FAR - U.S. Securities & Exchange Commission (SEC) - SEC - Role & Standard-Setting Process

Question 1

What purpose does Accounting and Auditing Enforcement Releases (AAER) serve?

Answer 1

Report the enforcement actions taken against accountants.

Question 2

Define “Staff Accounting Bulletins (SAB)”.

Answer 2

Bulletins that provide the SEC’s current position on technical issues.

Question 3

When the SEC finds an accounting irregularity, what happens?

Answer 3

The SEC sends a “deficiency” letter to a registrant when and accounting regularity is found.

Question 4

How many divisions does the SEC have?

Answer 4

Four; The Division of Corporation Finance, The Division of Enforcement, The Division of Trading and Markets, and The Division of Investment Management.

Question 5

Define “Financial Reporting Releases (FRR)”.

Answer 5

Formal pronouncements that rank the highest in authority for public companies.

Question 6

Does the SEC have the authority to penalize firms when financial statements are not in accordance with GAAP?

Answer 6

Yes, they may penalize firms.

Question 7

Does the SEC have legal authority to prescribe accounting standards to public companies?

Answer 7

Yes, it has that authority.

Question 8

What does the SEC strive to do?

Answer 8

Ensure that there is adequate information in the public domain before a company issues or trades securities.