New SEC C&DI issued – Non-GAAP financial measures

ARTICLE | January 11, 2023

Authored by RSM US LLP

The SEC continues to focus on non-GAAP financial measure disclosures with the topic being the second most frequent area of SEC review comments.  Accordingly, to provide transparency into the SEC staff’s process for evaluating certain non-GAAP measures and the criteria for considering such measures misleading, in December 2022 the staff of the Division of Corporate Finance issued new Compliance and Disclosure Interpretations (C&DI) addressing questions relating to Non-GAAP Financial Measures in those areas commonly identified as problematic. The new interpretations cover:

  • Certain adjustments that could result in non-GAAP measures that are misleading notwithstanding that they are not explicitly prohibited (Question 100.01).
  • The violation of Rule 100(b) of Regulation G if the non-GAAP measure is inconsistent with generally accepted accounting practice (GAAP) (Question 100.04).
  • Inappropriate labeling and unclear descriptions of adjustments made to a GAAP measure (Question 100.05).
  • Violation of Rule 100(b) of Regulation G even when a non-GAAP measure is accompanied by disclosure about the nature and effect of each adjustment made to the most directly comparable GAAP measure (Question 100.06).
  • Examples of disclosures that would cause a non-GAAP measure to be more prominent rather than a directly comparable GAAP measure filed under Item 2.02 of Form 8-K (Question 102.10(a)).
  • Examples of disclosures that would cause the non-GAAP measure reconciliation required by Item 10(e)(1)(i)(B) of Regulation S-K to give undue prominence to a non-GAAP measure (Question 102.10(b)).
  • A description of what is considered to be a non-GAAP income statement item when presenting a non-GAAP income statement, alone or as part of the required non-GAAP reconciliation (Question 102.10(c)).

It should be remembered that the C&DI’s reflect the views of the SEC staff and are not rules, regulations, or statements of the Commission, and are intended to provide general guidance (and should not be relied upon as definitive). However, if your client is reporting non-GAAP measures, or would like to change any non-GAAP measures disclosed, the clarifications in these new C&D’s should be kept in mind.

Let's Talk!

Call us at +1 213.873.1700, email us at or fill out the form below and we'll contact you to discuss your specific situation.

  • Topic Name:
  • Should be Empty:

This article was written by RSM US LLP and originally appeared on 2023-01-11.
2022 RSM US LLP. All rights reserved.

RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each is separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit us for more information regarding RSM US LLP and RSM International. The RSM logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.

​Vasquez & Company LLP is a proud member of the RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.

Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise and technical resources.

For more information on how ​Vasquez & Company LLP can assist you, please call +1 213.873.1700.

Subscribe to receive important updates from our Insights and Resources.

  • Should be Empty: