calculatorInvestors, analysts, D&O insurance underwriters, and others responsible for identifying risks among public companies may want to pay close attention to the ways that companies report their financial results. According to a recent analysis, companies that make heavy use of non-GAAP reporting – such as tailored figures like “adjusted net income” and “adjusted operating income” – are more likely to encounter some kinds of accounting problems, such a restatements, than companies that stick to standard accounting measures. The research, by consulting firm Audit Analytics, is discussed in an August 3, 2016 Wall  Street Journal article (here), and in an August 4, 2016 post on the Cooley law firm’s PubCo blog (here).
Continue Reading Heavy Use of Non-GAAP Financial Metrics Represents an Accounting “Red Flag”