ACCT 4140 - Key Items Flashcards
Securities Act of 1933
Regulates initial offering of securities made by companies or underwriters; lead to Securities Exchange Act of 1934
Securities Exchange Act of 1934
Regulates the subsequent trading of securities through brokers & exchange
Structure of Securities & Exchange Commission (SEC)
- 5 commissions (appointed by US president)
- 6 divisions
- 25 offices ; 4500 employees
- 11 regional locations
6 Divisions
- Corporate Finance
- Trading & Markets
- Investment Management
-Enforcement
-Economic & Risk Analysis
-Examination
Corporate Finance
Revise financial reports filed w/ SEC; ensure compliance w/ SEC requirements
Trading & Market
Regulates brokerage firms & stock exchange
Enforcement
Investigates possible violations on securities laws
Investment Management
Regulates investment companies like mutual funds
Economic & Risk Analysis
Provides sophisticated economic & risk analysis for the other commissions
Examinations
New division; provides help support inspection of brokerage firms and investment management companies
SEC Authorities
1) set acct standards 2) override FASB 3) issue moratorium on specific acct practices 4) tend to restrict its authorities to gray areas of accounting
PCAOB
under oversight of SEC ; 5 board members; 2 members must be CPA; enforces auditing standards
PCAOB Authorities
modify standards made by ASB, develop own pronouncements, inspect LARGE firms every year, inspect SMALL firms every 3 years
Audit Committees
responsible for appointment of compensation and external auditors, must be independent of management; work directly w/ auditors; lead partners rotate every 5 years
S-K
non-financial information
S-X
financial information/ statements
Registration Filings
S-1 (most common); S-3; S-4; S-8; S-11 (2 parter: 1 - prospectus -> explains the reasons and where the money of stock will go, what the investors want to know; 2- information for the SEC)
Periodic Filings
every reporting period, include 10-k audited statements, 10-q nonaudited statements, proxy stmt (yearly information, improvements etc)
Fund Financial Stmt
current revenue, exp; uses the modified accounting method; focuses on current resources
Government Wide Stmt
long term focus; full accrual accounting -> similar to GAAP
Funds (definition)
separated reported (bookkeeping) government activities
Major Funds
Governmental; Proprietary; Fiduciary
Gov. Fund -> General Fund
account for all financial resources not accounted for in other funds
Gov Fund -> Special Revenue Fund
resources committed for specific purposes, meaning with restrictions by donors or law
Gov Fund -> Capital Projects Fund
financial resources for BIG projects
Gov Fund -> Debt Service Fund
financial resources set aside to pay long term liability and interest
Gov Fund -> Permanent Fund
account for endowments, principals can’t be used, only can use interest rev
Proprietary fund -> Enterprise Fund
accounting for government operations open to the public
Proprietary fund -> Internal Service Fund
account for operations that provide services to government department
Fiduciary Funds
money held by government; for others in pension fund held for employees only included in fund financial stmt not government wide
stmt of net position
similar to balance sheet; government wide financial; deferred outflows = prepaid exp; deferred inflows = deferred revenue; broken up by government vs business
stmt of activity
similar to income stmt; government wide financial; broken up by government vs business activities
balance sheet
fund financial; current liab, current asset, no SE instead fund balance
nonspendable
cannot spend (due to restriction)
restriction
can be spent only in manner assigned by highest authority
assigned
designated for specific purposes only not by the highest authority
unassigned
no external / internal restriction aka free to use
Stmt of revenue, expenditures, & changes in fund balance
uses modified accrual; separated by major fund
How to be major fund
> = 10% of total corresponding fund AND >= 5% of total government & enterprise fund
Ecumbrances
financial commitment to purchase item; almost used as a stand in to represent what we set aside to not overspend
purchase method
report what was spent & then report assets left over
Consumption method
report assets received, then report what was spent (COGS)
derived tax revenue
tied to an event; it is triggered like buying an item = sales tax)
imposed non exchange
revenue does not need to be triggered by event like when you buy a house there is no triggering event, you just pay taxes on the house (what you own)
government mandated nonexchange transaction
money from one government to another to help support
voluntary nonexchange transaction
money willingly given to government for particular reason, like a donation
Hierarchy
GASB official stmt; GASB interpretation prior to No. 76
GASBM technical bulletin; GASB implemintaion guide; AICPA literature that has been deemed by GASP
Tax abatement disclosures
purpose, type of tax, dollar amount, commitments by recipient and government; NOT INCLUDED identity of company
Solid Waste Landfill
Government- Wide: reports long term liability and short
fund financial: reports only short term liability
Net Pension Asset
if amount of pension trust fund is larger than present value of liability
Net Pension Liability
if present value of liability is larger than pension fund
Work of Art
has to be capitalized @ historical cost (donations @ FV); capitalization is optional if 1)held for public exhibition, education, and research 2) protected and kept unencumbered, education, or research and 3) subject to policy that requires proceeds of sale to go towards other item for collection
ACFR
3 sections - 1) introductory 2) financial (financial has 3 section - management decision and analysis; financial statements and notes; required supplementary information) 3) statistical
Component Unit
legally separated organization included in government if government is financially accountable for the organization
Qualification from Component Unit
1) must be fiscal dependency - financial interdependence 2) governing board - primary gov appoint voting majority and impose will on board or impose a financial burden or financial benefit
Reconciliation Components
Capital Assets reported by gov but not on gov fund
bond payable reported by gov but not gov fund
revenue and internal service fund reporting by gov but not gov fund
Stmt for Not for Profit
stmt of financial position (balance sheet); stmt of activity (income stmt); stmt of functional exp; stmt of cash flows
Supporting Activity
admin exp like marketing; rent; anything that cost to run org
Program Activity
mission fund
$ spent on mission
total program services / total exp
contribution
unconditional trade of asset or cash to entity voluntarily; if no restriction immediate rev - if restriction deferred rev
