This site uses cookies for analytics, personalized content and ads. By continuing to browse this site, you agree to this use of cookies in accordance with our Cookie Policy.

CAQ Tool Helps Audit Committees Examine Use of Non-GAAP Measures

Tuesday, June 28, 2016

Publication aims to spur robust dialogue among audit committees, management, and auditors

Washington, DC– The Center for Audit Quality (CAQ) has released a new tool to help audit committees continue to assess management’s presentation, outside the audited financial statements, of performance metrics that do not conform to Generally Accepted Accounting Principles (GAAP). The publication, Questions on Non-GAAP Measures: A Tool for Audit Committees, can assist in the determination of whether non-GAAP indicators provide investors with meaningful financial information.

“Concerns and questions from regulators and investors have grown around the use of non-GAAP measures in communications such as regulatory filings and press releases,” said Cindy Fornelli, executive director of the CAQ. “This tool can help audit committees probe whether such measures are accurate, appropriate, and useful to investors.”

Questions on Non-GAAP Measures groups its questions under three core categories:

  • TransparencyThe tool offers audit committees ways to consider the purpose, prominence, and labeling of non-GAAP information, specifically in relation to traditional GAAP measurements. For example, has the non-GAAP measure been given more prominence than the most directly comparable GAAP measure?
  • ConsistencyThe tool suggests ways that audit committees can question management to determine whether non-GAAP measures are consistent and balanced. For example, do the measures eliminate similar items that affect both revenue and expense, or do they only eliminate one or the other?
  • Comparability: The tool provides questions to promote the comparability of non-GAAP measures presented. For example, do other companies present this particular measure or similar measures? If not, why is this measure important for this company but not its peers?

Additionally, the tool reviews current regulation governing non-GAAP information, as well the auditor’s role in this area. Public Company Accounting Oversight Board (PCAOB) standards require the auditor to read this additional information for consistency with the financial statements.

Questions on Non-GAAP Measures: A Tool for Audit Committees is available at the CAQ website.

# # #

The Center for Audit Quality (CAQ) is an autonomous public policy organization dedicated to enhancing investor confidence and public trust in the global capital markets. The CAQ fosters high quality performance by public company auditors, convenes and collaborates with other stakeholders to advance the discussion of critical issues requiring action and intervention, and advocates policies and standards that promote public company auditors’ objectivity, effectiveness, and responsiveness to dynamic market conditions. Based in Washington, DC, the CAQ is affiliated with the American Institute of CPAs. For more information, visit