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Chapter 14 - SEC Reporting
Q14-1 The basis of the SEC's legal authority to regulate accounting principles stems
Q14-2 The Securities Act of 1933 regulates the initial registration of securities. The
Q14-3 The Division of Corporation Finance receives the registration statements of
Q14-4 The Foreign Corrupt Practice Act of 1977 requires that companies maintain
accurate accounting records and an adequate system of internal control. An adequate
system of internal control should contain the following:
a.
Strong budgetary controls
b.
An objective internal audit function that helps develop, document, and
then monitor the control system
c.
An active audit committee comprised of nonmanagement members from
the company's board of directors
d.
A review of the internal control system by the independent auditors
*The FCPA indicated that the cost of an internal control procedure should
not outweigh its benefit to the firm
Q14-5 Regulation S-X covers the form and content of financial disclosures; specifically,
this Reg. covers the form and content of financial statements, schedules, footnotes,
Q14-6 Two types of public offerings of securities are exempted from the
comprehensive registration requirements of the SEC. The first type of offering exempted
Q14-7 A company uses a Form S-1 registration form when the general registration is
for a first-time offering and no other publicly traded stock has been issued by that
Copyright © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized
for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted
on a website in whole or part.
Q14-8 (a) A customary review is a thorough examination by the SEC and may result in
acceptance of the registration or a comment letter from the SEC.
(b) A comment letter is issued by the SEC specifying the deficiencies that must be
Q14-9 Form 10-K is the annual filing to the SEC, and is broken into four parts. Parts I, II,
and III contain the basic financial information including the audited financial statements,
the management discussion and analysis, the report by management on internal control,
Q14-10 Interim reports submitted to the SEC are not required to be audited. The public
Q14-11 In 2004, the SEC enlarged the list of items that must be reported on the Form 8-
1.03.
The bankruptcy or receivership of the company
2.01.
Completion of the acquisition or disposition of assets
2.02.
Public announcement of material financial results
2.03.
Creation of a direct financial obligation under an off-balance sheet
arrangement
2.04.
An event that accelerates or increases an obligation under an off-balance
sheet arrangement
2.05.
Costs associated with exit or disposal activities
2.06
Material impairments of assets
4.01
Changes in the registrant’s certifying accountant
4.02
Non-reliance on previously issued financial statements or audit report
5.03
Changes in the registrant’s fiscal year
Q14-12 A proxy is a request by the company, or by a stockholder, for a security holder's
vote on a corporate matter. Proxy solicitations must include a full discussion of the
Q14-13 Part I of the Foreign Corrupt Practices Act (FCPA) prohibits individuals
associated with United States companies from giving bribes to foreign governmental or
political officials for the purpose of securing a contract or otherwise increasing the
Q14-14 The MD&A must include a discussion of trends and expected changes on the
company’s financial condition, changes in financial condition, and its results from
Copyright © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized
for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted
on a website in whole or part.
C14-1 Objectives of Securities Acts [CMA Adapted]
a. Investment practices of the 1920s that contributed to the erosion of the stock
market include the following:
– The prices of securities were manipulated through the use of "wash sales" or
b. 1. The objectives of the Securities Act of 1933 are to:
– provide investors with financial and other information concerning the initial
2. The objectives of the Securities Exchange Act of 1934 are to:
– regulate the trading of securities on secondary markets by requiring the
registration of securities traded on any national exchange.
