Canadians get guidance on MD&A disclosure. (Disclosure).

Canada's Chartered Accountants have issued new guidance to help companies improve Management's Discussion and Analysis (MD&A) disclosures about off-balance sheet arrangements and related exposures. The new "interpretive release" is designed to encourage management to see MD&A as an opportunity to disclose more about its off-balance sheet arrangements than what may be included in the notes to the financial statements.

"Enron and similar corporate situations in the United States demonstrated the need for greater disclosure in this area," says Chris Begy of the Canadian Institute of Chartered Accountants' (CICA) Canadian Performance Reporting (CPR) Board. "The MD&A is an excellent vehicle for helping investors understand the purpose and nature of a company's off-balance sheet arrangements and their impact on results, and enables investors to hold management accountable for the performance and transparency of those arrangements."

The release, the first in a series of interpretive releases, supplements the general guidance in an MD&A preparer's handbook issued by the CICA in November 2002.

"According to this new guidance, management should use the MD&A to explain to investors why it is using off-balance sheet arrangements, how they impact results, what risks are involved and how they are being managed," says Begy.

The guidance recommends that off-balance sheet arrangements should be disclosed if they have or are likely to have a material current or future effect on the entity's financial condition, changes in financial condition, results of operations, liquidity, capital expenditures or capital resources.

This release is available at the CICA Web site, www.cwa.ca.