Continuing Case Solution
Chapter 1
Memorandum
To: Eric Conner and Phil Martin, CM Corporation
From: L. Harbach
Re: SEC Regulations and FASB Standards for Non-Public Companies
Date: January 2, 2013
(a) As a non-public company, CM Corporation is not subject to SEC
regulations. The SEC has jurisdiction only over public companies whose
stock is traded on a U.S. national exchange.
(b) Although CM Corporation is not required to have a formal audit that is
required of companies registered with the SEC, an audit is a valuable
Non-public companies are not required to prepare their financials in
accordance with GAAP. However, financial statements prepared in
accordance with GAAP provide external users the ability to more