corp gov questions chapters 9-11

corp gov questions chapters 9-11 - Kevin Flinchbaugh...

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Corporate governance chapters 9-11 Chapter 9 3. What are the main problems that the SEC has encountered in trying to perform its duties? SEC problem areas: reporting and punishment One issue that people question is the adequacy of quarterly and annual reporting. If the information is to be useful then there may need to be more frequent reporting. One approach that is perpetually under consideration is to require companies to submit their reports earlier. Instead of providing a deadline of 90 days after the close of the fiscal year for filing of annual reports, it could be 60 days. For quarterly filings the deadline could be shortened to 30 instead of 45. This proposal might only add concerns about the haste and thus the accuracy with which companies compile reports. Another way to address the problem of infrequent reporting is to force companies to reveal immediately any material information that investors will deem important. Others believe that the SEC may be too weak because it cannot pursue criminal prosecution. They have the authority to bring civil charges only. If criminal prosecution can serve as a key deterrent to corporate crime then there may be some truth to the notion that the SEC does not really having the policing power necessary to do its job Prosecuting corporate criminals is difficult, securities laws are ambiguous, sophisticated financial concepts that are difficult to grasp and executives have plenty of tricks. The primary punishment tool employed by the SEC is to fine companies for wrongdoing. Critics argue that when individuals, such as corporate executives, commit fraud, they should be punished. Yet it is often the company that gets fined. Those fines are paid by the shareholders because it comes out of the profits. Managers often deflect an SEC investigation by offering to pay a fine with the company’s money. 4. Describe the major components of the Sarbanes-Oxley Act. The Public company accounting oversight board PCAOB is a nonprofit entity whose financing comes from firms registered with the SEC and from public accounting firms. All public firms must be registered and meet its standards. The PCAOB oversees the public accounting firms as well. The board consists of 5 members appointed by the SEC. only 2 can be or have previously been CPA’s. their duties are 1. To register public accounting firms 2. Establish or adopt auditing quality control, ethics, independence, and other standards. 3.
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corp gov questions chapters 9-11 - Kevin Flinchbaugh...

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