Top Accounting and Auditing Issues for 2023 CPE Course: Module 3

Author: Kelen Camehl

This four CPE hour course reviews top auditing issues: management’s discussion and analysis (MD&A) and non-GAAP financial measures. This course provides an overview of the rules and regulations with respect to the management’s discussion and analysis (MD&A) section of an entity’s consolidated financial statements filed with the U.S. Securities and Exchange Commission (SEC). MD&A has been, and continues to be, a primary focus area of the SEC when reviewing public company filings. In fact, it has consistently ranked in the top 10 of the most frequent comment letters issued by the SEC. This course also provides an overview of non-GAAP financial measures with a particular emphasis on comments from the U.S. Securities and Exchange Commission (SEC) and the Financial Accounting Standards Board (FASB), as well as comment letter analysis from several of the Big 4 accounting firms. Non-GAAP financial measures continue to rank at the top of the most frequent comment letters issued by the SEC. As a result, it’s important to understand the guidance with respect to these measures to ensure that an entity’s financial statements remain GAAP compliant and are not misleading.

Publication Date: August 2022

Topics Covered

• Where do I go for Guidance?
• Objective of MD&A
• Item 303—Full Fiscal Year Requirements
• Item 303—Liquidity and Capital Resources
• Item 303—Liquidity and Capital Resources: Illustrative Examples
• Item 303—Results of Operations: Illustrative Example
• Item 303—Critical Accounting Estimates
• Item 303—Critical Accounting Estimates: Illustrative Examples
• Item 303—Interim Reporting Requirements
• Item 303—Interim Reporting Requirements: Illustrative Example
• SEC Views—How to Improve MD&A
• Big 4 Views—Comment Letter Analysis on MD&A
• What is a Non-GAAP Financial Measure?
• Examples of Non-GAAP Financial Measures
• Where do Non-GAAP Financial Measures Show Up?
• What Drove the Increase in Non-GAAP Financial Measures?
• Why do Regulators Care About Non-GAAP Financial Measures?
• Where do I look for Guidance?
• Regulation G
• Regulation S-K
• SECA Compliance and Disclosure Interpretations
• Misleading Concerns
• Earnings Management
• Prominent Presentation
• Tax Impacts
• EBIT and EBITDA
• Free Cash Flow
• Segment Information
• The SEC is Watching
• Illustrative Examples: SEC Comment Letters

Learning Objectives

• Identify the SEC Regulation applicable to MD&A
• Recognize the primary objective and focus areas related to MD&A
• Identify key information that should be included within a company's MD&A
• Recognize the types of transactions that should be discussed in MD&A
• Identify methods to enhance the presentation of MD&A
• Differentiate between a GAAP financial measure and a non-GAAP financial measure
• Recognize examples of different types of non-GAAP financial measures
• Identify which SEC guidance is applicable to different types of non-GAAP financial measures
• Recognize disclosures within the scope of Regulation G
• Identify key requirements included within both Regulation G and Regulation S-K related to these measures

Level
Basic

Instructional Method
Self-Study

NASBA Field of Study
Accounting (4 hours)

Program Prerequisites
None

Advance Preparation
None