SEC- Role and Standard Setting

Question 1

T/F: Does the SEC have the authority to set accounting standards?

Answer 1

True– but it delegates the responsibility to FASB

Question 2

What is EDGAR?

Answer 2

System that collects and validates and index information filed with the SEC

Question 3

Who makes up the SEC?

Answer 3

There are 5 commissioners appointed by the President of the United States

Question 4

What are the five divisions of the SEC?

Answer 4

• Corporate Finance
• Enforcement
• Trading and Markets
• Investment Management
• Division of Economic and Risk Analysis

Question 5

Did the SEC require IFRS issuers to reconcile to US GAAP?

Answer 5

No

Question 6

What is the SECs role in the standard setting process?

Answer 6

The SEC can issue it’s own pronouncements (only public companies have to comply)

Question 7

Are SEC Pronouncements authoritative GAAP?

Answer 7

YES

Question 8

Which form is used for basic registration for new securities? And what are the two parts?

Answer 8

S-1:
- Part 1: Business operations, risks, audited financial statements, and use of proceeds. (two years of B/S, three years of income, comprehensive income, cash flows, and changes in equity)

• Part 2: Provides information about the cost of the issuance, information about the directors and officers, and additional financial schedules.

Question 9

What is the IPO Process?

Answer 9

Issuer–> Underwriter (determines price of securities) –> dealer (takes securities to the public) –> Public

Question 10

The Securities Act of 1934 applies to securities that have been issued, what are the requirements under form S-X?

Answer 10

• Annual Filings (2 B/S, 3 for flow statements, MD&A, Controls, management certifications)
• Quarterly Filings
• Significant Events

Question 11

What are the deadlines for filings of financial statements?

Answer 11

• Large Accelerated Filer (>700 million): 60 Days
• Accelerated Filer (between 75-700 million): 75 Days
• Nonaccelerated filers (less than 75 million): 90 Days

10-Q:

• Large Accelerated Filer: 40 Days
• Accelerated Filer 40 Days
• Nonaccelerated filer: 45 Days

Question 12

What are examples of a form 8-K (Significant Event) and how long do you have to report the form 10-K?

Answer 12

4 Days after significant event

• Business acquisition
• Bankruptcy
• Director Resigns
• Changes of the audit firm
• Disposal Activities

Question 13

T/F: Executive Compensation is included in the 10-K Filing?

Answer 13

True

Question 14

Which of the following are included in the 10-K Filing? Product Market Share, Description of the business, Market Price of Common Stock

Answer 14

The only item not included: Product Market Share