Uploaded: August 1, 2016
“Mary Jo White says agency is ‘poised to act’ with enforcement, and new rules ‘if necessary’
U.S. Companies should curtail their use of customized accounting as they too frequently crowd out standard accounting in financial reports, Securities and Exchange Commission Chairman Mary Jo White said in a conference address on Monday evening.
The SEC in May revised its guidance on the use of customized accounting figures, the latest step in the regulator’s campaign to reign in a practice it says can mislead investors. U.S. companies are required to report their financial performance using Generally Accepted Accounting Principles, or GAAP, but can supplement those figures with custom metrics.
“In too many cases, the non-GAAP information, which is meant to supplement the GAAP information, has become the key message to investors, crowding out and effectively supplanting the GAAP presentation,” Ms. White said.
The regulator is “poised to act through the filing review process, enforcement and further rulemaking if necessary to achieve the optimal disclosures for investors and the markets,” Ms. White said in a keynote address to the International Corporate Governance Network.
Just 29 companies in the S&P 500 reported their 2015 financials using exclusively GAAP,The Wall Street Journal reported today. The practice has contributed to the widening divergence between standard and adjusted earnings figures.”