Preparing a Management Discussion and Analysis (MD&A) can be both difficult and time consuming for some people. However, it does not always need to be that way. The MD&A’s purpose is to provide an objective, easily readable introduction to the financial statements and assessment of the year-over-year financial position. The MD&A needs to be brief yet effective. So you ask, “How do we do that?” We have identified five tips below that can help you create a quick, effective, and informational MD&A:
- Give the important top-down analysis before getting into the detail.
- Make sure you explain ‘Why?’ the results are like they are – it’s what the readers are looking for after all.
- Identify accounts or groups of accounts with major changes or transactions.
- Don’t be afraid to use charts or graphs. When discussing year to year comparisons, it could be easier to follow using simple easy to grasp charts.
- Take organized notes throughout the year as to any changes or expected changes to happen.
Writing a meaningful MD&A can be challenging; however, with the five helpful tips above, it can be easier. The MD&A is an opportunity for you as management to tell the facts behind the numbers in the financial statements, providing a more complete picture of the entity and not simply repeating the numbers. The MD&A does not need to be long or consume a lot of time and resources to prepare — it merely needs to discuss the specifics of the entity.
For more information on MD&A’s visit the following websites: www.gasb.org, www.gfoaz.org, or www.gfoa.org.
By Cailee Arnold