2009 May | Rich and Wealth

Archive for May, 2009

Generally Accepted Accounting Principles and the Securities and Exchange (2)

The SEC also will communicate problems to the FASB, respond to accounting standards proposed by the FASB, known as exposure drafts, and provide the FASB with counsel upon request. Finally, the SEC will, on occasion, issue its own standards for accounting and disclosure practices for companies falling under its jurisdiction. Good examples of such rules generated by the SEC are the Staff Accounting Bulletins on materiality, restructuring charges, and revenue recognition, recently released by the SEC in response to the chairman’s action plan. (more…)

Posted in: General | Posted by: Donalds | May 30th, 2009 | 3 Comments

Generally Accepted Accounting Principles and the Securities and Exchange

Section 13(b)(2)(B) states in part that internal controls in place should permit preparation of financial statements “in conformity with generally accepted accounting principles.” 43 The SEC has generally permitted the private sector, and since 1973, the Financial Accounting Standards Board, to develop accounting principles for use in the United States. Accounting principles developed by the FASB have the full support of the SEC. As such, the SEC does not play a major role in the development of accounting principles. (more…)

Posted in: General | Posted by: Donalds | May 27th, 2009 | 1 Comment

Financial Reporting and Disclosure Provisions (2)

Section 13(b)(2)(B) is referred to as the “internal control” provision of the 1934 Act. The section is designed to assure that a company filing with the commission maintains a system of internal controls that is sufficient to provide financial information that portrays the transactions and events affecting it, consistent with management’s authorization and in accordance with generally accepted accounting principles. Evidence that financial statements are not in accordance with GAAP, or of transactions that have been accounted for outside of corporate prescriptions, even if by a rogue member of management, could indicate a violation of this section of the Securities Act. Section 13(b)(2)(B) states in part: (more…)

Posted in: General | Posted by: Donalds | May 24th, 2009 | 1 Comment

Financial Reporting and Disclosure Provisions

Enforcement actions against companies and individuals involving financial reporting and disclosure issues typically focus on several sections and rules of the 1933 and 1934 acts. Given its ongoing disclosure requirements, key sections and rules of the 1934 Act are particularly prominent, especially three subsections from Section 13—Section 13(a), Section 13(b)(2)(A), and Section 13(b)(2)(B). (more…)

Posted in: General | Posted by: Donalds | May 21st, 2009 | 1 Comment

Enforcement Actions

The SEC’s Division of Enforcement is responsible for investigating potential violations of the Securities Acts. Violations involving financial reporting that are deemed to be a misrepresentation or omission of important information would fall under the division’s jurisdiction. Cases for investigation are identified from many sources, including its own surveillance activities, other divisions of the SEC, self-regulatory organizations, the financial press, and investor complaints. (more…)

Posted in: General | Posted by: Donalds | May 18th, 2009 | 1 Comment

ENFORCING THE SECURITIES LAWS (2)

The 1934 Act established the SEC and extended the corporate disclosure requirements. Generally, while the 1933 Act contained disclosure requirements for newly issued securities, under the 1934 Act the disclosure requirements became ongoing. That is, as long as the securities of an issuer subject to the requirements of the 1933 Act were outstanding, the subject company would be required to file periodic reports with the SEC to update the information contained in its original filing. The purpose of these recurring disclosure requirements was to ensure that the public gets accurate and timely information about the company. (more…)

Posted in: General | Posted by: Donalds | May 15th, 2009 | 1 Comment

ENFORCING THE SECURITIES LAWS

Given the SEC’s heightened concern about the accuracy of financial statements filed with it, we deemed it appropriate to look more closely at how the SEC’s Division of Enforcement enforces the securities laws that govern financial reporting. In this section, we look closer at the securities laws themselves, including key sections and rules of the laws that deal with accounting issues and we examine the workings of the Division of Enforcement, including the penalties available to it in the event of noncompliance. (more…)

Posted in: General | Posted by: Donalds | May 12th, 2009 | 1 Comment

SUMMARY (4)

Public Oversight Board An independent private-sector body that oversees the audit practices of certified public accountants who work with SEC-regulated companies. Restructuring Charges Costs associated with restructuring activities, including the consolidation and/or relocation of operations or the disposition or abandonment of operations or productive assets. Such charges may be incurred in connection with a business combination, a change in an enterprise’s strategic plan, or a managerial response to declines in demand, increasing costs, or other environmental factors. (more…)

Posted in: General | Posted by: Donalds | May 9th, 2009 | No Comments

SUMMARY (3)

Litigation Release Official SEC record of a settlement or a hearing scheduled before a civil court judge of an alleged violation of one or more sections or rules of the securities laws. Typically, a litigation release entails a more serious violation of the securities laws than an administrative proceeding. (more…)

Posted in: General | Posted by: Donalds | May 6th, 2009 | 1 Comment

SUMMARY (2)

Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees A committee formed in response to SEC chairman Arthur Levitt’s initiative to improve the financial reporting environment in the United States. In a report dated February 1999, the committee made recommendations for new rules for regulation of financial reporting in the United States that either duplicated or carried forward the recommendations of the Treadway Commission. (more…)

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