Understanding Corporate Annual Reports Financial Accounting 1A – Online By: Chak Lam Andy WONG Dr. Seyedin References: http://www.ibm.com/annualreport/2004/annual/guide_whatis.shtml http://thecaq.aicpa.org/Resources/PCAOB/ http://www.aicpa.org/audcommctr/guidance_resources/auditors_and_audit_committee/understanding_process/36.htm http://www.sec.gov/about/whatwedo.shtml http://fl1.findlaw.com/news.findlaw.com/hdocs/docs/gwbush/sarbanesoxley072302.pdf What is an annual report? A formal report on a company’s performance in the preceding year Name the federal government agency that requires a publicly held corporation to keep shareholders informed of its state of business. Securities and Exchange Commission (SEC) What is the …show more content…
A spate of highly publicized business failures, allegations of corporate improprieties and financial statement restatements. Under the new rules of the Sarbanes-Oxley Act of 2002, name eight types of services that are "unlawful" if provided to a publicly held company by its auditor. 1. bookkeeping or other services related to the accounting records or financial statements of the audit client 2. financial information systems design and implementation 3. appraisal or valuation services, fairness opinions, or contribution-in-kind reports 4. actuarial services 5. internal audit outsourcing services 6. management functions or human resources 7. broker or dealer, investment adviser, or investmentbanking services 8. legal services and expert services unrelated to the audit What is the mission of SEC? To protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation How many commissioners does SEC have and who appoints them? Five presidentially-appointed Commissioners How many divisions and offices does SEC have? Four divisions & nineteen offices Briefly explain the Securities Act of 1933 and the Securities Exchange Act of 1934. The Securities Act of 1933 requires that investors receive financial and other significant information concerning securities being offered for public sale; and prohibit deceit, misrepresentations, and other fraud in the sale of securities. The Securities Exchange Act of 1934 empowers the
The SEC assists in providing investors with reliable information upon which to make investment decision. The Securities Act of 1933 requires most companies planning to issue new securities to the public to submit a registration statement to the SEC for approval. The Securities Exchange Act of 1934 provides additional protection by requiring public companies and others to file detailed annual reports with the commission. Smackey Dog Food, need to file next forms:
Auditor independence and a prohibition on audit firms offering value-added (read "conflict of interest") services
The SEC was created due to the stock market crash of 1929 which led to the great depression. The SEC was created to protect investors in security exchanges such as the stock market. It is responsible for oversight of both private investment and corporate investment dealings.
The purpose of the Sarbanes-Oxley Act is to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities law, and for other purposes. (Lander, 2004) The Act created new standards for public companies and accounting firms to abide by. After multiple business failures due to fraudulent activities and embezzlement at companies such as Enron Sarbanes and Oxley recognized a need for the revamping of our financial systems laws, rules and regulations. Thus, the Sarbanes-Oxley Act was born.
You can use this workbook for analyzing many companies and saving your analysis for each one, like many professionals. Just like them, over time, you can compare a company’s actual performance to your analysis and predictions. Saving your analysis sheets can help sharpen you analytical skills.
Title II of Sarbanes-Oxley covers Auditor independence, it contains nine sections all covering different aspects of auditors’ independence. Section 201, Services outside the Scope of Practice of Auditors, details what activities are not allowed to be performed by auditors for a client if they are to be performing an audit for that client. Detailed in section 201 as prohibited in order to maintain auditor independence are legal and expert services unrelated to the audit, any investment advisement, investment banking services, management or human resource functions, internal audit outsourcing services, actuarial services, appraisal or valuation services, financial
stood accused of in a series of scandals that nally came to a head in the largest bankruptcy
5. Although they were created just a year apart from one another, but there are still some big differences between the Securities Act of 1933 and the Securities Act of 1944. Under the Securities Act of 1933 the auditors are responsible for providing due diligence. Auditors are able to avoid the liability if they can demonstrate the due diligence. Under the Securities Act of 1934, it is the public companies who are required to file annual audited financial statements with the SEC. Also, the burden of proof belongs to the third party to prove the existence of someone who’s intent to deceive, manipulate or knowingly reckless.
These acts were a violation of the Securities Act of 1933. The objectives of the Securities Act of 1933 are that investors obtain accurate reports of a company's commerce and to prevent misleading securities sales (USSEC, 2007). Although, the USSEC cannot guarantee the information provided by each company; the Securities Act of 1934 grants authority to the USSEC with disciplinary authorization (USSEC, 2007).
On the liabilities and equities side, the most noticeable aspect is the revolving line of credit spike in 2004. Revolving lines of credit are typically used to provide liquidity for a company’s day-to-day operations so this is very concerning.
This paper provides an in-depth evaluation of Sarbanes-Oxley Act, which is said to be promoted to produce change in the corporate environment, in general, by stressing issues of public accountability and disclosure in the financial operations of business. It explains how this is an Act that represents the government's and the Security and Exchange Commission's concern in promoting ethical standards in terms of financial disclosure in the corporate environment.
After the end of every year, major companies produce an annual report to show shareholders or poteintial investors their performers for the year. Throught this report, the company is able to plan and set goals for the next trading year. Therfore, allowing them to identify their weakness and streanght.
U.S. Securities and Exchange Commission. Sarbanes-Oxley Act of 2002. Retrieve from: https://www.sec.gov/about/laws/soa2002.pdf. October 27, 2014.
I chose Google for this case study. Google has been both a pioneer and is a leader in the online world. Founders Larry Page and Sergey Brin met at Stanford University in 1995. By 1996, they had built a search engine (initially called BackRub) that used links to determine the importance of individual webpages. Google.com was registered as a domain on September 15, 1997. The name - a play on the word "googol” - reflects Larry and Sergey 's mission to organize a seemingly infinite amount of information on the web. Google is most profitable through its online advertising though it has also become very popular in many realms of the online world and technology both.
1 - What were the business risks Enron faced, and how did those risks increase the likelihood of material misstatements in Enron’s financial statements?