Wiley Practitioner's Guide to GAAS 2018, 2nd Edition

AT-C Section 395 (Designated for AT Section 701) Management's Discussion and Analysis (MD&A)—A Summary^1,2

Original Pronouncement

Source

Statement on Standards for Attestation Engagements (SSAE) 18.

Applicability

AT-C 395 applies when a practitioner is engaged by a public entity that prepares Management's Discussion and Analysis (MD&A) in accordance with the rules and regulations adopted by the Securities and Exchange Commission (SEC) (or a nonpublic entity following the same requirements) to perform either an examination or a review of MD&A. A practitioner engaged to perform agreed-upon procedures on MD&A should follow the guidance in Section 21r.

Definition of Term

1. MD&A. Management's Discussion and Analysis of Financial Condition and Results of Operations adopted by the SEC and found in Item 303 of Regulation S-K, as interpreted by Financial Reporting Release (FRR) 36.

Objectives of at Section 395

The SEC adopted requirements for MD&A in 1974 to have management provide a narrative explanation of the financial statements. The idea was to allow the user to see the company's financial position and operating results through management's eyes.

Two levels of service are possible—an examination or a review. A review report is restricted as to use and is not intended to be filed with the SEC. An examination report is intended for general use, but at this stage, whether there will be a significant demand for this service is unknown. The SEC does not require a practitioner's ...