20: Financial Reporting Standards Flashcards
to provide financial information that is useful to users in making decisions about providing resources to the reporting entity
objective of financial reporting
typically private sector, self-regulated organizations with board member who are experienced accountants, auditors, users of financial statements, and academics ex. IASB and FASB
standard-setting bodies
have the legal authority to enforce financial reporting requirement and exert other control over entities that participate in capital markets within their jurisdiction ex. SEC
regulatory authorities
_ set the standards and _ recognize and enforce the standards
standard-setting bodies, regulatory authorities
reflect the SEC’s views regarding accounting-related disclosure practices
Staff Accounting Bulletins
technically not a regulatory authority but regulate a significant portion of the world’s financial capital markets; has established objectives and principles to guide securities and capital market regulation
International Organization of Securities Commissions (IOSCO)
the securities commission or similar governmental regulatory authority with primary responsibility for security regulation in the member country, regulate more than 95% of the world’s financial capital markets
ordinary members of IOSCO
principles of securities regulation are based on 3 objectives:
- protecting investors
- ensuring the markets are fair efficient, and transparent
- reducing systematic risk
the act that specifies the financial and other significant information that investors must receive when the securities are sold, prohibits misrepresentations, and requires the initial registration of all public issuances of securities
Securities Act of 1933 (The 1933 Act)
this act created the SEC, gave the SEC authority over all aspects of the securities industry, and empowered the SEC to require periodic reporting by companies with publicly trading securities
Securities Exchange Act of 1934 (The 1934 Act)
this act created the Public Accounting Oversight Board (PCAOB) to oversee auditors, the SEC is responsible for carrying out the requirements of the act and overseeing the PCAOB, the act addresses auditor independence (prohibits auditors from providing non-audit services to clients they audit), strengthens corporate responsibility for financial reports (executive management certifies fair representation) and requires management to report on the effectiveness of the company’s internal controls
Sarbanes-Oxley Act of 2002
requires new issuers and previously registered companies issuing new securities to disclose about the securities being offered for sale, the relationship of these new securities to the issuer’s other capital securities, the information typically provided in the annual filings, recent audited financial statements, and risk factors involved in the business
Securities Offerings Registration Statement
annual filing that require a comprehensive overview including information concerning a company’s business, legal proceedings, and information related to management
Form 10-K
one of the most significant opportunities for a company to present itself to shareholders and other external parties *not a requirement of the SEC
Annual Report
prior to a shareholder meeting, an authorization from the shareholder giving another party the right to cast its vote; includes proposals that require a shareholder vote, details of security ownership by management and principal owners, biographical information on directors, and disclosures of executive compensation
proxy statement/Def-14A
forms that companies are required to submit for interim periods (quarterly); requires certain financial information and MD&A but is unaudited
Forms 10-Q and 6-K
material corporate events on a more current basis, such as acquisitions or disposals of corporate assets, changes in securities and trading markets, matters related to accountants and financial statements, corporate governance and management changes
Form 8-K
