SEC and IASB

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 Security and Exchange Commission’s current position on technical issues.

Question 3

Define “Financial Reporting Releases (FRR)”.

Answer 3

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

Question 4

When the Securities and Exchange Commission (SEC) finds an accounting irregularity, what happens?

Answer 4

The SEC sends a “deficiency” letter to a registrant when an accounting irregularity is found.

Question 5

Does the Securities and Exchange Commission (SEC) have the authority to penalize firms when financial statements are not in accordance with Generally Accepted Accounting Principles?

Answer 5

Yes, they may penalize firms.

Question 6

How many divisions does the Securities and Exchange Commission (SEC) have?

Answer 6

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

Question 7

What does the Securities and Exchange Commission (SEC) strive to do?

Answer 7

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

Question 8

Does the Securities and Exchange Commission (SEC) have legal authority to prescribe accounting standards to public companies?

Answer 8

Yes, it has that authority.

Question 9

Financial Reporting Releases are the formal pronouncements issued by the SEC that must be adhered to by public companies.

Answer 9

TRUE

Question 10

The SEC is not a member of the International Organization of Securities Commissions (IOSCO).

Answer 10

FALSE

Question 11

Division of Accountants is not a division of the SEC.

Answer 11

TRUE

Question 12

The SEC has no enforcement power.

Answer 12

FALSE

Question 13

The Securities and Exchange Commission (SEC) has the legal authority to prescribe accounting standards, but has delegated standard setting to the private sector.

Answer 13

TRUE

Question 14

Public companies must adhere to SEC pronouncements.

Answer 14

TRUE

Question 15

A foreign private issuer would not have the following characteristic:
The foreign issuer is a foreign government.

Answer 15

TRUE

Question 16

The SEC does not acknowledge or accept financial statements in compliance with IASB approved IFRS.

Answer 16

FALSE

Question 17

Does the Sarbanes-Oxley Act allow auditors to complete non-audit services for clients?

Answer 17

No, the Sarbanes-Oxley Act does not allow this.

Question 18

What law prohibits the bribing of foreign officials?

Answer 18

The Foreign Corrupt Practices Act of 1977

Question 19

What information does the 8-K provide?

Answer 19

Significant events affecting the company.

Question 20

Within how many days after the end of the quarter does a company need to file the 10-Q?

Answer 20

Forty days for large accelerated filers and accelerated filers; forty-five days for non-accelerated filers.

Question 21

What information does Management Discussion & Analysis (MD&A) cover?

Answer 21

The firm’s financial condition, changes in financial condition, results of operations, liquidity, capital resources and operations, and indications in trends, significant events, and uncertainties.

Question 22

What information does Management Discussion & Analysis (MD&A) provide?

Answer 22

A discussion of important aspects of the firm from the viewpoint of management.

Question 23

Within how many days after the fiscal year end of a large accelerated filer does a 10-K need to be filed?

Answer 23

Sixty days.

Question 24

What are the steps in the offering process?

Answer 24

Issuer, underwriter, dealer, public.

Question 25

How many years of selected financial data are required by the Securities and Exchange Commission (SEC)?

Answer 25

Five years are required.

Question 26

How many years of cash flow data are required by the Securities and Exchange Commission (SEC)?

Answer 26

Three years are required.

Question 27

How many years of income statement data are required by the Securities and Exchange Commission (SEC)?

Answer 27

Three years are required.

Question 28

How many years of balance sheet data are required by the Securities and Exchange Commission (SEC)?

Answer 28

Two years are required.

Question 29

What does registration with the Securities and Exchange Commission (SEC) require?

Answer 29

Extensive disclosures about the company, management, and the intended use of the proceeds from the issue.

Question 30

Where are the Securities and Exchange Commission (SEC) formal rules found?

Answer 30

The Code of Federal Regulations.

Question 31

What does the Securities Act of 1934 do?

Answer 31

Regulates the trading of securities after they are issued and requires periodic reporting.

Question 32

2 years balance sheets, 3 years income statement, statements of cash flows, and shareholders' equity are the audited financial statements provided upon initial registration of a security.

Answer 32

TRUE

Question 33

The 10-k for a large accelerated filer is required to be filed within 60 days of the fiscal year end.

Answer 33

TRUE

Question 34

Regulation S-X requires reporting on disagreements with accountants.

Answer 34

FALSE

Question 35

Audited financial information is included in Part II, Item 8 of Form 10-k.

Answer 35

TRUE

Question 36

10-k is the form required for annual filing of a public company.

Answer 36

TRUE

Question 37

Initial registration of securities is typically done via Form S-1.

Answer 37

TRUE

Question 38

Regulation S-K governs non-financial statement disclosures in Form 10-K.

Answer 38

TRUE

Question 39

Regulation S-X governs form and content of financial statements.

Answer 39

TRUE

Question 40

Notes, debentures, or evidence of indebtedness would not be considered a security that requires registration.

Answer 40

FALSE

Question 41

The 10-Q for a large accelerated filer is required to be filed within 45 days of the fiscal year end.

Answer 41

FALSE

Question 42

The 1933 Securities Act governs the registration and trading of all public securities.

Answer 42

FALSE

Question 43

Management's Discussion and Analysis (MD&A) is governed by Regulation S-X.

Answer 43

FALSE

Question 44

What does the International Financial Reporting Standards (IFRS) Interpretations Committee do?

Answer 44

Committee serves a similar role to the FASB's Emerging Issues Task Force, except that the IFRS Interpretations Committee's pronouncements (Interpretations) are reviewed by the IASB before they are issued. The IFRS Interpretations Committee reviews issues arising in the context of IFRSs and issues Interpretations of those issues.

Question 45

What does the International Financial Reporting Standards (IFRS) Advisory Council do?

Answer 45

The Council advises the IASB on priorities and the views of interested organizations on major projects, as well as the benefits and costs of proposed standards.

Question 46

How long are the terms for Board Members of the International Accounting Standards Board (IASB)?

Answer 46

Five years, renewable one term.

Question 47

How long are the terms for the trustees of the International Financial Reporting Standards (IFRS) Foundation?

Answer 47

Three years, with one renewable term.

Question 48

Who appoints members of the International Accounting Standards Board (IASB), International Financial Reporting Standards (IFRS) Advisory Council, and IFRS Interpretations Committee?

Answer 48

The IFRS Foundation.

Question 49

How many members does the International Accounting Standards Board (IASB) have?

Answer 49

Sixteen.

Question 50

What is IOSCO?

Answer 50

It is the International Organization of Securities Commissions. IOSCO promotes high standards of regulation to ensure transparent and efficient capital markets.

Question 51

Does the International Accounting Standards Board (IASB) have enforcement power over companies?

Answer 51

No, it does not have enforcement power.

Question 52

What is the fourth objective of the International Financial Reporting Standards (IFRS) Foundation?

Answer 52

To promote and facilitate adoption of IFRs issued by the International Accounting Standards Board (IASB), through the convergence of national accounting standards IFRS.

Question 53

What is the third objective of the International Financial Reporting Standards (IFRS) Foundation?

Answer 53

To take into account the special needs of a range of sizes and types of entities in diverse economic settings.

Question 54

What is the second objective of the International Financial Reporting Standards (IFRS) Foundation?

Answer 54

To promote the use and rigorous application of those standards.

Question 55

What is the first objective of the International Financial Reporting Standards (IFRS) Foundation?

Answer 55

To develop in the public interest a single set of high-quality, understandable enforceable and globally accepted financial reporting standards. These standards require high quality, transparent, and comparable information in financial reporting to help make economic decisions.

Question 56

What year did the International Accounting Standards Board (IASB) begin taking control of standard setting?

Answer 56

2001 (April).

Question 57

From what entity did the International Accounting Standards Board (IASB) evolve?

Answer 57

The IASB, formed in 2001, evolved from the International Accounting Standards Committee (IASC), which was established in 1973.

Question 58

The IFRS Interpretations Committee serves a similar role as the Emerging Issues Task Force.

Answer 58

TRUE

Question 59

The IASB has enforcement power.

Answer 59

FALSE

Question 60

The IASB Board members are elected into their positions.

Answer 60

FALSE

Question 61

International Standards Committee (IASC) was the organization that was the predecessor to the IASB.

Answer 61

TRUE

Question 62

The IFRS Foundation is the parent to the IASB.

Answer 62

TRUE

Question 63

What did the Securities and Exchange Commission (SEC) eliminate for foreign companies listed in the United States?

Answer 63

A reconciliation of earnings and equity to U.S. Generally Accepted Accounting Principles (Form 20-F) in their financial statements.

Question 64

List the steps of developing International Accounting Standards.

Answer 64

1. Add item to agenda; 2. Discuss issue; 3. Publish discussion paper if topic is difficult; 4. Prepare and vote on exposure draft; 5. Issue the Exposure Draft; 6. Analyze the comments on the exposure draft; 7. Debate the issue at hand.

Question 65

List some examples of simplified recognition and measurement for Small and Medium-sized Entities (SMEs) in International Financial Reporting Standards (IFRS)?

Answer 65

Goodwill is amortized; all R&D is expensed, categories of investments reduced, less prior year data required for first- time adoption.

Question 66

What are some omitted topics for Small and Medium-sized Entities (SMEs) in International Financial Reporting Standards (IFRS)?

Answer 66

Earnings Per Share, Interim Financial Reporting, Segment Reporting.

Question 67

When can revisions happen for Small and Medium-sized Entities (SMEs) in International Financial Reporting Standards (IFRS)?

Answer 67

Revisions for SMEs standards happen every three years at most.

Question 68

What is simplified for Small and Medium-sized Entities (SMEs) in International Financial Reporting Standards (IFRS)?

Answer 68

Topics that are irrelevant are eliminated, recognition and measurement aspects simplified, disclosures reduced to 10% of those in regular IFRS

Question 69

Is IFRS more rules based or principle based?

Answer 69

Principle based.

Question 70

Under IFRS, if no standards exist on an accounting issue, what should companies use?

Answer 70

The definitions, recognition criteria, and measurement concepts for assets, liabilities, income, and expenses in the Framework.

Question 71

What is the highest level of International GAAP?

Answer 71

IFRS.

Question 72

U.S. GAAP requires more professional judgment than application of IASB Standards.

Answer 72

FALSE

Question 73

The due process for setting international accounting standards is very similar to the U.S. approach for setting U.S. standards.

Answer 73

TRUE

Question 74

International Financial Reporting Standards (IFRS) is the highest authority in the IFRS hierarchy.

Answer 74

TRUE

Question 75

SME reporting under IFRS requires more extensive disclosures.

Answer 75

FALSE

Question 76

A Small and Medium-sized (SME) company can apply the IFRS SME standards and be publicly traded.

Answer 76

FALSE

Question 77

What are the underlying assumptions of the International Accounting Standards Board (IASB) framework?

Answer 77

The financial statements are prepared on the accrual basis and the entity is a going concern.

Question 78

Does the International Accounting Standards Board (IASB) framework include losses for the term "expense?"

Answer 78

Yes, it includes such losses.

Question 79

What elements are considered income under the Financial Accounting Standards Board (FASB) framework?

Answer 79

"Revenue" and "gains" as separate elements.

Question 80

What comprises income under the International Accounting Standards Board (IASB) framework?

Answer 80

Includes both revenues and gains.

Question 81

True or False: Income may be realized or unrealized.

Answer 81

True.

Question 82

What is meant by a "reliable measurement?"

Answer 82

Measurement in which a reasonable estimate is made.

Question 83

When do you recognize an element in the International Accounting Standards Board (IASB) framework?

Answer 83

When it is probable that there is a future economic benefit and the item has a cost or value that can be measured with reliability.

Question 84

What elements of the Financial Accounting Standards Board (FASB) framework are not included in the International Accounting Standards Board (IASB) framework?

Answer 84

Investments by owners, distributions to owners, comprehensive income, gains, losses.

Question 85

What are the five elements in the International Accounting Standards Board (IASB) framework?

Answer 85

1. Assets; 2. Liabilities; 3. Equity; 4. Income; 5. Expenses.

Question 86

What will be the underlying conceptual support for future principles-based accounting standards?

Answer 86

Developing a common framework.

Question 87

What are some of the purposes of the International Accounting Standards Board (IASB) framework?

Answer 87

Assist the Board to develop new International Accounting Standards (IASs); promote harmonization of standards; and assist, provide information to interested parties.

Question 88

True or False: The International Accounting Standards Board (IASB) framework should only apply to public companies, not private corporations.

Answer 88

False. The IASB Framework should apply to both public and private companies.

Question 89

The U.S. Framework identifies accrual accounting as a basic assumption.

Answer 89

FALSE

Question 90

The U.S. Framework and International Framework both identify that the objective of financial reporting is to aid the external users decision making.

Answer 90

TRUE

Question 91

The IASB Framework treats expenses and losses as an expense, where the U.S. Framework treats expenses and losses as separate elements.

Answer 91

TRUE

Question 92

To provide guidance in accounting for specific transactions, events or conditions is not a purpose of the IASB Framework.

Answer 92

TRUE

Question 93

The IASB Framework identifies accrual accounting as a basic assumption.

Answer 93

TRUE