Day one continued at the AICPA Conference on Current SEC and PCAOB Developments in Washington, DC. The afternoon of day one had several informative sessions including two panel discussions, one on Internal Control over Financial Reporting (ICFR) and the other on Management Discussion and Analysis (MD&A). Both of these panels had representatives from several disciplines in the industry.
During the ICFR panel discussion, it was noted that improvements have been made on the documentation and testing of management review controls. However, one of the rising challenges surrounds the risk assessment process. It was noted that often times management’s risk assessment may be different than the external auditor’s risk assessment. Both preparers and auditors on the panel agreed that early and continuous communication on the risk assessment and the controls being tested is something that will help resolve some of these issues.
During the MD&A panel discussion, the panelists discussed some common themes on how the MD&A can be enhanced. Enhancements discussed include eliminating duplicative information and adding tables, charts or other info-graphics to communicate information in a clearer manner. The panel also discussed the potential need for companies to revisit the risk factors that they identify, as the industry, the economy, their operations and other factors change. A broader filing comment that the panel drove home was to ensure that all of information that a registrant issues needs to be consistent, whether it is in a press release, earnings call, or 10Q/10K.