Measuring Disclosure Content Within the MD&A: The Case of North Carolina Counties

Abstract

Audit implementation of Government Accounting Standards Board (GASB) 34 guidelines has yielded increased levels of disclosure content within local government comprehensive annual financial reports (CAFRs). Of particular interest is the Management Discussion & Analysis (MD&A) content that provides a prelude to primary statements establishing unit overall financial position. In this study, the level of disclosure content is measured using net position, fund balance, and organizational factors among all 100 North Carolina County governments for fiscal year 2019. The empirical analysis suggests that disclosure content within area of foci changes depending on increased audit fees, state designated tier level, specific departmental spending, and lengthier MD&As. Additional information illuminates a very limited auditor pool and some recalcitrance concerning service provision. Overall, the findings point to audit disclosure practices including the MD&A as being predicated on unit overall needs versus illumination.