As stated previously in this chapter, a company should disclose any facts that an intelligent person would consider necessary for the statements to be interpreted properly. Public companies are required to file annual reports with the Securities and Exchange Commission (SEC). These annual reports include a section labeled, “Management Discussion and Analysis” (MD&A). The SEC requires that companies include an MD&A in their annual reports because the financial statements and related notes may be inadequate for assessing the quality and sustainability of a company’s earnings.