However, non-GAAP financials are still governed by the SEC. In fact, the SEC has taken action in the past against companies that it believes are being too aggressive with non-GAAP numbers.

Non-GAAP serves a critical role for management communication, but it cannot replace the tough record-keeping qualities of GAAP. Managements have been well incentivized to use non-GAAP since the ...

Non-GAAP financial measures are used as a “complement,” like bread and butter, to supplement the earnings reported under GAAP. Because GAAP does not permit their inclusion in reported financial ...

Non-GAAP earnings eliminate various one-time items (restructuring costs, impairment charges), which by their erratic occurrence detract from the consistency of GAAP earnings.

That's why when looking at S&P 500 earnings, we only care about GAAP numbers. Non-GAAP numbers don't provide a clear (if any) indication of the true financial state of the company.

Review non-GAAP measures in SEC filings to make sure they are not presented with greater prominence than the comparable GAAP measure in light of the new examples provided by the SEC staff in ...

IMGCAP (1)]The regulatory focus has sharpened recently on non-GAAP measures, by which I mean financial metrics, presented by companies outside the audited financial statements, that do not conform to ...

In some cases, companies even use modified non-GAAP metrics between their different SEC filings. Take, for example, the following statement found in Mallinckrodt's (MNK) most recent proxy statement.

Asking the external auditors what their responsibilities are for non-GAAP measures, and whether that responsibility is different depending on where non-GAAP measures are presented.

Non-GAAP Regulations and Guidance Although non-GAAP measures can be helpful to investors in any number of ways, the SEC has grown concerned about the potential for abuse of these metrics.

Nearly all large public companies now report non-GAAP metrics in their financial statements. In 1996, around 60 percent of S&P 500 companies reported at least one non-GAAP earnings-per-share figure.