Are you concerned that operating income (EBIT) could be misleading? Should the FASB try to standardize operating income?
If you were the Uber CFO selling the IPO to bankers and investors, why would you want to use non-GAAP measures? Which ones would you choose?
Do you believe that GE’s stock price is affected by the fact that it uses multiple “pro forma” or non-GAAP earnings measures? Why or why not?
What are solutions to the perceived problems of executive compensation being based on faulty performance measures and inappropriate peer firms? If you were CEO, would you agree to the changes in how your compensation would be calculated? Why or why not?
Do you think it is possible to devise a comprehensive and uniform way to determine whether pro forma earnings are reasonable, that is, that do not overstep the SEC’s guidelines for reporting non-GAAP earnings? Or, do these cases have to be considered on a case-by-case basis?
Why shouldn’t firms be able to provide non-GAAP measures as long as they reconcile them to GAAP? Do you agree with the author’s opinion in the last sentence that criticizes the presentation of non-GAAP measures?
In its non-GAAP EPS, Allergan removed “more than half of all operating expenses,” according to the SEC. If the non-GAAP EPS is reconciled to the GAAP EPS, does it matter what or how much they removed? Why or why not?
Microsoft obtained SEC approval before disclosing non-GAAP revenue figures in its financial filings. What do you think the consequences would have been had Microsoft not received pre-clearance before announcing non-GAAP revenue?
Can you tell from this description whether the pro forma (adjusted) results for Marvell Technology are “good”?
How would you determine whether financial reporting is “unbalanced”? How would you measure quality financial reporting? Do you think this attribute of financial reporting varies by country?
EBITDA, a non-GAAP measure, is apparently being tweaked, to make it “more” (?) non-GAAP. Should investors be concerned? Should investors be using cash based measures that are harder for firms to tweak? Should the government oversee non-GAAP metrics?
Firms who are “heavy users” of non-GAAP (pro forma) earnings measures (“EBBS”) seem to have a higher propensity of accounting problems, resulting in accounting restatements. What might be the connection? If the relation between use of non-GAAP measures and accounting problems is established to be systematic, what do you propose as a solution?
Why do you think Electronic Arts decided to discontinue reporting non-GAAP measures? Who benefits from this? Who loses? Do you think their decision is a good one?
If so many firms are using pro forma (adjusted) accounting measures, can you make a case that GAAP should be discontinued?
If you were a C-suite exec, would you want your bonus calculated on GAAP results or pro forma results?
The SEC is (again) planning to crackdown on non-GAAP disclosures. How will they do that? Will firms simply stop using them? Will the SEC give an approved list of non-GAAP disclosures? Is GAAP the “problem”?
Do you think the proliferation of non-GAAP measures is due to the accounting standards requiring firms to provide meaningless data to investors? In other words, are the accounting standard setters themselves responsible?
Most firms give some non-GAAP measures in their 10-Ks. If you are the CFO or Controller or General Counsel, what steps would you take to protect yourself and the firm against an SEC enforcement action re: improper non-GAAP disclosures?
The issue of whether firms should be allowed to give non-GAAP (or pro forma) numbers continues. How would you design a disclosure system that would accommodate pro forma numbers so that critics of the practice would be satisfied?
