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Flashcards in US Securities and Exchange Commission Deck (24):
1

Who has the legal authority to prescribe accounting standards?

the SEC

2

What is the mission of the SEC?

to protect investors, maintain fair, orderly and efficient markets, and facilitate capital information

3

In order to be a "foreign private issuer" what requirements must be met?

A foreign private issuer is any foreign issuer other than a foreign government, except an issuer that meets the following conditions (Rule 205, Securities Act 1933):
a. More than 50% of the outstanding voting securities are directly or indirectly owned by residents of the U.S. and
b. Any of the following:
i. The majority of its executive officers or directors are U.S. citizens or residents;
ii. More than 50% of the assets of the issuer are located in the U.S.;
iii. The business of the issuer is administered principally in the U.S.

4

What are the 4 divisions of the SEC?

The division of Corporate Finance, Enforcement, Trading & Markets, Investment management

5

What does the SEC's Division of Corporate Finance do?

This division oversees the compliance with the securities acts and examines all filings made by publicly held companies. All filings go to this division.

6

What does the SEC's Division of Enforecement do?

When there is a violation of a securities law (except the Public Utility Holding Company Act), this division completes the investigation and takes appropriate actions. This division makes recommendations to the Justice Department concerning any punishments or potential criminal prosecution.

7

What does the SEC's Division of Trading and Markets do?

This division oversees the secondary markets, exchanges, brokers, and dealers.

8

What does the SEC's Division of Investment Management do?

This division oversees the investment advisers and investment companies under the Investment Company Act of 1940 and the Investment Advisers Act of 1940.

9

What are the 2 main pronouncements that are published by the SEC?

Financial Reporting Releases (FRR) and Staff Accounting Bulletins (SAB)

10

What are Financial Reporting Releases (FRR)?

These are formal pronouncements and are the highest-ranking authoritative source of accounting for public companies.

11


What are Staff Accounting Buleltins? (SAB)

These provide the SEC's current position on technical issues. While SABs are not formal pronouncements (in the sense that they have not gone through any due process), they still are of importance to financial statement preparers, because they reflect the staff's current thinking on various technical issues.

12

What is an Accounting and Auditing Enforcement Release? (AAER)

These report the enforcement actions that have been taken against accountants, brokers or others

13

What does the 1933 Securities Act require?

The 1933 Securities Act requires publicly traded firms offering securities for sale to the public in primary and secondary markets to file a registration statement, and to provide each investor with a proxy statement before each shareholders' meeting.

14

What does the 1934 Securities Act regulate?

The 1934 Securities Act regulates the trading of securities after they are issued and provides the requirements for periodic reporting and disclosures.

15

What does Regulations S-X govern?

Regulations S-X governs the form and content of financial statements and financial statement disclosures.

16

What does Regulations S-K govern?

Regulation S-K governs the form and content of nonfinancial statement. The nonfinancial statement disclosures are
a. Description of the business;
b. Description of stockholder matters;
c. Management's discussion and analysis (MD&A);
d. Changes in and disagreements with accountants; and
e. Information on directors and management.

17

What is Form S-1?

Form S-1 is the basic registration form for new securities and it includes a list of required disclosures

18

Waht are the filing deadlines of a Large Accelerated Filer?

10-K - 60 days after the fiscal year end
10-Q - 40 days after the quarter end

19

What are the filing deadlines for an Accelerated Filer?

10-K - 75 days after the fiscal year end
10-Q - 40 days after the quarter end

20

What are the filing deadlines for a Non-accelerated Filer?

10-K - 90 days after the fiscal year end
10-Q - 45 days after the quarter end

21

What is the Management's Discussion and Analysis (MD&A)?

Required by the SEC
Provides discussion of important aspects of hte firm from the viewpoint of management.

22

What is the point of a quarterly report for the SEC?

The quarterly report is intended to provide investors with an update since the last annual report. The 10-Q is not required to be audited, but must be reviewed by the independent auditor.
The financial statements presented are:
a. Balance sheet for the quarter and prior fiscal year end;
b. Quarterly and year-to-date income statements for this quarter and the same period in the previous year;
c. Cumulative year-to-date statements of cash flow for the current and prior fiscal years.

23

What is the Foreign Corrupt Practices Act of 1977?

The Foreign Corrupt Practices Act of 1977 prohibits bribes of foreign governmental or political officials for the purpose of securing contracts or business

24

What is the purpose of Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 (SOX) contains provisions to enhance corporate governance and to mitigate financial accounting abuses