SEC Reporting

1. Baker / Lembke / King 14 SEC Reporting Electronic Presentation by Douglas Cloud Pepperdine University

2. EDGAR The SEC developed an electronic filing system known as EDGAR (Electronic Data Gathering, Analysis, and Retrieval). Under this system, firms electronically file directly using computers.

3. Organizational Structure of the Commission Division of Corporation Finance. Develops and administers the disclosure requirements for the securities acts and reviews all regulation statements and other issue-oriented disclosures. This is the division with which accountants are most familiar because all registration forms are submitted to it.

4. Organizational Structure of the Commission Division of Enforcement. Directs the enforcement actions of the Commissions. Division of Investment. Regulates investment advisers and investment companies. Division of Market Regulation. Regulates national securities exchanges, brokers, and dealers of securities.

5. Organizational Structure of the Commission The Commission | | | | Division of Division of Division of Division of Corporation Enforcement Investment Market Finance Management Regulations | | | | | Office of the Chief Accountant General Office of Office of Office of Office of Consul Economic International Compliance Legislative Analysis Affairs Inspections and Affairs Examinations Regional Offices and Branches

6. Laws Administered by the SEC • Public Utility Holding Company Act of 1935 • Trust Indenture Act of 1939 • Investment Company Act of 1940 • Investment Advisors Act of 1940 • Securities Investor Protection Act of 1970 • Foreign Corrupt Practice Act of 1977 • Federal Bankruptcy Acts

7. The Regulatory Structure Two major regulations, Regulation S-X and Regulation S-K, govern the preparation of financial statements and associated disclosures made in reports to the SEC.

8. The Regulatory Structure The Financial Reporting Releases (FRRs)disclose amendments or adoptions of new rules that affect preparers of financial statements and other disclosures. The Accounting and Audit ReportReleases (AAERs) primarily present the result of enforcement actions taken against accountants or other participants in the filing of a false or misleading statement. The Staff Accounting Bulletins (SABs)allow the Commission’s staff to make announcements on technical issues with which it is concerned as a result of reviews of SEC filings.

9. Basic Information Package (BIP) Classes of information constituting the BIP: • Market price and dividends on common equity and related security matters. • Selected financial data. • Management’s discussion and analysis of financial condition and results of operations. • Audited financial statements and supplementary data. • Other information.

10. Issuing Securities Governed by Securities Act of 1933 • The Registration Statement (Form S-1, etc.) • SEC Review and Public Offering • Preliminary prospectus • Shelf registration • Accountants liability in registration process • Liable up to effective date of registration statement

11. Periodic Reporting Requirements Industry Segment Data The company operates in three principal industries--construction material division residential heating systems, electrical parts and motors, plumbing supplies, and miscellaneous metal goods though a chain of wholesale supply warehouses. Year ended December 31 19X3 19X4 19X5 Net sales Construction $110,000 $ 98,000 $ 90,000 Metal products 30,000 20,000 18,000 130,000 118,000 108,000 Construction $ 9,000 $ 5,000 $ 9,100 Metal products 5,000 3,500 3,500 Paper products 4,0003,0008,000 $18,000 $11,500 $16,600 Form 10-K must be filed within 90 days after the end of the company’s fiscal year.

12. Periodic Reporting Requirements Parts I through III contain the basic information package, including the financial statements.

13. Periodic Reporting Requirements Part IV contains additional schedules and exhibits.

14. Periodic Reporting Requirements Registrant Company and Subsidiary Condensed Consolidated Statement of income Three Months Ended 19X119X0 Net sales $79,940 $70,030 Costs and expense: Cost of production 60,800 53,200 Selling and admin. 9,940 11,030 Interest, net 1,200 800 71,94065,030 Income before taxes 8,000 5,000 Income taxes 3,4002,200 Net income $4,600 $2,800 Net income per share $ 1.50 $ .95 Form 10-Q, the interim report of the SEC, is due within 45 days after the end of each quarter except the fourth quarter. That’s when the 10-K is issued.

15. Periodic Reporting Requirements Form 8-K is used to disclose unscheduled material events. This form is due within 15 days after the occurrence of an “unscheduled current material event” (defined in the next slide).

16. Unscheduled Current Material Events • A change in the control of the registrant. • Acquisition or disposal of major assets. • Bankruptcy or receivership of the registrant. • Changes in the registrant’s certifying accountants. • Resignations of one or more of the registrant’s directors. • Any other events deemed to be of material importance to security holders.

17. Foreign Corrupt Practices Act of 1977 Part I: Prohibits foreign bribes. Part II: Requires publicly held companies to maintain adequate system of internal control and accurate records.

18. Shareholder Proposals in Opposition to Management SEC Requirements • Eligibility. The proponents must own a security with voting privileges. • Attendance. The proponents or a designate must be in attendance at the annual meeting to present the proposal. • Timeliness.The proposal must be received at least 90 days prior to the mailing date of the proxy statement. • Rejected Proposals.The proposal cannot relate to a similar proposal that has been rejected within the last five years.

19. Insider Trading Insider trading rules prohibit company officers, directors, major investors, or anyone else who has gained access to nonpublic information about a company, from profiting from that information,

20. The SEC’s Policy-Setting Responsibilities Accounting Series Release No. 150 explicitly stated the principles, standards, and practices established by the FASB have substantial authoritative support. The commission can and does issue policy statements that amend accounting principles issued by the FASB.

21. Management Discussion and Analysis The discussion must include the following items: • Specific information about the company’s liquidity, capital resources, and results of operations. • The impact of inflation and changing prices on net sales and revenues and on income from continuing operations. • Material changes in line items of the consolidated financial statements from prior-period amount. • Known material events and uncertainties that may make historical financial information not indicative of future operations or future conditions. • Any other information the company believes necessary for an understanding of its financial condition, changes in financial condition, and results of operations.

22. Pro Forma Disclosures Essentially a “what if” financial presentation Used to show the effects of major transactions that occur after the end of the fiscal period. Used to show the effects of major transactions that have occurred during the year that are not fully reflected in the company’s historical cost financial statements.

23. Chapter Fourteen The End