An Example of Disclosing Changes in Information Presented Outside the Financial Statements
By George Wilson
In this post we discussed the SEC’s new Release about the use of metrics. One of the points the SEC emphasized in this release was consistency. If a company changes how a metric is computed or changes its presentation to discontinue use of a previously presented metric, it should make appropriate disclosure about the change and the reasons for the change.
This Investor FAQ Document from Square provides an example of such a disclosure. While this example is about a non-GAAP measure rather than a pure metric, it is an example of making disclosures about changes in the presentation of information outside the financial statements.
You will see that this document starts with two fundamental questions:
What change is being made to Square’s reporting?
Why were you using the Adjusted Revenue measure?
While there is no formal standard about such disclosure, it is clearly important to tell investors about such changes in a full and forthright manner.
As always, your thoughts and comments are welcome.