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MD&A: A picture worth a thousand words


MD&A: A picture worth a thousand words
January 14, 2015

The MD&A—a hot topic among SEC filings for regulators and filers. According to a recent PwC webinar, 28 percent of the comments noted in SEC comment letters are on the MD&A.

A company's MD&A is the most important portion of the filing to investors—giving color to the numbers detailed in the filing. Often providing information on key drivers, challenges, and risks the company is facing, the MD&A should provide insight into what has happened in the past, as well as the future of the company.

But there is a problem: companies are falling short.

Too frequently, companies are providing only generic information in their MD&As—sometimes this information is listed elsewhere in their filings. This generic information does not provide insight into how the business is doing and leaves a large gap for investors who are trying to understand the performance drivers of the company.

Without overloading your disclosure, what can you do to add more color?

Wayne Carnall, Partner, SEC Services Group at PwC, and former Chief Accountant for the Division of Corporate Finance at the SEC, suggests that companies use graphs and tables to provide insight into the past and future of the business. Carnall notes that waterfall graphs are often used by companies in internal management reports and that companies should consider expanding their usage to public filings in order to provide insight to investors.

How are you conveying complex messages to your investors? Are you relying on charts or lengthy descriptions?

Your data and your charts should work together to bring your financial statements to life. By linking your information, each data change automatically updates your charts—resulting in presentations and documents that are always in sync. In addition, charts should be fully customizable to fit your needs—without graphic designers or third-party vendors.

Mike Starr
Vice President, Governmental and Regulatory Affairs

About the Author

Mike Starr is Vice President of Governmental and Regulatory Affairs. He previously served as the SEC Chief Accountant’s advisor with a focus on investors’ financial information needs and the role of structured data in meeting those needs. Prior to his work with the SEC, Mike served as Chief Operating Officer for Grant Thornton International Ltd., where he oversaw global strategy and public policy. He earned a Bachelor of Science in accounting from Oklahoma State University (OSU), and in 2010 was recognized as an OSU distinguished accounting alumnus and inducted into the School of Accounting Hall of Fame.

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