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Two key financial reporting issues may need a more prominent place

on audit committee agendas: Implementation of new accounting
standards and non-GAAP financial measures.

Few audit committees say their companies have clear In addition, audit committees ought to consider
implementation plans for two major accounting changes whether to increase attention to any non-GAAP financial
on the horizon—the new revenue recognition and lease measures, which are an area of significant attention and
accounting standards. Given the scope and complexity comment by regulators worldwide. Nearly a quarter
of those implementation efforts and their impact on the of those surveyed say their role with respect to the
business, systems, controls, and resource requirements, presentation of those metrics is very limited.
those efforts should be a key area of focus.

Q What is your audit committee’s role in considering how the
company should present non-GAAP financial measures—and which
ones to present? (select all that apply)

Audit committee discusses with management the
31 % process by which management develops non-GAAP
financial measures

27 % Discusses adequacy of disclosure controls and processes
around development of non-GAAP financial measures

25 % Company does not provide non-GAAP
financial measures

Discusses the correlation of the non-GAAP financial measures with
24% actual state of the business and results

24% Audit committee’s role/input is very limited

Multiple responses allowed

It is critical that non-GAAP measures have a prominent the questions to consider: What is the process by which
place on the audit committee agenda and that the the company decides whether to present non-GAAP
committee have a robust dialogue with management measures—and which ones to provide? What is the
about the process—and controls—by which role of management's disclosure committee? What is
management develops and selects the non-GAAP the role of the audit committee? Is the audit committee
financial measures it provides and their correlation to satisfied that non-GAAP measures are being used to
the performance of the business and results. Among improve transparency and not to distort results?

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