The MD&A requirements call for a discussion of: the historical financial results for the period covered by the financial statements (typically three years), liquidity, capital expenditures, off-balance sheet arrangements, contractual obligations, and known prospective information. They also encourage management to describe matters that are most significant in the company’s circumstances and to avoid boilerplate discussions.
MD&A should be a discussion and analysis of the company’s business rather than simply a recitation of the financial statements, and changes therein, in narrative form. The guidance on the preparation of MD&A directs management to consider, where appropriate, explaining the underlying factors that caused the changes in financial statement results and the interrelationships between results. In short, management should consider disclosure of an analysis of why something happened, not simply that it happened.