Chapter 14 – SEC Reporting
C14-8 Audit Committees [CMA Adapted]
a. The Sarbanes-Oxley Act specifies that audit committees be composed of
nonmangement members of a company’s board of directors. Generally, the chair of the
audit committee has financial experience. The Sarbanes-Oxley Act requires the auditor
to report directly to, and have its work overseen by, the company’s audit committee, not
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E14-1 Organization Structure and Regulatory Authority of the SEC
1. c –The SEC does have authority over the disclosure in Corporate annual reports, and the
content contained in them.
2. b –This statement is true.
(a) incorrect. This in not a role played by the SEC.
3. b –The Division of Corporation Finance develops and administers the disclosure
requirements for the securities acts and reviews all registration statements and other
issue-oriented disclosures.
4. d –Regulation S-X presents the rules for preparing financial statements, footnotes, and
the auditor’s report.
5. d –The SEC does not make an effort to improve the actual securities being traded. The
SEC makes an effort to ensure that the investors can trust the information that is
being presented by the companies about their securities.
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.
3. b –Form 10-Q is a quarterly report due 35 days after the first three quarters.
(a) incorrect. This is not true of the 10-Q.
4. d –Form 8-K is used to disclose unscheduled events. The form must be filed within four
business days of the triggering event.
5. e –This would be a triggering event and it is classified under Financial Information.
(a) incorrect. This would not be considered a triggering event.
6. b –The changing of accounting principle is not a triggering event.
(a) incorrect. This is a triggering event.
7. d –The election of a new vice president would not be included in the 8-K
(a) incorrect. This would be included in the 8-K.
E14-4 Corporate Governance [CMA Adapted]
1. a – The Securities Exchange Act of 1934 has two major parts, (1) individuals associated
with U.S. Companies cannot bribe foreign governmental officials, and (2) Companies
are required to keep detailed records that accurately and fairly reflect their financial
