Quarterly Review and Discussion of Financial Statements and Disclosures

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Quarterly Review and Discussion of  Financial  Statements Disclosures

  • review and discuss the quarterly and audited financial statements with management before they are released publicly;
  • review the content, tone and quality of the text of each earnings release, including the adequacy and presentation of any pro forma earnings disclosures;
  • review the company’s Forms 10-Q and 10-K before they are finalized and filed with the SEC, in particular Management’s Discussion and Analysis (”MD&A”);
  • review the company’s financial disclosures (in press releases and SEC filings) for understand ability and transparency;
  • in connection with the audit committee’s review and discussion of quarterly and annual financial statements and financial disclosures, address the following (among other things) in discussions with management and, where appropriate, the independent auditors:

-       the company’s business, overall business environment and risks, including business and industry trends, the company’s competitive position and strategy and how the company is affected by current economic conditions;

-       analyst and press reports, and competitors’ statements, about the company, its competitors and its industry, and how the company is responding to relevant issues and risks;

-       differences in reported versus planned results;

-       how the company’s results differ from its competitors;

-       the impact of the loss of a significant customer or supplier;

-       seasonality effects;

-       the impact of items that are not likely to be recurring;

-       segments of the company’s business that have a disproportionate impact on the company’s revenue and results of operations;

-       the company’s liquidity situation, including the potential effects of off- balance sheet arrangements, covenants in debt and other agreements and trading activities;

-       any related-party transactions;

-       the risk of misstatements in the company’s financial statements or in MD&A;

-       risks related to the creditworthiness of the company and its customers;

-       the impact of changes in company sales policies (for example, the level of discounts given to customers or the length of customer payment periods);

-       the volume of sales transactions closed near the end of each quarter;

-       the existence of any reciprocal or barter transactions;

-       the company’s investments in customers or suppliers;

-       the existence of any transactions that raise form over substance issues;

-       the company’s creation of any special purpose entities;

-       the company’s policies about managing and assessing risk; and

-       the status of legal and regulatory matters (also discuss with inside and/or outside legal counsel);

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