Corporate Financial Disclosure Answer Book

Federal law requires public companies to disclose financial and other information in accordance with strict standards, including thousands of SEC, FASB, PCAOB, and stock exchange pronouncements. Disclosure must be in a prospectus, as well as in annual and quarterly reports and proxy statements filed with the SEC.

Corporate Financial Disclosure Answer Book is your guide to this vital subject. Whether you are a lawyer, accountant, corporate officer, director, audit committee member, or investor, you will obtain detailed answers to virtually every regulatory question you are likely to encounter regarding financial disclosure—in readable plain English. The convenient question-and-answer format is ideal for beginners seeking a general understanding of a topic, as well as seasoned professionals grappling with critical issues. Semiannual supplements keep this valuable reference up to date in this rapidly evolving field, including requirements created by the massive Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 .

With Corporate Financial Disclosure Answer Book, you’ll be able to quickly obtain and easily understand answers to key questions about:

• Financial statement preparation
• Exchange Act registration and reporting
• Interactive data financial reporting and electronic filing
• Management’s discussion and analysis
• Derivatives disclosure
• Disclosure controls and procedures
• Internal control over financial reporting
• Executive compensation disclosure
• CEO and CFO certification of reports
• Pro-forma/non-GAAP financial information
• Audit committee responsibilities
• Auditor independence
• Financial restatements
• Regulation FD fair disclosure
• International accounting standards
• Financial statement audits
• PCAOB registration, inspections and enforcement
• Stock exchange listing standards
• And much more!

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PART I: FUNDAMENTALS OF FINANCIAL DISCLOSURE

Regulatory Framework

• Federal Securities Laws
• Securities and Exchange Commission
• Securities Act Registration
• Exchange Act Registration and Reporting
• Stock Exchange Listing Requirements
• Public Company Accounting Oversight Board
• State Boards of Accountancy
• State Blue Sky Laws
• American Institute of Certified Public Accountants
• Private-Sector Gatekeepers
• Research references

Financial Reporting

• Role of financial statements
• GAAP and the FASB
• Balance sheet
• Income statement
• Statement of cash flows
• Footnotes and MD&A

Financial Statement Audits

• Audit profession
• Audit engagement
• Audit report
• Alternatives to the audit
• Attestation report on internal control over financial reporting
• Records retention
• Auditors as defendants
• Research references

International Standards

• IFRS basics
• Transition to IFRS
• U.S. GAAP reconciliation
• Auditing standards
• Research references

Electronic Filing and Interactive Data

• Filing requirements
• Hardship exemptions
• Preparing submissions
• XBRL
• Interactive data financial reporting
• Research references

Acronyms and Abbreviations

PART II: SEC REQUIREMENTS

Management’s Discussion and Analysis

• Scope of disclosure
• Focus of disclosure
• Presentation of disclosure
• Forward-looking information
• Liquidity and capital resources
• Results of operations
• Critical accounting policies and estimates
• Interim period reporting
• Liability
• Research references

Off-Balance Sheet Arrangements

• "Off-balance sheet” defined
• Disclosure threshold
• Scope of disclosure
• Tabular disclosure of contractual obligations
• Presentation of disclosure
• Foreign private issuers
• Safe harbor for forward-looking information
• Research references

Derivatives Disclosure

• Accounting policy disclosure—Rule 4-08(n)
• Quantitative disclosure about market risk—Item 305(a)
• Tabular presentation
• Sensitivity analysis
• Value at risk
• Qualitative disclosure about market risk—Item 305(b)
• Item 305 general issues
• Safe harbor protection
• Disclosure required by GAAP
• Research references

Disclosure Controls and Procedures

• Definitions
• Creating a disclosure committee
• Establishing disclosure controls and procedures
• Evaluating disclosure controls and procedures
• Liability
• Research references

Internal Control Over Financial Reporting

• Definition
• Management’s annual assessment and report
• Material weakness and significant deficiency
• Quarterly evaluations
• Framework for evaluation
• Evaluation and reporting guidance
• Auditor’s attestation
• Research references

Executive Compensation

• Officers covered by disclosure requirements
• Compensation discussion and analysis
• Compensation committee report
• Summary compensation table
• Exercises and holdings of previously awarded equity
• Post-employment compensation
• Director compensation
• Scaled disclosure for smaller reporting companies
• Form 8-k disclosure
• TARP recipients
• Research references

Certification of Reports

• Section 302 certification
• Section 906 certification
• Liability
• Research references

Pro Forma/Non GAAP Financial Information

• Circumstances requiring proforma presentations
• Regulation G—disclosure of non- GAAP financial measures
• Inclusion of non-GAAP financial measures in SEC filings
• Non-GAAP disclosure in earnings releases
• Research references

Code of Ethics

• "Code of ethics” defined
• Code of ethics disclosure
• Code changes or waiver
• Foreign private issuers
• Investment companies
• Research references

Audit Committee

• Introducing the audit committee
• Proxy statement disclosures
• Pre-filing review of quarterly financials
• Pre-approval of audit and other accounting services
• Auditor required communications with audit committee
• Attorney’s duty to report wrongdoing
• Financial expert disclosure
• Audit committees of listed companies— Rule 10A-3
• Audit committee liability
• Research references

Auditor Independence

• General standard for auditor independence
• Financial relationships
• Employment relationships
• Business relationships
• Non-audit services
• Contingent fees
• Partner rotation
• Administering the engagement
• Compensation
• Quality control system
• Communication with audit committee
• Proxy and annual report disclosure
• Enforcement
• Research references

Audit Integrity

• Falsification of accounting records
• False statements to accountants and auditors
• Improper influence on conduct of audits
• Research references

Financial Restatements

• Materiality
• Press release
• Form 8-K disclosure
• Internal investigation
• Auditor’s response to illegal acts
• Amended quarterly or annual reports
• SEC inquiries
• Disgorgement of bonuses and profits—SOX 304
• Research references

Fair Disclosure

• Regulation FD basics
• Intentional and non-intentional disclosures
• Public disclosure requirement
• Liability
• Enforcement actions
• Research references

PART III: STOCK EXCHANGE REQUIREMENTS

Role of Stock Exchanges

• Listing standards
• SRO rulefiling requirements
• Research references

New York Stock Exchange Listing Standards

• Listing and delisting
• Disclosure and reporting
• Corporate governance
• Certifications and affirmations
• Research references

Nasdaq Stock Market Listing Standards

• Corporate governance
• Audit committee
• Code of conduct
• The PORTAL Market
• Research references

PART IV: PCAOB OVERSIGHT

About the PCAOB

• Establishment and organization
• Authority
• Budget and funding
• Accounting support fee
• SEC control
• Research references

Registration and Reporting

• Definitions
• Applying for registration
• Withdrawing from registration
• Annual and special reporting
• Public availability of applications and reports
• Enforcement
• Research references

Inspections of Registered Firms

• Frequency of inspections
• Conduct of inspections
• Draft inspection report
• Final inspection report
• Addressing quality control criticisms
• SEC review
• Inspections of foreign firms
• Research references

Auditing Standards and Related Rules

• Auditing standards
• Interim standards
• Related rules
• Ethics and independence
• Contingent fees
• Tax services
• Services related to internal control
• Research references

PCAOB Investigations

• Division of Enforcement and Investigations
• Testimony and document demands
• Asserting claims of privilege
• Confidentiality
• Rights of witnesses
• Noncooperation
• Research references

PCAOB Adjudications

• Commencement of disciplinary proceedings
• Hearing officer
• Prehearing procedure
• Hearings
• Settlement
• Disciplinary sanctions
• Appeals to the Board
• SEC review
• Research references

Table of Cases

Index