Deck 14: Sec Reporting

Question 1

When deficiencies are found in a registration statement that must be corrected before the securities may be offered for sale,which of the following is issued by the SEC?

A)An audit opinion
B)A comment letter
C)A customary review
D)A comfort letter

Answer 1

B

Question 2

Regulation S-X presents the rules for preparing all of the following except:

A)financial statements.
B)footnotes.
C)auditor's report.
D)management's discussion.

Answer 2

D

Question 3

Which of the following forms is the most comprehensive registration statement?

A)Form S-1
B)Form S-2
C)Form S-3
D)Form 20-F

Answer 3

A

Question 4

Which regulation resulted in the creation of the Public Company Accounting Oversight Board?

A)Investment Advisers Act
B)Securities Investor Protection Act
C)Sarbanes-Oxley Act
D)Trust Indenture Act

Question 5

Identify the regulation that created an entity which insures investors from possible losses if an investment house enters bankruptcy.

A)Federal Deposit Insurance Protection Act
B)Securities Investor Protection Act
C)Investment Advisers Act
D)Federal Bankruptcy Act

Question 6

Regulation D of the SEC presents important exemptions from full registration requirements for:

A)private placements.
B)issuances of securities by savings and loan associations.
C)issuances of securities by common carriers regulated by the Interstate Commerce Commission.
D)foreign companies.

Question 7

Which of the following acts helps businesses raise funds in public capital markets by minimizing regulatory requirements?

A)Dodd-Frank Wall Street Reform and Consumer Protection Act
B)Foreign Corrupt Practices Act
C)Jumpstart Our Business Startups (JOBS)Act
D)Sarbanes-Oxley Act

Question 8

Which of the following presents the results of actions taken against accountants,brokers,and other participants for filing false or misleading statements?

A)Financial Reporting Releases
B)Financial Reporting Interpretations
C)Accounting and Auditing Enforcement Releases
D)Staff Accounting Bulletins

Question 9

Which of the following best describes a "red herring" prospectus?

A)A shortened version of registration Form S-1 available to those companies that already have publicly traded securities.
B)A prospectus containing material irregularities and deficiencies.
C)Preliminary information provided to investors about an upcoming issue,and issued between the time a registration statement is presented to the SEC and its effective date.
D)Disclosure in the business press,outlined in red,informing investors of an upcoming offering.

Question 10

The purpose of a "tombstone ad" is:

A)to inform investors an upcoming offering has been canceled.
B)to inform investors of an upcoming offering.
C)to inform investors an upcoming offering will be delayed for 30 days.
D)to inform investors securities will be offered for sale after the company has responded to the SEC's comment letter.

Question 11

Which of the following acts requires that a trustee be appointed for sales of bonds,debentures,and other debt securities of public corporations?

A)Securities Investor Protection Act
B)Trust Indenture Act
C)Investment Company Act
D)Investment Advisors Act

Question 12

The preparation of which of the following items is covered by Regulation S-K?

A)Descriptions of business
B)Pro forma disclosures
C)Schedules
D)Reports of accountants

Question 13

Regulation S-X and Regulation S-K:

A)govern the preparation of financial statements and associated disclosures.
B)govern the registration requirements for private placements.
C)outline responsibilities for audit committees of publicly held companies.
D)prohibit artificial pyramids of capital in public utilities.

Question 14

Which of the following covers new or revised administrative practices and interpretations used by the SEC staff in reviewing financial statements?

A)Securities Exchange Act releases
B)Exchange Act industry guides
C)Accounting and Auditing Enforcement Releases
D)Staff Accounting Bulletins

Question 15

Which of the following divisions of the SEC regulates national securities exchanges,brokers,and dealers of securities?

A)Division of Investment Management
B)Division of Corporation Finance
C)Division of Economic and Risk Analysis
D)Division of Trading and Markets

Question 16

Which of the following types of securities or securities transactions are exempt from the need to be registered under the Securities Act of 1933?
I.Commercial paper with a maturity of nine months or less.
II.Intrastate issues in which the securities are offered and sold only within one state.
III.Municipal bonds.

A)I and II
B)II
C)I,II,and III
D)III

Question 17

Which regulation created the Securities and Exchange Commission?

A)Securities Act of 1933
B)Securities Exchange Act of 1934
C)Investment Company Act of 1940
D)Securities Investor Protection Act of 1970

Question 18

Which division of the SEC develops and administers the disclosure requirements for the securities acts and reviews all registration statements and other issue-oriented disclosures?

A)Division of Enforcement
B)Division of Corporation Finance
C)Division of Investment Management
D)Division of Trading and Markets

Question 19

The Securities and Exchange Commission is responsible for:

A)
B)
C)
D)

Question 20

For an accelerated filer,how many years of audited financial statements must be presented in the issuer's annual report?
I.Three years of audited income statements
II.Two years of audited balance sheets
III.Three years of audited statements of cash flows

A)I and II
B)II and III
C)I and III
D)I,II,and III

Question 21

Which of the following statements concerning pro forma disclosures is not true?

A)They show the effects of major transactions that occur after the end of the fiscal period.
B)They show the effects of major transactions that have occurred during the year but are not fully reflected in the company's historical cost financial statements.
C)The SEC requires these to be presented only when the company has made an unusual asset exchange,or a restructuring of existing indebtedness.
D)They often take the form of summarized financial statements.

Question 22

Each of the following questions names an item.Select the correct description of the item from this list.Indicate your selection by entering the letter of the description.
Descriptions

-Comment Letter

A)Provides preliminary information to investors about an upcoming issue.
B)Informs investors of an upcoming offering.
C)Required annual filing to the SEC.
D)Discloses unscheduled material events.
E)Includes amendments to the Securities Act,additional disclosure requirements,and other current issues regarding accounting and auditing principles and standards.
F)Results in a thorough examination by the SEC of a registration statement.
G)Issued by the staff of the SEC and contains differences that must be corrected in a registration statement before the securities may be offered or sale.
H)Quarterly report to SEC.
I)Includes new or revised administrative practices and interpretations used in reviewing financial statements.
J)Includes the results of actions taken against accountants or other participants because false or misleading statements were filed.
K)Includes Regulations S-X and S-K.

Question 23

Which of the following is defined as directly or indirectly having the power to vote the shares or investment power to sell the security?

A)Proxy
B)Significant influence
C)Control
D)Beneficial ownership

Question 24

Each of the following questions names an item.Select the correct description of the item from this list.Indicate your selection by entering the letter of the description.
Descriptions

-"Red Herring" Prospectus

A)Provides preliminary information to investors about an upcoming issue.
B)Informs investors of an upcoming offering.
C)Required annual filing to the SEC.
D)Discloses unscheduled material events.
E)Includes amendments to the Securities Act,additional disclosure requirements,and other current issues regarding accounting and auditing principles and standards.
F)Results in a thorough examination by the SEC of a registration statement.
G)Issued by the staff of the SEC and contains differences that must be corrected in a registration statement before the securities may be offered or sale.
H)Quarterly report to SEC.
I)Includes new or revised administrative practices and interpretations used in reviewing financial statements.
J)Includes the results of actions taken against accountants or other participants because false or misleading statements were filed.
K)Includes Regulations S-X and S-K.

Question 25

Which of the following observations is true of the shelf registration rule?

A)It is an option available to all listed companies.
B)Shelf registration is limited to 25 percent of the company's currently outstanding stock.
C)It allows private placements of an unlimited amount of securities.
D)It allows large companies to select the optimal time to sell their stock.

Question 26

Which of the following classes of information are included in the Form 10-K?
I.Management's discussion and analysis
II.Audited financial statements and footnotes
III.Auditor's opinion on the company's internal control system

A)I and II
B)I and III
C)II and III
D)I,II,and III

Question 27

Accountants are liable for any materially false or misleading information contained in the registration statement filed with the SEC up to:

A)the date the registration statement is filed.
B)the date of the audit report.
C)the effective date of the registration statement.
D)the date securities are sold.

Question 28

Pro forma disclosures are:

A)used to disclose unscheduled material events.
B)interim financial statements need not be audited.
C)materials submitted to shareholders for votes on corporate matters.
D)"what-if" presentations often taking the form of summarized financial statements.

Question 29

The SEC administers many laws and regulations governing the information made in files reports.
Required:
a)What is the difference in issues covered by Regulation S-X and Regulation S-K?
b)How do the issues covered by these regulations differ from the AAERs and SABs?

Question 30

What does an underwriter typically require from an accountant which indicates that the company has fulfilled all the accounting requirements in the registration process?

A)A comment letter
B)An audit opinion
C)A "red herring" prospectus
D)A comfort letter

Question 31

Proxy statements are:

A)filed by an entity that acquires a beneficial ownership of more than 5 percent in a company.
B)interim financial statements need not be audited.
C)materials submitted to shareholders for votes on corporate matters.
D)used to disclose unscheduled material events.

Question 32

Each of the following questions names an item.Select the correct description of the item from this list.Indicate your selection by entering the letter of the description.
Descriptions

-"Tombstone ad"

A)Provides preliminary information to investors about an upcoming issue.
B)Informs investors of an upcoming offering.
C)Required annual filing to the SEC.
D)Discloses unscheduled material events.
E)Includes amendments to the Securities Act,additional disclosure requirements,and other current issues regarding accounting and auditing principles and standards.
F)Results in a thorough examination by the SEC of a registration statement.
G)Issued by the staff of the SEC and contains differences that must be corrected in a registration statement before the securities may be offered or sale.
H)Quarterly report to SEC.
I)Includes new or revised administrative practices and interpretations used in reviewing financial statements.
J)Includes the results of actions taken against accountants or other participants because false or misleading statements were filed.
K)Includes Regulations S-X and S-K.

Question 33

Which of the following is true about the Foreign Corrupt Practices Act of 1977 (FCPA)?
I.Publicly held companies should maintain an adequate system of internal control.
II.Individuals associated with U.S.companies are prohibited from bribing foreign officials for the purpose of securing a contract.
III.Compensating or agents' fees are disallowed under all circumstances.

A)I and II
B)II and III
C)I and III
D)I,II,and III

Question 34

Information concerning the unexpected resignation of one or more of the registrant's directors would be disclosed on which of the following forms?

A)Form 10-K
B)Form 8-K
C)Form S-1
D)Form 10-Q

Question 35

Schedule 13D is filed:

A)by entities that acquire a beneficial ownership of more than 5 percent of a class of registered equity securities.
B)to broadly report material information that is being provided to securities analysts,selected institutional investors,or others.
C)to disclose material items related to asset-backed securities such as a bond issue.
D)by management to report the existence and effectiveness of the company's internal control over financial reporting.

Question 36

Which system helps the SEC accomplish its primary purpose of increasing the efficiency and fairness of the securities markets by expediting the receipt,acceptance,dissemination,and analysis of time-sensitive data filed with it?

A)EDI
B)ESEC
C)EDGAR
D)EMMA

Question 37

Each of the following questions names an item.Select the correct description of the item from this list.Indicate your selection by entering the letter of the description.
Descriptions

-Customary Review

A)Provides preliminary information to investors about an upcoming issue.
B)Informs investors of an upcoming offering.
C)Required annual filing to the SEC.
D)Discloses unscheduled material events.
E)Includes amendments to the Securities Act,additional disclosure requirements,and other current issues regarding accounting and auditing principles and standards.
F)Results in a thorough examination by the SEC of a registration statement.
G)Issued by the staff of the SEC and contains differences that must be corrected in a registration statement before the securities may be offered or sale.
H)Quarterly report to SEC.
I)Includes new or revised administrative practices and interpretations used in reviewing financial statements.
J)Includes the results of actions taken against accountants or other participants because false or misleading statements were filed.
K)Includes Regulations S-X and S-K.

Question 38

According to the provisions of the Sarbanes-Oxley Act,

A)accounting firms can provide both audit and non-audit services to the same company.
B)the auditor should report directly to,and have its work overseen by,the company's management.
C)audit committees should be composed of non-management members of a company's board of directors.
D)both the lead audit partner and the audit review partner for publicly held companies should be rotated at least every two years.

Question 39

Which of the following statements concerning the management discussion and analysis (MD&A)of a company's financial condition is true?
I.It should cover the financial statements and other statistical data for the most recent three-year time span.
II.It should make year-to-year comparisons of material changes in the line items.
III.Management need not explain the cause(s)of the material changes.
IV.Disclosure of material off-balance sheet transactions,arrangements,and obligations is required in each annual and each quarterly report.

A)I,II,and IV
B)II and III
C)I,III,and IV
D)I,II,III,and IV

Question 40

Which of the following statements concerning Form 10-Q is NOT true?

A)It is filed for all four quarters.
B)It is the quarterly report to the SEC.
C)It contains an update on significant matters occurring since the last quarter.
D)It includes comparative financial statements for the quarter presented.

Question 41

Each of the following questions names an item.Select the correct description of the item from this list.Indicate your selection by entering the letter of the description.
Descriptions

-Form 8-K

A)Provides preliminary information to investors about an upcoming issue.
B)Informs investors of an upcoming offering.
C)Required annual filing to the SEC.
D)Discloses unscheduled material events.
E)Includes amendments to the Securities Act,additional disclosure requirements,and other current issues regarding accounting and auditing principles and standards.
F)Results in a thorough examination by the SEC of a registration statement.
G)Issued by the staff of the SEC and contains differences that must be corrected in a registration statement before the securities may be offered or sale.
H)Quarterly report to SEC.
I)Includes new or revised administrative practices and interpretations used in reviewing financial statements.
J)Includes the results of actions taken against accountants or other participants because false or misleading statements were filed.
K)Includes Regulations S-X and S-K.

Question 42

Each of the following questions names an item.Select the correct description of the item from this list.Indicate your selection by entering the letter of the description.
Descriptions

-Staff Accounting Bulletins

A)Provides preliminary information to investors about an upcoming issue.
B)Informs investors of an upcoming offering.
C)Required annual filing to the SEC.
D)Discloses unscheduled material events.
E)Includes amendments to the Securities Act,additional disclosure requirements,and other current issues regarding accounting and auditing principles and standards.
F)Results in a thorough examination by the SEC of a registration statement.
G)Issued by the staff of the SEC and contains differences that must be corrected in a registration statement before the securities may be offered or sale.
H)Quarterly report to SEC.
I)Includes new or revised administrative practices and interpretations used in reviewing financial statements.
J)Includes the results of actions taken against accountants or other participants because false or misleading statements were filed.
K)Includes Regulations S-X and S-K.

Question 43

Each of the following questions names an item.Select the correct description of the item from this list.Indicate your selection by entering the letter of the description.
Descriptions

-Form 10-K

A)Provides preliminary information to investors about an upcoming issue.
B)Informs investors of an upcoming offering.
C)Required annual filing to the SEC.
D)Discloses unscheduled material events.
E)Includes amendments to the Securities Act,additional disclosure requirements,and other current issues regarding accounting and auditing principles and standards.
F)Results in a thorough examination by the SEC of a registration statement.
G)Issued by the staff of the SEC and contains differences that must be corrected in a registration statement before the securities may be offered or sale.
H)Quarterly report to SEC.
I)Includes new or revised administrative practices and interpretations used in reviewing financial statements.
J)Includes the results of actions taken against accountants or other participants because false or misleading statements were filed.
K)Includes Regulations S-X and S-K.

Question 44

Both the FCPA (Foreign Corrupt Practices Act of 1977)and SOX (Sarbanes-Oxley Act of 2002)contain provisions related to internal control.Discuss some significant differences between how the two acts impact internal control practices for publicly held companies.

Question 45

The items below are associated with the Securities and Exchange Commission.Describe or explain each item as concisely as possible.
(a)Customary Review
(b)Comment Letter
(c)"Red Herring" Prospectus
(d)"Tombstone Ad"
(e)Financial Reporting Releases
(f)Staff Accounting Bulletins
(g)Accounting and Auditing Enforcement Releases
(h)Management's Discussion and Analysis

Question 46

Companies issuing stock to the public have to aware of certain terms.Using complete sentences define the following:
a)Comment Letter.
b)Preliminary Prospectus.
c)Shelf Registration.

Question 47

Each of the following questions names an item.Select the correct description of the item from this list.Indicate your selection by entering the letter of the description.
Descriptions

-Form 10-Q

A)Provides preliminary information to investors about an upcoming issue.
B)Informs investors of an upcoming offering.
C)Required annual filing to the SEC.
D)Discloses unscheduled material events.
E)Includes amendments to the Securities Act,additional disclosure requirements,and other current issues regarding accounting and auditing principles and standards.
F)Results in a thorough examination by the SEC of a registration statement.
G)Issued by the staff of the SEC and contains differences that must be corrected in a registration statement before the securities may be offered or sale.
H)Quarterly report to SEC.
I)Includes new or revised administrative practices and interpretations used in reviewing financial statements.
J)Includes the results of actions taken against accountants or other participants because false or misleading statements were filed.
K)Includes Regulations S-X and S-K.

Question 48

The Securities Exchange Act of 1934 requires publicly held companies to file periodic financial disclosures as updates of their economic activity.The three basic forms used for this updating are Form 10-K,Form 10-Q,and Form 8-K.
Required:
Describe the information contained in each of the three basic forms noted above.

Question 49

Paul's Plumbing acquired Smithtown Distributors on January 15,20X8.Pansy's Flowers acquired Sam's Farm on January 1,20X7.In the 12/31/X7 financial statements filed with the SEC,Paul's Plumbing included a Pro Forma disclosure and Pansy's Flowers did not.If both acquisitions account for 100% of the common stock of the company acquired and are considered to be material,then can both filings be considered proper?

Question 50

Each of the following questions names an item.Select the correct description of the item from this list.Indicate your selection by entering the letter of the description.
Descriptions

-Accounting and Auditing Enforcement Releases

A)Provides preliminary information to investors about an upcoming issue.
B)Informs investors of an upcoming offering.
C)Required annual filing to the SEC.
D)Discloses unscheduled material events.
E)Includes amendments to the Securities Act,additional disclosure requirements,and other current issues regarding accounting and auditing principles and standards.
F)Results in a thorough examination by the SEC of a registration statement.
G)Issued by the staff of the SEC and contains differences that must be corrected in a registration statement before the securities may be offered or sale.
H)Quarterly report to SEC.
I)Includes new or revised administrative practices and interpretations used in reviewing financial statements.
J)Includes the results of actions taken against accountants or other participants because false or misleading statements were filed.
K)Includes Regulations S-X and S-K.