Management’s Discussion and Analysis (Portfolio 5107)

  • This Portfolio analyzes the requirement that annual and quarterly financial statements of public companies be accompanied by management’s narrative discussion of certain issues (MD&A).


Accounting Policy and Practice Portfolio 5107, Management’s Discussion and Analysis, analyzes the requirement that annual and quarterly financial statements of public companies must be accompanied by management’s narrative discussion of certain issues (MD&A). The Securities & Exchange Commission has promulgated regulations mandating the form and content of these narrative descriptions. Although the Sarbanes-Oxley Act of 2002 expanded the significance of MD&A, the requirements precede that legislation. This Portfolio consists of two parts: Detailed Analysis of Rules (Part 1) and Highlights and Illustrations (Part 2).

Part 1, by Brian J. Lane and Gillian McPhee, analyzes the history, purpose, and components of MD&A and forward looking information. The Portfolio analyzes both the SEC’s regulations and significant relevant judicial and administrative actions. Echoing the significance of MD&A under the Sarbanes-Oxley Act, the Portfolio emphasizes MD&A disclosures in 2001 and beyond.

Part 2, by William Ruland, highlights the SEC’s requirements and illustrates contemporary reporting practice. The highlights summarize major MD&A requirements as reflected in major directives from the SEC. The illustrations are taken primarily from annual reports of companies that have received recognition for the quality of financial reporting as reflected in the AIMR Corporate Disclosure Survey, February 2000, the final and most recent edition of that series.

This Portfolio may be cited as Bloomberg Tax Portfolio 5107, Lane, McPhee, and Ruland, Management’s Discussion and Analysis. Please note, however, that Mr. Lane and Ms. McPhee had no part in preparing and take no responsibility for Part 2 of the Portfolio. Accordingly, they take no position with respect to the merits of the MD&A of any company including the companies identified in Part 2.

Table of Contents

I. Introduction and Scope of Portfolio
II. History, Purpose, and Components of MD& A
III. Forward-Looking Information
IV. Significant Judicial and Administrative Action Involving MD& A
V. Recent Years’ Guidance on MD& A Disclosure in 2001 and Beyond
VI. Organization and Relationship to Part 1
VII. Introduction or Overview Section of MD& A
VIII. Liquidity and Capital Resources
IX. Results of Operations
X. Key Indicators of Financial Condition and Operating Performance
XI. Known Trends and Uncertainties
XII. Forward Looking Information
XIII. Safe Harbors – Meaningful Cautionary Language
XIV. Material Changes in Financial Statement Line Items
XV. Interim Period Reporting
XVI. Segment Analysis
XVII. Critical Accounting Estimates
XVIII. Off-Balance Sheet Arrangements and Tabular Disclosure of Contractual Obligations

Ronald Pippin
Arthur Andersen, WoltersKluwer
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