SEC didn't like how Tesla was reporting its earnings

If you've been paying attention to recent Tesla earnings calls, you may have noticed that the electric automaker has stopped with the "non-GAAP" phrasing in favor of "GAAP." The last time that Tesla used non-GAAP numbers was in August. For the company's next quarterly release ( in October), it shifted totally to GAAP numbers. If you don't know what those phrases mean, you're not the employee at the SEC that had a problem with Tesla's used of these terms. For everyone else, here's what's going on.

"GAAP" stands for "generally accepted accounting principles," and, well, "non-GAAP" means doing things that are not generally accepted. As you might expect, GAAP is the standard because it puts everyone on a level playing field. But for years, Tesla has used both GAAP and non-GAAP numbers in its reports, and that's what the Securities and Exchange Commission told Tesla to stop doing. The SEC said that Tesla was using prohibited non-GAAP "accounting metrics" ( as reported by The Wall Street Journal) that were "individually tailored." The SEC sent Tesla a series of letters describing the issues and now considers the matter resolved, the WSJ says. The SEC has been cracking down on non-GAAP numbers across the board, so don't expect Tesla to revert to its old methods in the future.

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