The idea behind the adoption of Management’s Discussion and Analysis (MD&A) by SEC—to have management provide a narrative explanation of the financial statements, was to allow the user to see the company’s financial position and operating results through management’s eyes. If you are an auditor, how do you perform examinations and reviews of Management’s Discussion and Analysis (MD&A)?

An auditor and other practitioners who are seeking to provide these services should refer to SSAE 10 and the SEC’s rules and regulations on MD&A. SSAE on examination or review of MD&A is essentially a detailed manual on how to perform examinations and reviews. Unfortunately only the highlights are summarized.

This post provides a brief guidelines on how auditor can do examination and review of an MD&A with report examples. But before that, please note that only the considerations for a public entity are covered here. The considerations for a non-public entity are very similar because only the SEC has issued rules and regulations that provide guidance on the presentation of MD&A.