Reporting Model Phase I: MD&A and Stewardship Investments Improvements

FASAB Contact: Robin Gilliam,, 202-512-7356

Project Summary

The Board agreed in April 2019 to a number of amendments to MD&A through the Risk Reporting and Reporting Model Phase I: MD&A and Stewardship Investments Improvements projects. The decision to merge the projects into the MD&A Amendments project was presented to the Board in June 2019 to best utilize staff resources.

As a result, the Reporting Model Phase I: MD&A and Stewardship Investments Improvements project has been closed and archived.

Project Objective:

The objective of the reporting model phase I: MD&A and stewardship investments improvements project is to determine near-term opportunities for improving required financial report content. On September 22, 2017, the Federal Accounting Standards Advisory Board (FASAB or “the Board”) issued Statement of Federal Financial Accounting Concepts (SFFAC) 8, Federal Financial Reporting. SFFAC 8 provided a more progressive platform for considering financial reporting issues and developing financial reporting standards. The Statement effectively concluded the concepts phase of the reporting model project; for a history of the concepts phase, please see Next, the Board decided to develop financial reporting standards using a two-phased approach. During phase I, the Board will focus on near-term issues, particularly improving the content within management’s discussion and analysis and the reporting of stewardship investments information. During phase II, the Board will focus on illustrations of an ideal reporting model, additional issues, and discrete projects over the long term.


April 24-25, 2019

The Board considered a proposal to amend SFFAS 15, Management’s Discussion and Analysis. Paragraph 2 of SFFAS 15 states that “MD&A should contain sections that address the entity’s mission and organizational structure; performance goals, objectives, and results; financial statements; and systems, controls, and legal compliance.” The proposed amendments would rescind the paragraph and references to the format requirements and permit reporting entities to structure MD&A in a manner most appropriate for communicating with general purpose federal financial report users.

The Board agreed to consider the amendments along with other amendments discussed in the risk reporting project.

Issue Paper for April 24-25, 2019 – Tab C (PDF)

February 27, 2019

The Board agreed to amend SFFAS 15, Management’s Discussion and Analysis. The Board noted that reporting entity mission-related programs, functions, and activities are complex; therefore, preparers need a flexible framework to discuss the topics SFFAS 15 requires. SFFAS 15, however, is explicit regarding the structure of MD&A and requires preparers to organize their discussion of specific topics into specific sections. The Board agreed that the requirement should be changed to provide the flexibility preparers need to communicate the required information to users.

Issue Paper for February 27, 2019 – Tab A (PDF)

December 19-20, 2018

The Board agreed to develop an Interpretation of Statement of Federal Financial Accounting Standards (SFFAS) 15, Management’s Discussion and Analysis. The Interpretation would clarify the purpose of the SFFAS 15 requirements and the level of flexibility available in preparing management’s discussion and analysis (MD&A).
Members also discussed a multi-pronged approach to the project. As part of developing the Interpretation, staff could reach out to reporting entities for their feedback on issues, coordinate with the Office of Management and Budget as it prepares form and content guidance, and consider the need for education in preparing the MD&A. In addition, the project will consider guidance for discussing reporting entity performance. Staff will organize a task force to begin developing the Interpretation.

Issue Paper for December 19-20, 2018 – Tab D (PDF)
Attachment 1
Attachment 2

October 24-25, 2018

 The Board considered whether the requirement for sections of information in MD&A should be rescinded. Staff suggested eliminating the requirement for sections to permit more flexibility in presenting information in MD&A and facilitate an integrated discussion of the required topics. The Board, however, decided to retain the requirement but supported the notion of flexibility within a general framework of topical sections. Members emphasized that sections and section headings assist users in locating the information they need. Also, sections help ensure that management addresses all the required topics.

The Board also considered whether reporting entity MD&A should discuss stewardship investment information. Staff suggested eliminating the SFFAS 8, Supplementary Stewardship Reporting, requirement for stewardship investment information as a separate item in RSI because reporting entities adopt a definition of investments in MD&A and elsewhere that is broader than stewardship investments and the stewardship investment information was not being used. The Board believed that users need stewardship investment information to assess how the government has contributed to the nation’s current and future well-being, and the information should be discussed in MD&A.

Although the Board determined that MD&A should discuss stewardship investment information, the Board decided to propose rescinding the SFFAS 8 requirement to present the required supplementary stewardship information category in financial reports. The proposal would permit management to continue reporting stewardship investment information, at their discretion, while the Board develops guidance for discussing investment information in MD&A. Once exposed, the proposal would provide feedback regarding the need for stewardship investment information.

The proposal would be developed as part of the Omnibus project. See

Issue Paper for October 24-25, 2018 – Tab D (PDF)

August 29-30, 2018

The Board discussed the discussion and analysis of the financial statements section within MD&A. While the discussion and analysis of financial statements may be central to MD&A, the Board expressed concern that component reporting entities were not explaining the reason for significant changes in financial statement line items or totals.

Members agreed that a single set of guidance should be prepared for both the government-wide and component reporting entities. The Board noted that similar information would be needed from both the government-wide and component reporting entities and the discussion and analysis would not necessarily need to focus on addressing a particular reporting objective, such as Operating Performance. Also, the

Board believed that guidance for the discussion and analysis should be principles-based, providing flexibility.

In addition, the Board requested that staff answer the following questions:

  • What do SFFAS 15, Management’s Discussion and Analysis, and Statement of Federal Financial Accounting Concepts 3, Management’s Discussion and Analysis, require to meet the reporting objectives?
  • How are reporting entities applying those requirements?
  • What are the gaps in the requirements or their application that warrant changing standards or providing guidance?

Stewardship Investments

In addition, the Board discussed permitting flexibility in reporting on stewardship investments. For some component reporting entities, stewardship investments are significant to the entity’s mission. Consequently, stewardship investments could be discussed as part of the entity’s mission and organizational structure section of MD&A. However, if stewardship investments are not significant to the component reporting entity’s mission, the entity could discuss stewardship investments in a distinct section. Considering that the government-wide reporting entity relies on stewardship investments information from the component reporting entities, component reporting entities could have flexibility in the amount of detail presented. Component reporting entities with significant investments may provide more detail than a component reporting entity with less significant investments.

Issue Paper for August 29-30, 2018 – Tab D (PDF)

June 27-28, 2018

To better reflect the objectives, the reporting model phase I: streamlining project was renamed to the reporting model phase I: MD&A and stewardship investments improvements project.

Management’s Discussion and Analysis

During the June 2018 meeting, the Board discussed the following four improvements to the management’s discussion and analysis (MD&A) standards.

Improvement #1

The Board believed that component reporting entities should provide a summary about performance instead of details. The summary could include background information on the mission of the agency, management measures of strategic performance, and a high-level overview of major accomplishments. The summary could also include key risks associated with prior period performance and risk mitigation initiatives. The summary could also discuss how users might access detailed performance information.

Improvement #2

The Board believed that the requirement for information on compliance with laws and regulations and the adequacy of internal control should be retained. Members noted that management should provide a general discussion to address the requirement. For example, management could address material weaknesses that auditors identified and audit findings. In addition, the entity could address actions taken to mitigate any negative audit findings.

The Board also suggested that a reduction in volume of information could be addressed in changes to OMB Circular A-136, Financial Reporting Requirements, and requested that staff collaborate with OMB on this effort.

Improvements #3 & #4

Members agreed to remove the requirement to segment information in the MD&A. SFFAS 15, Management’s Discussions and Analysis, currently requires management to discuss topics in discrete sections of the MD&A. Removing this requirement would allow flexibility in formatting MD&A and facilitate an integrated discussion about financial performance. The discussion should include the rationale for material changes in accounting elements, such as assets, liabilities, and/or net costs.

Staff originally presented a framework that would include a financial performance discussion for each responsibility segment presented in the statement of net cost. The discussions would inform users on the financial impact of key risks to the segment. However, the Board determined that key risk factors may affect entities at different levels and requested staff to present an alternative framework. The framework should be flexible enough to integrate risks that had or will have a significant financial impact at the level best defined by management.

Members requested that staff develop principle-based standards to address the different types of risks that may have a significant financial impact on the government-wide financial position, condition, or results of operations. To tell the entire financial story, members believed that management should discuss what actions are being taken to address current and future risk drivers, as well as forward-looking information.

Stewardship Investments Information

The Board discussed alternatives for improving stewardship investments (SI) information and agreed that SI should be presented in the MD&A of government-wide and component reporting entity GPFFRs. The Board considered the following alternatives for presenting SI:

  • FASAB limits SI reporting to the Financial Report of the U.S. Government (FR). The FR would include a general discussion of SI and a reference to more detail in the Budget of the United States. SI would not be required for component reporting entities.
  • FASAB allows reporting SI in the FR and component reporting entity reports if it is significant.
  • FASAB moves all of the existing SI requirements to the MD&A of the FR and component reporting entities.
  • FASAB encourages component reporting entities to present SI in agency performance reports.

For each alternative, staff proposed to rescind SFFAS 8, Supplementary Stewardship Reporting, and issue a new Statement.

FASAB members believed that SFFAS 8 should be rescinded and a new Statement should be developed. Members noted that users of the FR and component reporting entity reports need to know about the expenses that provide long-term benefits for the nation; however, the Board did not determine the level of detail that should be discussed. Staff will develop illustrations of the information that could be presented in MD&A regarding investments.

Issue Papers for June 27-28, 2018 – Tab D & E (PDF)

April 25-26, 2018

MD&A Improvement

During the April 2018 meeting, the risk assumed (RA) and reporting model projects collaborated to present recommendations to improve management’s discussion and analysis (MD&A). The projects collaborated because the findings from the separate round tables were the same—financial statement users want to understand the financial performance for major programs and not have to sift through dense, duplicative strategic performance information that can be found in the agency performance report. As a result, staff recommended a new Statement that would maintain the current principles but rescind Statement of Federal Financial Accounting Concepts 3, Management’s Discussion and Analysis, and SFFAS 15, Management’s Discussion and Analysis.

The Board directed staff to consider previously discussed concerns regarding MD&A, review existing MD&A concepts and standards, and determine what changes might be needed. Staff will also collaborate with the Office of Management and Budget to determine whether form and content guidance could help guide improvements.


The Board discussed alternatives for improving the required supplementary stewardship information (RSSI) category. The Board believed that the remaining element of the category, stewardship investments, should be presented in financial reports and noted that stewardship investments provide important information about how the government affects the nation. Thus, stewardship investments provide information on the performance of the entity.

Upon deciding that stewardship investments should be presented in financial reports, the Board discussed where the information should be reported. The Board agreed that stewardship investments should be presented in MD&A. The MD&A should provide information that addresses the entity’s performance. Consequently, the Board directed staff to determine how investment information should be addressed in MD&A.

Given the decision to present stewardship investments in MD&A, the Board agreed to rescind the RSSI category. SFFAS 8, Supplementary Stewardship Reporting, established the RSSI category and discussed the nature of stewardship information. Because the new stewardship information category was not fully understood, the Board had previously reclassified or eliminated all the RSSI elements except for stewardship investments.

Issue Papers for April 25-26, 2018 – Tab F & G (PDF)

February 21-22, 2018

In considering a reporting model for the future, the Board observed a demonstration of interactive data visualizations, management’s discussion and analyses (MD&As), and financial statements. The interactive presentations considered the needs of users and were designed to help users understand financial information.

Mr. Justin Marsico, Senior Policy Analyst, Department of the Treasury (Treasury), presented a series of data visualizations. Treasury developed the visualizations to help users understand and explore data collected as part of the Digital Accountability and Transparency (DATA) Act of 2014. Mr. Marsico’s presentation included a sankey diagram and a dendrogram. The sankey diagram linked budget functions to object classes and illustrated the magnitude of the relationships. The dendrogram listed each federal agency and allowed users to drill down from the agency level to the sub-agency level and to the federal accounts that comprise sub-agency spending. Users could also view a federal account profile to gain a better understanding of how agencies receive and spend congressional funding to carry out their programs, projects, and activities.

The Board also observed an interactive MD&A and interactive financial statements developed by a team from Deloitte & Touche LLP. The interactive MD&A included tips to help users understand technical terms, a sankey diagram of budgetary resources, a radar chart comparing the net cost for five programs over multiple periods, and a geospatial heat map of net cost by state with drill-down capability enabling users to view amounts by congressional district. The interactive financial statements also provided drill-down capability. The drill-down feature enabled users to learn more about the details of financial statement line item balances.

The Board encouraged continued progress in electronic reporting. The Deloitte team included Mr. Justin Reed, Partner; Ms. Tasha Austin, Senior Manager; Mr. Daniel Shorstein, Manager; Ms. Tanya Bagheri, Business Technology Analyst; Ms. Reem El Seed, Consultant; and Mr. Dai Tran, Specialist Master.

The Board subsequently discussed whether to revisit certain topics within Statement of Federal Financial Accounting Concepts (SFFAC) 3, Management’s Discussion and Analysis. The possible topics included revisiting (1) SFFAC 3 for standards or implementation guidance; (2) the role of MD&A; (3) the scope of MD&A; (4) the schematic diagram of a sample general purpose federal financial report (GPFFR); (5) the intended audience for MD&A and GPFFRs; (6) the financial statements discussion; (7) the systems, control, and legal compliance discussion; and/or (8) the performance discussion. Board members discussed the topics for revisiting SFFAC 3 and noted that they were integrated rather than stand-alone topics. Consequently, the Board agreed that implementation guidance should be developed to help improve the content of MD&As. The Board noted that component reporting entities could be more creative and use interactive technology. Existing standards do not preclude reporting entities from using the technology.

Issue Paper for February 2018 – Tab G (PDF)

December 20, 2017

The Board discussed the next steps toward improving long-term investment reporting and management’s discussion and analysis. SFFAS 8, Supplementary Stewardship Reporting, requires reporting on the government’s long-term investments (or stewardship investments), and the Board discussed concerns regarding this guidance. For instance, the guidance defines and measures the government’s long-term investments differently from other sources of information, and readers of financial reports do not use the information presented. In addition, the Board considered whether reporting entities could reference other sources of information, such as the Budget of the U.S., but noted that the other sources could decide to change or remove the information at any time.

Considering that long-term investment information is important for achieving the Stewardship Reporting objective, the Board decided to reach out to interested groups and individuals. The feedback will be used to determine how best to improve long-term investment reporting.

Also, the Board discussed whether to update Statement of Federal Financial Accounting Concepts 3, Management’s Discussion and Analysis. The Board developed the concepts in the 1990s, and performance reporting and other areas have evolved since then. Rather than revisiting the entire concepts statement, the Board decided to identify and prioritize key areas for improving the guidance.

Issue Papers for December 20, 2017 – Tab B (PDF)

October 25-26, 2017

The Board discussed two proposals for improving the content of financial reports. The first proposal would provide flexibility in reporting the remaining item of required supplementary stewardship information (RSSI), stewardship investments, and eliminate the RSSI category. The second proposal would permit management to refer users to more detailed performance reports when preparing management’s discussion and analysis (MD&A). The flexibilities would be responsive to input from preparers and auditors regarding users’ access to and preference for other sources of information.

Given the flexibilities, Board members were concerned that financial reports would not present information needed to achieve the reporting objectives. Board members noted that financial report users need information on expenses that provide long-term benefits, such as investments in human capital, research and development, and non-federal physical property. In addition, users need information about the reporting entity’s performance.

Consequently, staff will conduct additional research to determine 1) how stewardship investment information might be improved, 2) what MD&A concepts could be considered for standards, and 3) what performance reporting concerns could be addressed through OMB form and content guidance.

Issue Paper for October 25-26, 2017 – Tab B (PDF)

August 30 – 31, 2017 Board Meeting

During its August 2017 meeting, FASAB staff presented a proposal to require reporting entities to inform readers on where to obtain the entity’s annual performance report (APR) rather than providing detailed performance information in MD&A. The Board supported providing flexibilities to reporting entities and noted that conditions have changed since FASAB developed the MD&A standards in the early 1990s. Component reporting entities currently issue separate financial and performance reports and issue the reports at different times. In addition, the Board’s concepts acknowledge that information that users need may not reside in a single report. Consequently, the Board plans to develop an exposure draft (ED) to amend the existing MD&A reporting standards, explain the rationale for the proposal, and obtain comments from users, preparers, and auditors.

The Board also discussed an initial draft ED proposing to rescind RSSI reporting requirements. The draft ED noted that users do not review the RSSI provided in financial reports. Users can access the information from other sources, such as the Budget of the United States and APRs. However, the Board discussed the history and complexities of the RSSI topic and noted that the draft ED needed to include a comprehensive discussion of the rationale for rescinding RSSI. Thus, FASAB staff will present a revised draft ED during the October 2017 meeting.

Issue Paper August 2017 – Tab I

June 21-22, 2017 Board Meeting

The Board plans to consider opportunities for streamlining management’s discussion and analysis (MD&A) and required supplementary stewardship information (RSSI). In May 2017, Board members reviewed financial reports and FASAB staff conducted roundtable discussions to determine potential areas for streamlining. As a result, staff noted several areas, including MD&A, RSSI, other information, the overall reporting model, and certain financial statements and note disclosures that might be suitable for the streamlining initiative.

The Board decided to use a two-phased approach for reviewing the streamlining options. During the first phase, the Board will focus on areas that can be addressed in the near term and, in the second phase, consider areas to address over the long term.

The Board’s near-term efforts involve MD&A and RSSI; as such, the Board will begin a note disclosure project. Staff will engage roundtable participants to help determine streamlining prospects for MD&A and RSSI. MD&A is intended to be concise. However, Board members and others noted MD&A is often broad and may overwhelm readers. In addition, with respect to RSSI, users can access the information from other sources, such as Analytical Perspectives, Budget of the United States Government, Fiscal Year 2017. Related performance information may also be presented in agency performance reports.

For the long term, staff will consider the other areas proposed by Board members and roundtable participants. Members discussed that the entire financial reporting community can become involved in the process of identifying opportunities for streamlining financial reports; users do not necessarily need to wait for standards to be developed.

Issue Paper for June 2017 –Tab C

2017 AFR MD&As