The Center for Audit Quality (CAQ) has published the paper, Non-GAAP Financial Measures: Continuing the Conversation (Non-GAAP Financial Measures). Non-GAAP Financial Measures calls for a robust conversation across the financial reporting supply chain regarding the preparation, presentation, and use of these measures, with the objective of increasing the usefulness of those insights to investors and other users.
Non-GAAP Financial Measures explores the issue of non-GAAP information. It provides context on its definition and use, pertinent regulatory developments, and the current level of auditor involvement. While auditors do not audit non-GAAP metrics, according to the paper, audit committees and management may consider using auditors as a sounding board when evaluating them.
In addition, Non-GAAP Financial Measures compiles sets of suggested questions for each stakeholder group to consider as it relates to their preparation or use of non-GAAP financial measures. These stakeholders include management, investors, investment analysts, securities counselors, audit committee members, internal auditors, independent auditors, regulators, accounting standard setters, and academics.
Non-GAAP Financial Measures also builds on the CAQ publication, Questions on Non-GAAP Measures: A Tool for Audit Committees, published in June 2016. The CAQ plans to use the questions in these papers at roundtables and panels to further the dialogue around non-GAAP financial measures.