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.
