The Canadian Institute of Chartered Accountants’ Canadian Performance Reporting Board has issued a new document seeking to enhance the credibility of corporate reporting.

“Management’s Discussion and Analysis: Guidance on Preparation and Disclosure” is designed to reform how the management’s discussion and analysis is presented.

Intended to become the standard ‘how-to’ manual in this area, this guidance prescribes six key principles and a five-part framework for MD&A disclosure.

“At one time the importance of MD&A was somewhat overlooked,” said Jim Goodfellow, FCA, chair of the CPR board, “but since Enron and similar corporate situations in the United States, renewed attention has been focused on the potential of MD&A to communicate what financial statements alone cannot.”

The 50-page publication, more than two years in preparation, is designed to assist management prepare MD&As that provide investors, potential investors, analysts and other users a broader context for understanding how a company has created shareholder value to date and how it intends to continue doing so.

The guidance lists tough questions the audit committee or board of directors should ask in order to determine the integrity of the financial statements and MD&A. The guidance also addresses the critical role MD&A plays in continuous disclosure.

The guidance goes beyond existing regulatory requirements in several areas. The six disclosure principles include the fundamental principle established by regulators that the MD&A should enable readers to view the company through the eyes of management. The other five principles address:

  • Complementing as well as supplementing financial statements;
  • Completeness and materiality, as well as fairness, balance and reliability;
  • The need for MD&As to have a forward-looking orientation;
  • A focus on strategy for generating value for shareholders over time; and
  • Usefulness, including comparability and consistency over reporting periods, and the use of plain language.



An online MD&A Resource Centre that contains reference information relevant to those who prepare MD&As has also been established on the CICA web site.

The CICA’s MD&A Guidance is accessible through the CICA Web site and is also available in Handbook-sized hard copy (with optional binder) and CD-ROM formats through the CICA Order Department at http://www.cica.ca/Order.