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Risk Management Practices

Non-GAAP Financial Measures:
Caveat Emptor

Kevin Nye, Executive in Residence, Global Risk Institute

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2021-03 NON-GAAP FINANCIAL MEASURES: Caveat Emptor


INTRODUCTION

Today, approximately 20 per cent of the financial information used in making investment, lending and capital allocation decisions is prepared in accordance with generally accepted accounting principles (GAAP).  Conversely, a full 80 per cent of that same information is unaudited, subject to little or no formal oversight, and its use and definition is at times at the discretion of management. This is a troubling development and should be a flashing caution light to consumers of that information.

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