The SEC issues an interpretive release, Commission Guidance Regarding Management’s Discussion and Analysis of Financial Condition and Results of Operations ( www.sec.gov/rules/interp/33-8350.htm ). Commonly called MD&A, such information is included in public companies’ disclosure documents. The guidance emphasizes the MD&A should not be merely a recitation of financial statements in narrative form or otherwise uninformative technical responses, neither of which provides the important management perspective an MD&A should offer. Instead, the release encourages top-level management to participate in drafting the MD&A and provides guidance regarding the overall presentation and focus of MD&A; emphasis on analysis of financial information; known material trends and uncertainties; key performance indicators, including those that are nonfinancial in nature; liquidity and capital resources and critical accounting estimates. The release neither creates new—nor modifies existing—legal requirements.
AICPA Chairman S. Scott Voynich appoints a task force, led by past chairman James G. Castellano, to study financial reporting by privately held businesses. To provide members in business and industry with information they can use to meet their evolving reporting responsibilities, the group will speak with, for example, investors, credit rating agencies and other stakeholders in the financial reporting process. Voynich said the task force’s strategy will be to identify any informational deficiencies in private companies’ traditional GAAP-based financial statements and propose appropriate solutions on behalf of the profession.