REG mod 24c

Question 1

All entities registered with the SEC must adopt a code of ethics. True / False

Answer 1

False, however, if the entity has not adopted a code of ethics, the company must provide the reasoning for not having a code of ethics.

Question 2

Once the board of directors receives communication from the auditor related to the identification of a material illegal act, how long does the board have to communicate the finding to the SEC?

Answer 2

One day. If the board does not communicate the finding to the SEC, the auditor must make the communication.

Question 3

Rule 504, Rule 505, and Rule 506 are part of which regulation under the Securities Act of 1933?

Answer 3

Regulation D

Question 4

In general, public companies may make personal loans to the CFO. True / False

Answer 4

False. In general, the Sarbanes-Oxley Act prohibits publically traded companies from making personal loans to the officers and directors of the company.

Question 5

What is the overall purpose of the Dodd-Frank Act?

Answer 5

To increase the level of transparency related to the financial system.

Question 6

What is another term for the preliminary prospectus?

Answer 6

A red herring

Question 7

When is it acceptable for a practitioner to charge a contingent fee?

Answer 7

When the fee is for an IRS examination or for services rendered for judicial fees.

Question 8

What information is contained in section 11 of the Securities Act of 1933?

Answer 8

Section 11 is the anti-fraud portion of the Securities Act of 1933

Question 9

What Regulation allows an issuer to issue $5,000,000 of securities each year and be exempt from registration?

Answer 9

Regulation A Note: The issuer must file a notice with the SEC

Question 10

How long is a copyright valid for?

Answer 10

The life of the author plus seventy years.

Question 11

Name the party that may sue under the Securities Act of 1933.

Answer 11

Purchasers of securities

Question 12

What must be filed with the SEC prior to selling or offering to sell securities in interstate commerce?

Answer 12

A registration statement

Question 13

Who selects the officers of a corporation?

Answer 13

The board of directors

Question 14

How many classes of stock may an S Corporation have?

Answer 14

Only one class of stock is permitted for an S Corporation.

Question 15

The Sarbanes-Oxley Act requires audit working papers to be maintained for how many years?

Answer 15

Five years and in certain circumstances seven years

Question 16

What procedures are auditors required to establish under the Private Securities Litigation Reform Act?

Answer 16

Identify / detect material illegal acts
Identify material related-party transactions
Evaluate the entity’s ability to continue as a going concern