R. Bricker, SEC Chief Accountant

How KPMG can help

We can help your organization assess internal controls over the calculation and reporting of non-GAAP financial and operational measures—from readiness assessments to documentation, remediation, and testing assistance.

Our professionals work closely with you to identify key risks and the applicable internal controls you have in place—or need to implement—to address those risks. We can work with you to implement the appropriate controls and determine the best mix of resources with minimum interruption to your business.

We can also help you reduce costs and improve quality through access to skilled professionals who provide a fresh perspective and an increased level of objectivity.

You can benefit from our global strength and capabilities. Our global network of member firms includes professionals located in all of the world’s commercial hubs, enabling us to serve you wherever you do business—now or in the future.

Contact us for more information on developments in non-GAAP financial and operational measures and how we can help you.

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Our professionals in the PMG and VC practice have the knowledge and insight to help private companies address complex marketplace challenges and drive growth in today’s global economy. Focused on serving privately held entities, including private equity- and venture capital-backed companies, our global network of professionals offer audit, tax, and advisory services tailored to meet the needs of private enterprises. By providing industry perspectives and proactive guidance, we help private companies achieve their strategic objectives through each stage of the business lifecycle.

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