Management Discussion and Analysis is denoted by MDA and is a part of annual report. This is an unaudited part of the report because here the management of the entity discusses the entity’s performance by comparing the past performance with the current one and project the performance for the future period using its estimate based on its strategy and future plan. In UK and most parts of the world, this report is called as Director’s report.
Difference between MDA and Audited Financial Statements
The audited financial statements are the responsibility of the external auditors of the entity and as such they do not accept any discussion in the report from management of the company. External audit is done to give an independent audit review about the performance of the company.
So, management need some form of platform to discuss its performance with the users of the financial statements and their future strategy and plan. Here comes the role of MDA or director’s report into focus.