Management Discussion & Analysis (MD&A) Workshop (2 days)

Introduction

Updated to reflect the ongoing economic crisis as a result of the COVID-19 pandemic, this two-day workshop provides an in-depth review and practical guidance – from disclosure requirements to organization, and from drafting tips to illustrative examples – for preparing Management Discussion and Analysis of Financial Condition and Results of Operations (MD&A). MD&A is critically important because it appears or is incorporated by reference in each annual report, quarterly report and registration statement filed by companies with U.S.-traded securities. Topics covered include Regulation S-K requirements and FR 36, FR 60, and FR 72; the SEC’s Compliance and Disclosure Interpretations on MD&A; the IASB Management Commentary framework; key performance indicators and non-GAAP financial measures; safe harbors to present forward-looking information and non-GAAP measures; disclosure concerning trends, commitments, events, and uncertainties related to the COVID19 pandemic; qualitative versus quantitative disclosure; critical accounting policies and estimates; impairment testing and disclosures; fair value changes and related disclosures; sensitivity and value-at-risk analyses; market risk disclosures; discussion and analysis of operating results, liquidity, capital resources and cash flow; materiality and assessments of likely outcomes; and how MD&A will differ when the financial statements are prepared in accordance with IFRS versus U.S. GAAP. Illustrations, sample documents, exercises and profiles of SEC enforcement cases involving deficient MD&A are used to promote awareness of applicable MD&A requirements. The course includes practical recommendations for improving MD&A, including the development of disclosure and reporting strategies that complement the company’s business strategies. Finally, the course examines Integrated Reporting – the combined reporting of financial, non-financial, and corporate responsibility information using a forward-looking approach driven by the business model – for which the International Integrated Reporting Council developed a framework. Examples will be used to relate and demonstrate the guiding principles for Integrated Reporting, including the discussion of the business model, operating context and risk, strategic objectives, business strategy, operating performance, and future outlook. Practice examples are used to provide practical application of the underlying principles for MD&A reporting.

The course will answer questions such as:

• How has the recent economic crisis as a result of COVID-19 pandemic affected companies’ MD&A disclosures?
• Where do I find the requirements for the content of MD&A?
• How do I prepare MD&A?
• What should I look for when reviewing an MD&A?
• Who uses MD&A, and for what?
• What differentiates a superior MD&A from one that is deficient?

Learning Objectives

• Become familiar with the SEC requirements for MD&A
• Learn how to write and evaluate MD&A
• Understand the resources available to assist in writing MD&A
• Differentiate between required and advisable disclosure, and superior/deficient MD&A
• Use real-world examples and case studies to apply your knowledge
• Know what’s coming in the way of SEC focus points and future changes to MD&A, especially as it relates to the economic crisis related to the COVID-19 pandemic

Who Should Attend

• Executive officers, industry controllers and accountants, and finance professionals of public companies filing reports with the SEC  
• Public practitioners who audit, or play a substantial role in auditing, public company financial statements included in reports filed with the SEC 
• Analysts who analyze public company reports, focusing on MD&A and the financial statements 
• Regulators who review public company reports including MD&A

Topics

• Introduction to MD&A
  • What is MD&A
  • Underlying principles of MD&A
  • The goals of MD&A
  • Why MD&A is critical to get right
  • When and how MD&A is filed
  • Effects of COVID-19 pandemic on MD&A reporting
• Rules, Regulations and Interpretations Related to MD&A
  • Basic definitions
  • Regulation S-K
  • Regulation S-X and its related financial statement requirements
  • Guidance: FR 36, FR 60, FR 72, and proposed guidance
  • Compliance and Disclosure Interpretations
  • Regulation G: Non-GAAP financial information
  • Forward-looking information and the safe harbour
  • Changes to forward-looking information
• Preparation Basics
  • Plain English principles and application
  • Accounting framework: IFRS or GAAP
  • Functional and presentation currencies
  • Sequence, headings, and format
  • Single location versus duplication
  • Using the “layered” approach
  • Materiality assessments
  • Trends, demands, commitments, events or uncertainties
• Content
  • Executive overview
  • Recent developments
  • Known trends and future events/outlook
  • Critical accounting policies and estimates
  • Results of operations
  • Segment disclosures
  • Liquidity
  • Capital resources
  • Contractual obligations
  • Commitments and the disclosure window
  • Off-Balance sheet arrangements
  • Cash flows
    • Components
  • Sustainability and environmental disclosures
  • Quantitative and qualitative disclosures concerning market risk
    • Sensitivity analyses
    • Value-at-risk
    • Input using qualitative factors
  • Recently issued accounting pronouncements
  • Seasonality
  • Dependence on principal customers or suppliers
  • Unaudited quarterly financial information
  • Share repurchase programs
  • Inflation
  • Evaluation of disclosure controls and procedures
  • Management’s assessment of internal control over financial reporting
  • Effects of the economic crisis related to COVID-19 pandemic
• SEC Comment Letter Trends
  • Foreign private issuers and Operating and Financial Review
  • IFRS
• Accounting Issues Closely Related to MD&A
  • Fair value
  • Impairments and goodwill
  • Percentage of completion and related estimates
  • Segment reporting
  • Business combinations
  • Contingencies
  • Coming changes in revenue recognition and lease accounting
• Evaluating MD&A
  • Comparing and assessing real-life examples
  • Historical reporting versus analysis
  • Deficient MD&A: Historical cases including Sony, Coca-Cola, Caterpillar, and others
  • Special issues: segments, related party transactions, cyber-security, coming extractive industry disclosures, conflict minerals
  • Case study on MD&A
• Key Performance Indicators and Non-GAAP Financial Information
  • Understanding the difference
  • Required disclosures under Regulation G for non-GAAP financial information
  • Risks and safe harbours
  • Effects of the COVID-19 pandemic on non-GAAP reporting
  • Lead or follow?
• Liabilities and Certifications
  • Who is responsible?
  • Liability for misrepresentations or omissions
  • Use of sub-certifications
  • How Sarbanes-Oxley certifications relate to MD&A
• Checklists and Performance Evaluation Tools
  • The dangers of checklists
  • Sample checklists and performance evaluation tools
  • Peer analysis
  • Case study: applying performance tools to evaluate actual MD&A
• Final Review of MD&A Before Filing
  • Importance of the “cold read”
  • Refocus on the principles and objectives of MD&A
• Looking Forward
  • The Integrated Reporting approach
  • Real-time reporting
  • How XBRL will continue to impact MD&A

Teaching Method

• Group live instruction in a workshop format
• Detailed review of regulations, rules and interpretations
• Extensive use of real-world examples of MD&A
• High level of attention to individual participants
• Interactive participation is encouraged
• All participants receive a comprehensive binder containing copies of the presentation slides, handouts and other course materials

Instructors

Venue

CPE/CPD Accreditation

IASeminars is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.

 

Field of study: Accounting

Prerequisites

Some accounting/finance experience and a basic working knowledge of the elements of financial statements will be helpful. No advance preparation is required for this course.