Meet the Street: Debate Over Use of Pro Forma Earnings Continues

On Wednesday, the Securities and Exchange Commission charged Trump Hotels & Casino Resorts(DJT Quote) with making misleading statements in a 1999 earnings release, bringing into sharp focus the issue of pro forma earnings reporting. The move came just as fourth-quarter earnings season launched into full swing this week.

Jeff Brotman, Adjunct Professor of Accounting, Univ. of Penn. Law School

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The widespread practice of pro forma reporting, or reporting that deviates from generally accepted accounting principles (GAAP), gained in popularity in the '90s as fast-growing companies sought to exclude acquisition-related and other charges that might have obscured their growth. But pro forma reporting has since become a more controversial topic. ...