Handling segment income or expense line items without hewing to GAAP principles.But try one formula here and another there across multiple segments, and you are likely asking for a comment letter. Calculate one segment’s profit differently than GAAP and you might be fine under ASC 280. Using varying approaches to measure segment profit or loss.Presenting a segment’s revenue exclusive of discounts and returns that they must deduct under GAAP.So, what exactly are filers doing to draw the staff’s ire? Here are some examples: If yours is one of those companies…well, this conference put you on notice. Yet more companies are reporting enterprisewide revenue by shuffling segment treatments in a way that is inconsistent with GAAP, the Division staff warned. Inaccurate reporting of revenue is like sucking bone marrow from regulators and investors. The Division staff simply won’t consider that result to be “revenue.” Subtracting certain revenue-reducing amounts from GAAP revenue and reporting it as non-GAAP “net revenue.” That really isn’t “revenue ” you might persuade the SEC to accept “adjusted gross profit,” although even that is not a given. Deputy Chief Accountant Patrick Gilmore made the staff’s position crystal-clear by warning of objections to:Īdding back sales discounts, return allowances, and other concessions to revenue as adjusted gross sales. In case you hadn’t heard, the SEC Division of Corporation Finance staff takes a very dim view these days when it comes to attempted adjustments to GAAP revenue. The following are my thoughts on some of the most relevant discussions. Have no fear: I attended and tried hard to miss nothing of import, from the Guns N’ Roses intro music to some meaty trends and issues discussed by the SEC staff. Even as a fully virtual event, the AICPA’s annual conference on SEC and PCAOB issues in December may not have fit your busy schedule.
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