Cpa Review- Far 1-9 (Sec Reporting Requirements)

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Overview of SEC Reporting Requirements (2)

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-The SEC requires that more than 50 forms be filed to comply with reporting requirements.

-Filed electronically through the electronic data gathering, analysis, and retrieval system (EDGAR) and are available online to the public.

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Securities Offering Registration Statements (5)

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When a company issues new securities, it is required to submit a registration statement to the SEC that includes:

1. Disclosures about the securities being offered for sale
2. The relationship of the new securities to the company's other securities
3. Information similar to that filed in the annual filing
4. Audited F/S's
5. A description of business risk factors

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From 10-K (3)

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-Must be filed annually by U.S. registered companies.
-Filing deadline is 60 days after the end of the fiscal year for large accelerated filers*, 75 days for accelerated filers**, and 90 days for all other registrants.
-These forms contain financial disclosures, including a summary of financial data, management's discussion and analysis (MD&A), and audited statements prepared using U.S. GAAP.

Hint 3

*Large accelerated filer ia an issuer with a worldwide market value of $700 million or more.
**Accelerated filer is an issuer with worldwide market value of $75 million or more but less than $700 million

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Form 10-Q (3)

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-Must be filed quarterly.
-Deadline is 40 days after the end of the fiscal quarter for large accelerated and accelerated filers, and 45 days after for all other registrants.
-Form contains unaudited F/S's, interim period MD&A, and certain disclosures.

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Form 11-K

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-Annual report of a company's employee benefit plan(s).

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Form 20-F (3)

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-Filed by other non-U.S. registrants.
-Similar to Form 10-K and contain financial disclosures, including a summary of financial data, MD&A, and audited F/S's.
-Must be prepared using U.S. GAAP, IFRS, or a comprehensive body of accounting principles other than GAAP and IFRS.

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Form 40-F (3)

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-Filed by specific Canadian companies registered with the SEC.
-Similar to Form 10-K and contain financial disclosures, including a summary of financial data, MD&A, and audited F/S's.
-Must be prepared using U.S. GAAP, IFRS, or a comprehensive body of accounting principles other than GAAP and IFRS.

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Form 6-K (2)

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-Filed semi-annually by foreign private issuers.
-Similar to Form 10-Q and contains unaudited F/S's, interim period MD&A, and certain disclosures.

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Form 8-K

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-Filed to report major corporate events such as corporate asset acquisitions or disposals, changes in securities and trading markets, changes to accountants of F/S's, and changes in corporate governance or management.

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Form 3, 4, and 5

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-Required to be filed by directors, officers, or beneficial owners of more than 10% of a class of equity securities of a registered company.

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Regulation S-X

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-Here the SEC sets forth the "form and content" and requirements for interim and annual F/S's to be filed with the SEC.

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Requirements for Interim Financial Statements

Review Requirement and Statements and Periods Presented

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1. Review Requirement: interim F/S's filed with the SEC must be reviewed by an independent public accountant and the review report must be filed with the F/S's.

2. Statements and Periods Presented: should include (1) B/S's as of the end of the most recent fiscal quarter and as of the end of the preceding fiscal year*, (2) I/S's for the most recent fiscal quarter, for the period between the end of the preceding fiscal year and the end of the most recent fiscal quarter, and for the corresponding periods presented of the preceding fiscal year**, and (3) Statements of C/F's for the same periods as the I/S's.**

-Interim U.S.- quarterly
-Interim Foreign- semiannually

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*A B/S for the corresponding fiscal quarter for the preceding fiscal year is not required unless necessary to understand the impact of seasonal fluctuations.

**F/S's may also include I/S's/Statements of C/F's for the cumulative 12-month period ended during the most recent fiscal quarter and the corresponding preceding period.

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Requirements for Interim Financial Statements

Adjustments for Fair Presentation

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-Interim F/S's should reflect adjustments ("the accruals") necessary to fairly state the results of the interim periods.
-Adjustments include estimated provisions for bonus and profit sharing arrangements.
-F/S's should include a detailed description of the nature and amount of adjustments that are not normal recurring adjustments.

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Requirements for Interim Financial Statements

Condensed Financial Statements

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Interim F/S's may be condensed F/S's.

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Requirements for Interim Financial Statements

Disclosure

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-Disclosures should be sufficient so that the interim information is not misleading.

1. Omitted Disclosures: may omit the summary of significant accounting policies, the details of accounts that have not changed significantly since the end of the most recent fiscal year, and the detailed disclosures (described below).

2. Required Disclosures: should include (1) Material Contingencies and (2) Events subsequent to the end of the most recent fiscal year that have a material impact on the entity*

Hint 15

*Includes changes in accounting principles and practices (including the date of change and reasons for the change), changes in estimates, changes in the status of long-term contracts, significant new borrowings or modifications of financing arrangements, and business combinations or dispositions.

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Requirements of Annual Financial Statements

Audit Requirement and Periods Presented

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1. Audit Requirement: annual F/S's filed with the SEC must be audited by an independent public accountant and the audit report must be filed w/ the F/S's.

2. Periods Presented: must include B/S's for the 2 most recent fiscal years and statements of income, changes in owners' equity, and CF's for each of the 3 fiscal years preceding the date of the most recent audited balance sheet.

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IFRS vs. U.S. SEC

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IFRS requires, at a minimum, 2 B/S's, 2 statements of CI (and net income if using the 2-statement approach), 2 statements of changes in equity, 2 statements of CF's, and related notes.

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Requirements of Annual Financial Statements

Disclosure Requirements

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The following items must be disclosed in the F/S's or notes:
(1) Dividends per share (and total for each class), (2) Principles of consolidation or combination, (3) Assets subject to lien, (4) Defaults with respect to any issue of securities or credit arrangements that haven't been cured, (5) Preferred shares disclosures, (6) Restrictions that limit the payment of dividends, (7) Significant changes in bonds, mortgages, or similar debt, (8) Summarized financial information of subsidiaries not consolidated and 50% or less owned entities, (9) Income tax expense, (10) Warrants or rights outstanding, (11) Related party transactions which affect the F/S's, (12) Repurchase and reverse repurchase arrangements, (13) Accounting policies for derivative instruments.

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XBRL (3)

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-(Extensible Business Reporting Language) is a royalty-free, open specification for software that uses XML (Extensible Markup Language) data tags to describe financial information for businesses and financial reporting.
-It is a next generation language after HTML which tells computers how to display text.
-XML and XBRL tell computers how to interpret the context of the text.

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Tag

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-A "macine-readable code" that gives a standard definition for each line item in an I/S, CF statement, B/S, other financial/non-financial data, and data contained in the notes to the F/S's.
-Include descriptive labels, definitions, references to U.S. GAAP, and other elements that provide contextual information that allow data to be recognized and processed by software.

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Taxonomy

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-Defines the specific tags and include:

1. XBRL U.S. GAAP Financial Reporting Taxonomy- maintained and updated by the FASB and the Financial Accounting Foundation
2. XBRL IFRS Taxonomy- maintained by the IFRS Foundation
3. Global Ledger Taxonomy- independent of other reporting standards or system types that permits flexible, multi-national consideration.
4. Industry Specific Taxonomies
5. Company Specific Tags- companies can create their own tags

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Instance Document

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XBRL formatted document that contains tagged data.

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SEC Interactive Data Rule

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-Requires U.S. public companies and foreign private issuers that use U.S. GAAP, as well as private issuers that use IFRS, to present F/S's and any applicable F/S schedules in an exhibit prepared using XBRL.
-This exhibit is required with the filers' SEC registration statements, quarterly and annual reports, and reports 6-K and 8-K containing revised or updated F/S's.

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Phase-In Periods

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-SEC is phasing in the XBRL reporting requirement over 3 years
1. Phase-In Year 1: domestic and large accelerated filers that use GAAP and have a worldwide public float above $5 billion were required to begin using with the first periodic report* on or after June 15, 2009.
2. Phase-In Year 2: all other domestic and foreign large accelerated filers that use GAAP for the fiscal period ending on or after June 15, 2010.
3. Phase-In Year 3: all remaining filers using GAAP including smaller reporting companies and all foreign private issuers, on or after June 15, 2011

Hint 24

*Form 10-Q, Form 20-F, or Form 40-F

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Data Tagging Details

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-Tagged disclosures must include the primary F/S's, notes, and F/S schedules.
-Filer's primary F/S's are required to be tagged in detail.
-F/S footnote and schedule tagging is broken into 4 different levels.*
1. Level 1: each complete footnote and schedule is tagged as a single block of text
2. Level 2: each significant accounting policy w/in the significant accounting policies footnote is tagged as a single block of text
3. Level 3: each table w/in each footnote or schedule is tagged as a separate block of text
4. Level 4: w/in each footnote/schedule, each amount (monetary/percentage/number) is required to be separately tagged.

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*Level 1 tagging is required for a company's first XBRL submission. Level 1-4 tagging is required starting one year from the filer's initial submission.

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Modified Liability (XBRL)

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XBRL exhibits submitted to the SEC are subject to modified liability for 24 months from the time the filer first is required to submit interactive data files.
-Modified liability provision will terminate completely on 10/31/14.
-During the modified liability period, the interactive data files will be protected from liability for failure to comply with the tagging instruments if the failure occurred despite the filer's good faith effort and the filer corrected the failure promptly after becoming aware of it.

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30-Day Grace Period (XBRL)

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-Each company's initial interactive data exhibit will be required within 30 days after the earlier of the due date or filing date of the related report or registration statement.
-Filers will also receive a 30-day grace period for the first filing that is required to have footnotes and schedules tagged using all levels of detail.

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Posting in a Corporate Web Site (XBRL)

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-Information submitted by a filer to the SEC in interactive data format must also be posted to the filer's corporate Web site no later than the end of the calendar day on which the filer filed or was required to file the related registration statement or report with the SEC, whichever is earlier.