Friday, December 7, 2012

Nine tips for effective MD&A reporting


Deciding what to include in the management disclosure and analysis (MD&A) section of a company’s financial report seldom is an easy task.

Although the SEC issued guidance regarding MD&A, a fair amount of judgment is required. Obeying MD&A guidance is a case of complying with the spirit of a rule rather than following a checklist, Katherine Gill-Charest, CPA, said Monday during a session at the AICPA Conference on Current SEC and PCAOB Developments in Washington.

“I want to be consistent with the spirit of the guidance,” said Gill-Charest, the chief accounting officer at Viacom.

“I want to give forward-looking information when I think it’s material and I think it’s something that meets the rules. But by the same token, I don’t want to forecast anything.”

Gill-Charest’s fellow panelist at the conference, Brian Lane, said it’s a myth that projections are required in MD&A reports.

“Projections are not required,” Lane said. “… You do have to talk about known uncertainties and how they could impact the future, but you don’t have to make projections.”

Lane, a corporate securities lawyer with Gibson, Dunn & Crutcher, who has expertise in SEC issues, gave nine tips for effective MD&A reporting:

1. Use plain language. Lane said good MD&A reports minimize the jargon and provide plenty of tables.

2. Keep the overview brief. “Assume that one of your directors is Rip Van Winkle and they woke up at the end of the quarter,” Lane said. “And they’re like, ‘Hey, I just woke up. How did it go?’ 

To read the full article click here 

Source: Ken Tysiac  http://www.journalofaccountancy.com


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