Question

Select all that apply select the statements that properly describe requirements for non-gaap disclosures?

O audit committees carefully over see the use of non-gaap measures
O this audit committee should discuss the use non-gaap disclosures with the external auditors
O external auditors should explain the usefulness of non-gaap measures in the audit report

Answer 1

Audit committees carefully oversee, discuss with external auditors, and explain the usefulness of non-GAAP disclosures.

Step-by-step explanation:

The correct statements that properly describe requirements for non-GAAP disclosures are:

1. Audit committees carefully oversee the use of non-GAAP measures. They play a crucial role in ensuring the accuracy and transparency of financial reporting, including the use of non-standard measures.
2. Audit committees should discuss the use of non-GAAP disclosures with the external auditors. This promotes open communication and ensures that the auditor understands and provides necessary guidance on the appropriateness of non-GAAP measures.
3. External auditors should explain the usefulness of non-GAAP measures in the audit report. This helps stakeholders understand the purpose and relevance of such measures in assessing a company's financial performance.

The requirements for non-GAAP disclosures include the oversight by audit committees who should ensure that non-GAAP measures are used appropriately and discuss the use of such disclosures with external auditors. It is not the role of external auditors to explain the usefulness of non-GAAP measures in the audit report. Their responsibility is typically to audit financial statements prepared in accordance with accepted accounting principles (GAAP), rather than non-GAAP measures.