To GAAP or to non-GAAP COVID-19: What you should know

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In the loop , PwC US Jan 28, 2021

Thinking about including COVID-19 adjustments in your non-GAAP measures? We break down the SEC guidance for you.

Non-GAAP measures are more popular than ever

Companies use non-GAAP measures as a supplement to their financial statements to tell their stories. Some companies use them to show investors management’s view of their core operations, typically by eliminating nonrecurring charges and other amounts they believe are not indicative of their ongoing performance, such as major strategic restructurings.

A measure becomes a non-GAAP measure and is subject to the SEC’s non-GAAP rules and interpretive guidance when it excludes amounts that are included in (or includes amounts that are excluded from) the most directly comparable GAAP measure. Operating or other statistical measures (for example, unit sales, number of employees, and number of subscribers), certain ratios, and financial information that does not provide numerical measures that are different from the comparable GAAP measures (for example, the amount of debt repayments planned but not yet made) are not subject to the non-GAAP guidance.

What you need to know

  • Non-GAAP measures are being used more than ever; nearly all of the S&P 500 report at least one
  • Non-GAAP measures continue to be an area of focus and frequent comment from the SEC
  • Knowing the rules will help management steer clear of common areas of comment
  • Companies should pay particular attention in SEC filings when reporting the impact of the COVID-19 pandemic in non-GAAP measures

To have a deeper discussion, please contact:

Heather Horn

US Strategic Thought Leader, National Professional Services Group, PwC US

Email

Kyle Moffatt

Partner, National Professional Services Group, PwC US

Email

Ashleigh Pierce

Director, National Professional Services Group, PwC US

Email

Contact us

Heather Horn

Heather Horn

US Strategic Thought Leader, National Professional Services Group, PwC US

David Schmid

David Schmid

International Accounting Leader, National Professional Services Group, PwC US

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