SEC slaps Tesla's wrist over accounting practices

Elon Musk, chairman and chief executive officer of Tesla Motors, speaks during an event at the company's headquarters in Palo Alto, California.
David Paul Morris | Bloomberg | Getty Images
Elon Musk, chairman and chief executive officer of Tesla Motors, speaks during an event at the company's headquarters in Palo Alto, California.

The Securities and Exchange Commission has been writing Tesla some strongly worded letters about its accounting practices.

The regulator criticized Tesla for using "individually tailored" measurements in its August earnings release, according to a series of letters between Tesla and the SEC reported by The Wall Street Journal.

The regulator has been cracking down on the use of non-GAAP information in earnings releases, the report said.

The SEC letters also criticized Tesla for failing to make a "substantive case" for using non-GAAP figures. An expert consulted by the Journal noted the strong language of the letters.

Tesla announced in early October that it would stop reporting non-GAAP figures. The company had previously defended their use by saying non-GAAP figures better reflected their finances.

"Tesla responded promptly to the SEC's May guidance," the company told CNBC. "When Tesla announced its Q2 earnings, it stated that it was evaluating the SEC's guidance and was determining whether any changes should be made. When the SEC then asked Tesla about this as part of its review of the SolarCity acquisition, Tesla told the SEC that it had decided to make changes. These changes were reflected in its Q3 earnings, which was just one quarter after the SEC provided its new guidance."

Read the full article in The Wall Street Journal.

(Update: This story was updated with a comment from Tesla.)