Auditor's Role Regarding Other Information and Company Performance Measures, Including Non-GAAP Measures

(Updated Oct. 1, 2018)

Objective


Evaluate the auditor’s role in relation to other information and company performance measures, including non-GAAP financial measures, and explore whether there’s a need for guidance, changes to PCAOB standards, or other regulatory actions.

Background


In recent years, there has been much press attention and regulatory scrutiny about the disclosure of company performance measures. These measures are included in a company's annual reports, registration statements, earnings releases, or in other communications. Under current PCAOB standards, auditors do not have responsibilities to perform procedures related to information presented in corporate earnings releases, investor presentations, or other communications, such as calls with analysts and information on the company's website. Company performance measures that are included in an annual report outside the financial statements, for example, in management's discussion and analysis of financial condition and results of operations, are considered "other information" and are subject to the requirements of AS 2710, Other Information in Documents Containing Audited Financial Statements. Staff considerations include, among other things, observations from PCAOB and SEC oversight activities, initiatives of other regulators and standard setters, relevant academic literature, outreach to various stakeholders on current practice and the potential need to improve auditor’s responsibilities, and input from meetings with the IAG and SAG. Other considerations by staff include comments received on the other information standard proposed in 2013 (see below). The proposed standard was issued in connection with the proposal on the auditor's reporting model. 

Status


The staff is summarizing its research findings and is developing recommendations for next steps for Board consideration.