Page 4 - FINAL CFA SLIDES DECEMBER 2018 DAY 7
P. 4
Session Unit 6:
21. Financial Statement Analysis: An Introduction, p.1
LOS 21.c: Describe the importance of financial statement notes and supplementary information—
including disclosures of accounting policies, methods, and estimates—and management’s
commentary, p.2
Financial statement notes ( footnotes) include further disclosures:
• Basis of preparation, methods, assumptions and uncertainties, amount breakdown, timing
• Further info: M/As, disposals, legal actions, employee benefit plans, contingencies, related
parties, segments, etc.
Management’s discussion and analysis (MD&A)] addresses the nature of the business,
management's objectives, the company's past performance, the performance measures used, and
the company's key relationships, resources, and risks.
USA Listed firms, SEC requires that MD&A discuss trends and identify significant uncertainties that
affect the firm’s liquidity, capital resources, and results of operations; and also:
• Effects of inflation and changing prices if material.
• Impact of off-balance-sheet obligations and contractual obligations such as purchase commitments
• Accounting policies that require significant judgment by management.
• Forward-looking expenditures and divestitures.
