Search the Site

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

Allergan PLC received a  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

Crypto Roundup: The Road Remains Rocky

Remember when cryptocurrency was going to be a big deal? Bitcoin and other alt-coins were going to replace money and change the way the world does bus...

Severed Heads: Companies Split CEO, Chairman Roles

The saying goes that if you want a job done right, do it yourself. But public companies seem to have learned a different lesson. When things go wrong,...

SEC Proposal Would Curb Shareholder Resolutions

By definition, owning a share of stock gives the holder partial ownership of a company. Even though institutions like mutual funds and pensions contro...