04.01 Public Company Reporting Topics Flashcards
What is the Securities and Exchange Commission (SEC)?
The SEC is a federal agency whose mission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. The SEC administers the U.S. securities laws and requires publicly held companies to adhere to U.S. GAAP when reporting financial statements.
True or false: The SEC can prescribe accounting standards.
True. However, the SEC has delegated this task to the FASB. The SEC maintains the enforcement power for all publicly traded companies to assure compliance with U.S. GAAP.
What agency regulates the issuance of securities by publicly traded companies and the trading of those securities on secondary markets?
The SEC.
What is the Securities Exchange Act of 1934?
Established by the SEC, the act regulates the trading of securities after the securities are issued and provides requirements for periodic reporting and disclosures.
When must a company have their securities registered?
Unless exempt by regulation, companies with $10+ million of assets, 2,000+ shareholders (500+ if nonaccredited investor shareholders), and securities that trade on a national securities exchange or an over-the-counter market must have their securities registered.
What are the requirements for a large, accelerated filer?
Market value of o/s securities - $700M and up
Annual revenues - n/a
10-K - 60 days
10-Q - 40 days
What are the requirements for an accelerated filer?
Market value of o/s securities - $250M-$700M
Annual revenues - $100M and up
10-K - 75 days
10-Q - 40 days
What are the requirements for an accelerated filer and smaller reporting companies (SRC)?
Market value of o/s securities - $250M-$700M
Annual revenues - $100M and up
10-K - 75 days
10-Q - 40 days
What are the requirements for a nonaccelerated filer?
Market value of o/s securities - $75M-$700M
Annual revenues - Under$100M
10-K - 90 days
10-Q - 45 days
What are the requirements for a nonaccelerated filer and smaller reporting companies (SRC)?
Market value of o/s securities - Under $75M
Annual revenues - Unlimited
10-K - 90 days
10-Q - 45 days
What is a registration statement (Form S-1)?
Form S-1 is filed prior to a company’s initial public offering. It registers the company’s shares on the national exchange.
What is the quarterly report (Form 10-Q)?
The 10-Q is intended to provide investors with an update since the last annual report. Form 10-Q Part I, requires the following sections:
Item 1 - Financial Statements are reviewed (as opposed to audited) and include balance sheet for the quarter and prior fiscal year end; quarterly and year-to-date income statements for this quarter and the same period in the previous year; cumulative year-to-date statements of cash flow for the current and prior fiscal years.
Item 2 - MD&A provides the company’s perspective on the business results for the period. MD&A presents information about that company’s financial condition (and changes in financial condition), results of operations, liquidity, capital resources and any significant trends or uncertainties. This area also provides critical accounting judgments.
Item 3 - Quantitative and qualitative disclosures about market risk requires information about the company’s exposure to market risk. This item also provides information about risk factors, unresolved SEC comments on reporting, legal proceedings, etc.
What is the annual report (10-K)?
Form 10-K provides a comprehensive picture of a company’s business, its risks, and its performance, including audited FS. Form 10-K, Part II, requires the same sections as the 10-Q but presented in a different order:
Item 7 - MD&A
Item 7A - Quantitative and qualitative disclosures about market risk
Item 8 - Financial statements and supplementary data - two years of balance sheets, three years of income statements, statement of cash flows, and statement of comprehensive income.
What is an information statement (Form 8-K)?
Form 8-K reports significant events affecting the company and is required to be filed within four business days of such an event. Examples of significant events include entering into or terminating a material agreement; bankruptcy; acquisition or disposal of assets; change in directors, CEO, or auditor.
What does earnings per share represent?
EPS represents the amount of earnings attributable to one share of common stock. Companies with publicly traded stock are required to provide two different EPS figures: basic and diluted.
Basic EPS is the EPS based only on actual transactions for the year. Diluted EPS is a “worst-case” figure reflecting the potential dilution of stock options and convertible securities. Both allow comparisons of performance and profitability for firms of any size and indicate the amount of dividends that could have been paid, regardless of actual dividends paid.
