1.10 SEC Reporting Flashcards
What is the SEC created by?
Securities Exchange Act of 1934
What is the purpose of the SEC?
- to regulate securities trading
- enforce securities legislation
What is the basic purpose of the securities laws?
- prevent fraud & misrepresentation
- require full and fair disclosure so investors can evaluate investments
Under what act is disclosure made BEFORE the initial issuance of securities by registering with the SEC and providing a prospectus to potential investors?
Securities Act of 1933
How are disclosures made in the Securities Act of 1934?
disclosures are made about subsequent trading of securities by filing periodic reports for the public to review
Identify the 6 SEC regulations
1 - Regulation S-X
2 - Regulation S-K
3 - Regulation S-B
4 - Regulation S-T
5 - Financial Reporting Releases (FRRs)
6 - Staff Accounting Bulletins (SABs)
What does Regulation S-X apply to?
- reporting of interim and annual financial statements, including notes and schedules.
What does Regulation S-K provide or cover?
- provides disclosure standards, including many that are non-financial
- covers certain aspects of corporate annual reports to shareholders
What does Regulation S-B apply to?
- small business issuers and non-accelerated filers
- reduces disclosure requirements for smaller companies
What does Regulation S-T govern?
- the types of documents the SEC requires to be filed electronically
What are Financial Reporting Releases (FRRs)?
- announce accounting and auditing matters of general interest
What are Staff Accounting Bulletins?
- interpretations to be followed by the SEC staff in administering disclosure requirements
What is the Integrated Disclosure System?
- system adopted by the SEC to avoid overlapping of disclosures required by the 1933 and 1934 Acts
Identify the aspects of the Integrated Disclosure System
- Financial statements are standardized
- A basic information package is common to most filings
- elements of the annual shareholders’ report may be incorporated by reference in the annual SEC report (Form 10-K)
Identify the 4 categories of issuers recognized under the SEC’s integrated disclosure system
1 - non reporting issuer
2 - unseasoned issuer
3 - seasoned issuer
4 - well-known seasoned issuer
Define a non-reporting issuer
- one who need not file reports under the 1934 act
What form must a non-reporting issuer use?
Form S-1
Define an unseasoned issuer
- issuer has reported for at least 3 consecutive years under the 1934 act
What forms must an unseasoned issuer use?
- Form S-1 but provides less detailed information and may include some information by reference to other 1934 act reports
Define a seasoned issuer
- issuer has filed for at least 1 year
- has a market capitalization of at least $75 million
What form must a seasoned issuer use?
- Form S-3 to report even less detail and may include even more information by reference
Define a well-known seasoned issuer
- issuer has filed for at least 1 year
- has a worldwide market capitalization held by non-affiliates of at least $700 million or
- has issued for cash in a registered offering at least $1 billion of debt or preferred stock in the past 3 years
What form must a well-known seasoned issuer use
Form S-3
Annual Standardized Financial Statements must be audited by a firm that is registered with what organization?
Public Company Accounting Oversight Board (PCAOB)
Identify the statements that must be included in the audited financial statements
- Balance sheets for the 2 most recent fiscal year ends
- Statements of income, cash flows, and changes in equity for the 3 most recent fiscal years
Identify the requirements of the accountant certifying the financial statements
- must be independent of the management of the filer
- not required to be a CPA
- must be registered with a state
Identify the contents of the basic information package (BIP)
HINT: 11
1 - financial statements
2 - financial trends & selected financial info for preceding 5 years
3 - management’s discussion & analysis (MD&A)
4 - dividends & market prices of common stock
5 - description of business
6 - locations & descriptions of physical properties
7 - pending litigation (principal parties, allegations & relief sought)
8 - mgmt & general data for each director & officer
9 - compensation of the 5 highest-paid directors & officers
10 - security holdings of directors, officers, & those owning 5%+ of security
11 - matters submitted to shareholders for approval
What matters are discussed in the MD&A
- liquidity
- capital resources
- results of operations
- effects of tax legislation
- effect of changing prices
- entity’s outlook & the significant effects of known trends, events and uncertainties
Registration Under the 1934 Act:
Identify the securities that are required to be registered under the 1934 Act:
- Securities listed on a national exchange
- Equity securities of companies that have total gross assets > $10 million and a class of equity securities with 2,000 shareholders or 500 shareholders who are not accredited investors
Registration Under the 1934 Act:
What companies are required to register under the 1934 Act?
All regulated, publicly held companies must register with the SEC
Periodic Reporting:
Identify the reports an issuer must periodically file with the SEC
- Form 10-K (annual report)
- Form 10-Q (quarterly report)
- Form 8-K (current report)
- Form 20-F (annual report for foreign issuers)
Periodic Reporting:
When is Form 10-K required to be filed?
- 60 days of the last day of the fiscal year by large accelerated filers
- 75 days by accelerated filers
- 90 days by non-accelerated filers
Periodic Reporting:
Define a large accelerated filer
- $700 million or more in publicly held stocks, i.e., shares held by the public and not insiders
Periodic Reporting:
Define an accelerated filer
- $75 million to $700 million in publicly held stocks, i.e., shares held by the public and not insiders
Periodic Reporting:
Define a non-accelerated filer
- < $75 million in publicly held stocks, i.e., shares held by the public and not insiders
Periodic Reporting:
When Form 10-K is presented with the basic information package it must be certified by an independent accountant and signed by who?
- Principal executive, financial, and accounting officers
- Majority of the board of directors
Periodic Reporting:
What is Form 10-Q and when is it required to be filed?
- quarterly report of operations and financial condition
- 40 days of the last day of the 1st three fiscal quarters by large accelerated filers & accelerated filers
- 45 days for non-accelerated filers
- required to be filed for the 1st three quarters by all entities required to file Form 10-K
Periodic Reporting:
Is audited financial information required to be presented for Form 10-Q reporting?
No - but must be reviewed by an independent accountant
Periodic Reporting:
What is Form 8-K and when is it required to be filed?
- current report to disclose material events
- must be filed within 4 business days after the material event occurs
Periodic Reporting:
Provide examples of material events that would require the filing of Form 8-K:
HINT: 5
- change in control of the registrant
- Acquisition or disposition of a significant amount of assets not in the ordinary course of business
- Bankruptcy or receivership
- Resignation of a director
- A change in the registrant’s certifying accountant
Periodic Reporting:
What is Form 20-F and who is required to file it?
- annual report to the SEC filed by foreign private issuers
- similar to Form 10-K
Periodic Reporting:
How are the financial statements prepared in Form 20-F?
in accordance with U.S. GAAP or IFRS
