SEC- Role

Question 1

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

Answer 1

Yes, it has that authority.

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

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

Answer 3

Four:

The Division of Corporation Finance
The Division of Enforcement
The Division of Trading and Markets
The Division of Investment Management

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, it may penalize firms.

Question 6

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

Answer 6

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

Question 7

Define “Financial Reporting Releases (FRR).”

Answer 7

Formal pronouncements that rank the highest in authority for public companies

Question 8

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

Answer 8

They report the enforcement actions taken against accountants.