MD&A Report Card

ON THE RECORD

What is the state of MD&A disclosure? The staff in the SEC’s Division of Corporation Finance reviewed over 6,000 public companies’ filings last year. They tell me that generally, MD&A has improved. In many instances companies are better explaining their financial statements, providing and clarifying context and using MD&A to fill in some of those gaps in GAAP. ”

“ Despite this progress, there is still room for improvement. Some companies are doing an ‘elevator analysis’ without ample explanation. And some companies’ MD&A is still unnecessarily lengthy and not focused on telling the story clearly. ”

“ Management’s story would be more complete if it contained more forward-looking information, better explained trends and uncertainties that affect the business and discussed in more detail the business’ key drivers. ”

—SEC Commissioner Cynthia A. Glassman,
remarks at the 10th Annual Corporate Counsel Institute,
Washington, D.C., March 2006.