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Unformatted text preview: Chapter 14 - SEC Reporting 14-1 CHAPTER 14 SEC REPORTING ANSWERS TO QUESTIONS Q14-1 The basis of the SEC's legal authority to regulate accounting principles stems from the Securities Exchange Act of 1934. In the 1934 Act, the SEC was given the legal responsibility to regulate trades of securities and to determine the types of financial disclosures that a publicly held company must make. Q14-2 The Securities Act of 1933 regulates the initial registration of securities. The Securities Exchange Act of 1934 regulates the periodic reporting of publicly traded companies. Q14-3 The Division of Corporation Finance receives the registration statements of companies wishing to make public offerings of securities. The Division of Enforcement investigates individuals or firms who may be in violation of a security act. 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 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, reports of accountants, and pro forma disclosures. Items included in Regulation S-K include a description of business, management's discussion and analysis, disagreements with accountants, and required information about new stock issues. 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 from the full registration process is a small offering of less than $1.5 million of stock sales during any 12-month period. The second type of offering exempted from the full registration requirements is limited offerings to accredited investors of up to $5 million in securities within a 12-month period. 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 company. A company may use a Form S-3 registration form for a new stock issuance when the registrant is large and established, possessing stock that has been trading for several years. Chapter 14 - SEC Reporting 14-2 Q14-8 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....
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This note was uploaded on 03/26/2011 for the course ACTG 3400 taught by Professor Durkee during the Spring '11 term at Weber.
- Spring '11