Search the Site

The SEC shines a bright light on Allergan’s non-GAAP reporting strategy

Allergan PLC received a comment letter from SEC examiners regarding financial reporting in its 8-k dated 8/8/2016 . The SEC specifically questioned how Allergan approached its calculations of adjusted earnings per share stating “you continue to view your non-GAAP adjusted net income attributable to shareholders, including its presentation on a per share basis, as solely a performance measure.”

In the comment letter, the SEC clearly presents that it disagrees with the approach and left little room for interpretation by stating “In light of our observations, we suggest that you carefully consider Question 102.05 of the updated Non-GAAP Compliance and Disclosure Interpretations and consider ending your practice of providing the per share data.”

Even though the SEC has previously directed registrant’s attention to question 102.05 of the updated Compliance and Disclosure Interpretations, this very direct comment letter could act as an early indicator as to what’s on the horizon regarding how the SEC intends to crackdown on company use of non-GAAP figures.

While Allergan’s compliance machine focuses on its response to its SEC comment letter, it is probably a safe bet that other registrants will be monitoring this exchange closely, along with other SEC favorites related to compliance and disclosure interpretations.

Related Articles

COVID-19 Tests Limits of Non-GAAP Reporting

How many times can you write off a one-time cost? How often can a non-recurring expense recur? What is the sound of one hand clapping? These ...

Issuers Put the $ in ESG

Public companies have been talking a big game on ESG for years. Now they’re putting their money where their mouth is. Well, some of them are. Of ...

Podcast Preview: ESG Comes to the Earnings Call

Nature abhors a vacuum. It turns out that maxim might be true in investor relations as much as anything else. We’ve all noticed, for instance, the t...