What the Accountant Must Know about SEC Requirements

By Chiu, Peter; Siegel, Joel | The National Public Accountant, November 1990 | Go to article overview

What the Accountant Must Know about SEC Requirements


Chiu, Peter, Siegel, Joel, The National Public Accountant


What the Accountant Must Know About SEC Requirements

The accountant who is or may become involved with SEC filing requirements must be familiar with the provisions of the SEC as it affects his or her particular requirements to optimally perform the accounting, reporting and disclosure functions. In addition, familiarity is required with regard to prospective financial statements. The practitioner must be on guard that no violations exist regarding the Accounting and Auditing Enforcement Releases. The accountant also is sometimes faced with the question of whether the company should go from private to public or vice versa. Guidelines are offered in making this decision.

SEC disclosures require a five-year summary of earnings and management's discussion and analysis of earnings. Quarterly data are also presented.

Regulation S-X Requirements

S-X requirements of the SEC govern the annual report. All financial statements presented in annual reports must conform to the S-X accounting and disclosure rules. The stockholders' report must include three-year comparative financial statements prepared in conformity with Regulation S-X. Form 10-K must be signed by a majority of the board of directors. There is significant expansion to management's discussion and analysis.

To accomplish uniformity of financial statements, S-X has been revised to bring it into conformity with generally accepted accounting principles (GAAP).

S-X's Article 3 serves as the general instructions for financial statement presentation in all disclosure documents. Mandated by the uniform instructions are:

1. Audited balance sheet of the

close of the two most recent

fiscal years. 2. Audited income statement and

changes in cash flow for each

of the three most recent fiscal

years prior to the date of the

most recent audited balance

sheet.

A 10-K annual filing must be filed within 90 days subsequent to the closing of the registrant's fiscal year. Form 10-Q, a quarterly filing, must be filed with the SEC within 45 days subsequent to the end of each of the first three quarters.

In the case of registration statements, the SEC has 135 days as the essential date for ascertaining the aging of the financial statements at the anticipated effective date of the registration statement, or a proposed mailing date of the proxy statement, which includes financial statements.

Filed registration is effective 90 days subsequent to the end of the fiscal year, but prior to the 135th day. It must include audited financial statements for the last two years and the three-year income and changes in cash flows statements. If the filing is 135 days or more subsequent to the year-end, the filing has to be kept current with an unaudited interim balance sheet as of a date within 135 filing days. In addition, the filing must include an unaudited income and changes in cash flows for the interim period and for the corresponding period of the prior year.

Regulation S-X relates to the form and content of financial statements filed with the SEC. It also deals with the qualifications of accountants who report on financial statements and schedules filed with the SEC.

On occasion, financial reporting releases are issued by the SEC in connection with Regulation S-X. They cover accounting, reporting and disclosure requirements. Guidance along with acceptable and unacceptable cases of the independence of accountants are provided.

Integrated Disclosure System (IDS)

The SEC's Integrated Disclosure System consists of audited financial statements, management's discussion and analysis of operations and selected income statement and balance sheet information. The package is common to the annual report, Form 10-K, and most 1933 Act filings.

In Form 10-K (annual report), Part I includes the business, properties, litigation, security ownership of beneficial owners and management. …

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