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Management Discussion & Analysis and Auditor
09-10-2009, 01:48 PM
Post: #1
Management Discussion & Analysis and Auditor
<font color="red"><b>Management Discussion and Analysis</b></font id="red">
A section of a company's annual report in which management discusses numerous aspects of the company, both past and present.


Among other things, the MD&A provides an overview of the previous year of operations and how the company fared in that time period. Management will usually also touch on the upcoming year, outlining future goals and approaches to new projects of the company as well as other matters relating to future prospects

The MD&A is a very important section of an annual report, especially for those analyzing the fundamentals, which include management and management style. Although this section contains useful information, investors should keep in mind that the section is unaudited.

<font color="blue"><b>Auditor’s Responsibility Regarding MD&A </b> </font id="blue">

Hence management discussion and analysis is a part of annual report and annual report also contains on the annual accounts of a company so if any misrepresentation or misleading information contains in the annual report it may misguide the users of financial information on the ground that MD&A is a part of annual report and the users may think that it is true and auditor has also the same point of view about the financial position of the company as has been disclosed in the management analysis and discussion. Hence, it seems very true that MD&A extends the auditor’s testing and evolution of control to control over the preparation of management analysis and discussion.

It is responsibility of an auditor that must check the reliability and fairness of management analysis and discussion.

Auditor should must include an explanatory paragraph if

1. MD&A is missing, or
2. MD&A contains materially misleading information
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