Hans Hoogervorst, who chairs the International Accounting Standards Board, is uneasy about the increasing use of non-GAAP measures in the financial statements of public companies. Speaking May 11 at the annual conference of the European Accounting Association in Maastricht, the Netherlands, Hoogervorst pointed to the widening difference between GAAP and non-GAAP numbers in financial reports. And he’s not alone.
“There is growing evidence showing increasing use of non-GAAP measures, and of these measures becoming increasingly misleading,” he said, adding, “More than 88 per cent of the S&P 500 currently disclose non-GAAP metrics in their earnings release. Of those releases, 82 per cent show increased net income and are clearly designed to present results in a more favourable light.”