Topic: Issuer filings with SEC―Registration statements
Difficulty: 2 Medium
37. Which one of the following requires the audit committee to be responsible for the appointment and
compensation of the external auditor?
A) The Securities Act of 1933.
B) The Securities Exchange Act of 1934.
C) The Investment Company Act of 1940.
D) The Foreign Corrupt Practices Act of 1977.
E) The Sarbanes-Oxley Act of 2002.
38. Which one of the following requires the registration of mutual funds that engage in investing and
trading in securities?
A) The Securities Act of 1933.
B) The Securities Exchange Act of 1934.
C) The Investment Company Act of 1940.
D) The Foreign Corrupt Practices Act of 1977.
E) The Sarbanes-Oxley Act of 2002.
39. Which statement is false regarding the Public Company Accounting Oversight Board (PCAOB)?
A) Regulates audit standards and independent audit firms.
B) Has five members appointed by the SEC.
C) Allows all members to be accountants, past or present.
D) Is under the oversight and enforcement of the SEC.
E) Is funded by fees levied on all publicly traded companies.
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Education.
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AICPA: BB Legal
[QUESTION]
40. Which one of the following forms is used when companies have filed with the SEC for less than 36
months but are not large enough to file form S-3?
A) S-8.
B) S-6.
C) S-4.
D) S-1.
E) S-11.
41. Which one of the following forms is used in connection with employee stock plans?
A) S-8.
B) S-3.
C) S-4.
D) S-1.
E) S-11.
42. Which of the following forms is used in connection with registration of securities by certain real
estate companies?
A) S-8.
B) S-3.
C) S-4.
D) S-1.
E) S-11.
43. Which of the following forms is used in connection with registration of securities of a small reporting
company with $25 million of annual revenues and of $25 million of voting securities held by non-
affiliates?
A) S-8.
B) S-3.
C) S-4.
D) S-1
E) S-11.
44. The SEC’s role in the initial registration of securities to be publicly issued is:
A) To ensure that the content of the registration filing is in compliance with securities regulations.
B) To ensure that securities issued are quality investments.
C) To provide data to the public regarding first-time issuance of securities.
D) To give permission to an independent CPA firm to audit the registrant’s financial statements.
E) To make the registrant’s annual report available for public viewing.
45. Audited financial statements in an annual report of an issuer that is subject to SEC regulation must
include:
A) Three balance sheets, three income statements, and three statements of cash flows.
B) Three balance sheets, two income statements, and two statements of cash flows.
C) One balance sheet, one income statement, and one statement of cash flows.
D) Two balance sheets, three income statements, and three statements of cash flows.
E) Two balance sheets, two income statements, and two statements of cash flows.
46. The audit committee of an entity subject to SEC regulation will do all of the following except:
A) Be responsible for agreeing to fee compensation of the independent audit firm.
B) Certify the annual financial statements.
C) Be comprised only of individuals who are not members of management.
D) Approve non-audit services provided by the independent audit firm.
E) Serve as liaison between the board of directors and the independent audit firm.
47. For each of the following situations, identify the type of form to be filed with the SEC for disclosure
purposes:
(A) Form 10-K
(B) Form 10-Q
(C) Form 8-K
(D) Not required
___ 1. A unique or significant happening.
___ 2. Annual information required by Regulation S-X.
___ 3. Changes in control of the registrant.
___ 4. Interim financial statements.
___ 5. Fourth quarter income statement.
___ 6. Bankruptcy.
___ 7. Annual information required by Regulation S-K.
___ 8. Income statement for the current quarter, year-to-date, and comparative periods in the previous
year.
___ 9. Changes in bookkeeping staff.
___ 10. Changes in the registrant’s independent auditor.
48. What is shelf registration?
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Education.
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AACSB: Reflective Thinking
AICPA: BB Legal
[QUESTION]
49. What is a private placement of securities?
50. What is a wraparound filing?
51. What is included in Part I of a securities registration statement?
52. What is included in Part II of a securities registration statement?
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Education.
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Topic: Issuer registration―Procedures
Difficulty: 2 Medium
Blooms: Remember
AACSB: Reflective Thinking
AICPA: BB Legal
AICPA: FN Measurement
[QUESTION]
53. What is blue sky legislation?
54. How are the operations of the SEC funded?
55. What was the purpose of the Securities Act of 1933?
56. What was the purpose of the Securities Exchange Act of 1934?
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Education.
Page 12-19
Answer: The purpose of the Securities Exchange Act of 1934 was to regulate the trading of previously
issued securities through brokers and exchanges. The Act created the SEC and empowered it to: (i)
require reporting by publicly owned companies; and (ii) require registration of securities, security
exchanges, and certain brokers and dealers of securities. The purpose of the Act is to also prohibit
fraudulent and unfair behavior such as sales practice abuses and insider trading.
Learning Objective: 12-02
Topic: Federal securities laws―Purpose
Topic: Federal securities laws―Specific laws
Difficulty: 2 Medium
Blooms: Remember
AACSB: Reflective Thinking
AACSB: Ethics
AICPA: BB Legal
[QUESTION]
57. What is the purpose of the SEC’s Regulation S-K?
58. Why is the SEC’s Rule 14c-3 important to the accounting profession?
59. For what purpose is the SEC‘s Registration Form S-4 used?
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Education.
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[QUESTION]
60. When must Form 8-K be filed with the SEC and in what situations must this form be used?
61. What is the purpose of Regulation S-K? Briefly describe requirements of Regulation S-K.
62. What is a proxy? Briefly explain the importance of a proxy solicitation and a proxy statement.
63. What are the responsibilities of the SEC’s Division of Corporation Finance?
64. What are the four interconnected goals that the SEC has tried to achieve?
65. What is required by the Trust Indenture Act of 1939?
66. What information needs to be included in Form 10-Q?
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Education.
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(4) Any needed disclosures need to be included pertaining to the current period including management’s
discussion and analysis (MD&A) of the financial condition of the company and the results of operations.
Learning Objective: 12-06
Topic: Issuer filings with SEC―Periodic-10K-10Q-8K-Proxy
Difficulty: 3 Hard
Blooms: Remember
AACSB: Reflective Thinking
AICPA: BB Legal
AICPA: FN Measurement
[QUESTION]
67. What are some of the reasons for the corporate scandals of 2001 and 2002?
68. Why was the Public Utility Holding Company Act of 1935 created?
69. What information is required in proxy statements?
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Education.
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AICPA: FN Measurement
[QUESTION]
70. What Federal agency has Congressional authority to amend, modify, repeal, or reject auditing
standards?
71. How has the Sarbanes-Oxley Act of 2002 changed the role of the audit committee?
72. What is a primary focus of the Sarbanes-Oxley Act of 2002?
73. Who has the responsibility for the evaluation of the quality of an investment?
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[QUESTION]
74. Name the two broad categories of filings with the SEC.
75. Name five securities offerings exempt from registration with the SEC.
76. Describe the two parts of the SEC registration statement.