September 29, 2020

CAQ Report Highlights How Auditors Can Enhance the Reliability And Comparability of Non-GAAP Financial Measures and KPIs

CAQ Report Highlights How Auditors Can Enhance the Reliability And Comparability of Non-GAAP Financial Measures and KPIs

Tuesday, September 29, 2020

Washington DC (September 29, 2020) – The Center for Audit Quality (CAQ) released a new report today that finds external auditors can contribute to the reliability and comparability of non-GAAP financial measures and KPIs – information found outside of the audited financial statements.

The report, The Role of the Auditor in Non-GAAP Financial Measures and Key Performance Indicators: Present and Future, highlights how auditors can enhance the reliability of such information. Currently, external auditors have no responsibility for non-GAAP financial measures and KPIs reported in documents that do not contain audited financial statements. This report comes as investors increasingly seek information outside of the traditional financial statements to assess the impact of COVID-19 on the company’s financial performance.

“In their public interest role, public company auditors play a role in the flow of comparable and reliable information for decision making,” said Julie Bell Lindsay, CAQ Executive Director. “Having auditors associated with non-GAAP financial measures and KPIs could bring additional discipline to management’s process and help enhance the trust and confidence in such information.”

Many public companies supplement their financial disclosures with financial measures prepared outside of U.S. Generally Accepted Accounting Principles (GAAP) and other key performance indicators (KPIs). Non-GAAP financial measures – numerical measures of a company’s historical or future financial performance, financial position, or cash flows that adjust GAAP amounts – are used by nearly all S&P 500 companies, according to data from Audit Analytics assessing the first quarter of 2020. Along with KPIs, these measures are commonly the metrics used by management to evaluate company performance. When shared with investors and other stakeholders, they can help provide insight into a company’s performance, long-term value, and overall health.

CAQ’s report also offers considerations for the disclosure of non-GAAP measures and KPIs, to guard against misinterpretation. Non-GAAP measures and KPIs can provide helpful information to investors provided they are transparently disclosed and calculated consistently. Further, in its role as a bridge between management and investors, it is critical that the audit committee consider whether such disclosures present a fair view of the company’s performance as part of their oversight. Similarly, investors may want to consider the usefulness and reliability of such information in their investment analysis.

“Clarity around the development of these measures, quality in their preparation, and strong oversight in their reporting and disclosure is critical given the importance of non-GAAP financial measures and KPIs in decision making.” said Lindsay.

The full report can be found here.


About the Center for Audit Quality
​​​​​The Center for Audit Quality (CAQ) is a nonprofit organization dedicated to promoting high-quality performance by public company auditors; convening and collaborating with financial reporting stakeholders; and advocating for policies and standards that promote public company auditors’ objectivity, effectiveness, and responsiveness to dynamic market conditions. For more information, visit

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