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Essential SEC Filings Questions and Answers



Essential SEC Fillings Questions and AnswersThe Securities and Exchange Commission (SEC) requires full and fair disclosure in connection with the offering and issuance of securities to the public. The CFOs, Controllers, Treasurers, and accountants who work for company that offer and issue securities to public should be familiar with the major provisions of the Securities Act of 1933 and the Securities Act of 1934. The SEC’s disclosure rules were enhanced by the Sarbanes-Oxley Act of 2002. The accounting requirements of the SEC are specified mostly in Articles 3A through 12 of Regulation S-X, Financial Reporting Releases (FRRs), Accounting and Audit Enforcement Releases (AAERs), and Industry Guides.

This post provides answers to many questions regarding the SEC filings. This is by no meant all inclusive, but sure it answers most of the essential issues on the SEC filings.




  • Q = Question
  • A = Answer
  • Most questions and answers designed to be in order and tightly related. However, some maybe not, although they are remain relevant.


Qestion [Q]: What SEC rules apply to the issuance of securities for the first time?

Answer [A]: The Securities Act of 1933 (as amended) pertains to the initial offering and sale of securities. It does not apply to the subsequent trading of securities. The Act requires the filing of a registration statement with the SEC so as to prevent misrepresentation.


Q: What SEC rules apply to the subsequent trading of securities?

A: The Securities Act of 1934 regulates the subsequent trading of securities on the various national stock exchanges. A scaled-down version of the 1933Act registration statement must be filed by the company if its securities are to be traded on a national exchange. The annual Form10-K and the quarterly Form 10-Q are required to be filed.


Q: What should the Basic Information Package contain?

A: The complexity of the reporting requirements under the 1933 and 1934 Acts was somewhat relieved when the SEC adopted the Integrated Disclosure System, which requires the Basic Information Package (BIP). The BIP includes:

  • Audited balance sheets for the last two years and audited statements of income, retained earnings, and cash flows for the most recent three years
  • Management’s discussion and analysis of the company’s financial position and operating results
  • A five-year summary consisting of selected financial information


Q: What information is required in the S Forms?

A: Here are informations required on the S Forms:

  • Form S-1 is typically used by a company that wants to sell securities and that has been subject to the SEC reporting requirements for less than three years. The form typically includes: (a) A description of the securities being registered; (b) A summary of the business including pertinent industry and segment information; (c) A listing of properties; (d) Background and financial information concerning the company’s directors and officers; (e) Selected financial information over the last five years, including sales, profit, divisions, and total assets
  • Form S-2 is a short form that is used by issuers who have been reporting to the SEC for at least three years and have voting stock held by non-affiliates of less than $150million.
  • Form S-3 may generally be used by a company that has at least $150 million of voting stock owned by non-affiliates. It may also be used if the company issues $100 million of securities and the annual trading volume is at least 3 million shares.
  • Form S-4 is filed for securities issuances arising from business combinations.
  • FormS-8 is filed when registering securities to be offered to employees under an employee benefit plan. Information presented is usually restricted to a description of the securities and the benefit plan.
  • Form S-18 is filed when the company’s objective is to obtain capital of $7.5 million or less. Although disclosures shown in Form S-18 are very similar to those in Form S-1, some differences exist. Form S-18 does not mandate management’s discussion and analysis. It also requires only one year’s audited balance sheet and two years’ audited statements of income and cash flows.


Q: What should the CFO discuss when reporting to stockholders?

A: Management’s discussion and analysis is an important element of the registration filing and provides an explanation of the significant changes in financial position and results of operations, including:

  • Results of operations
  • Unusual or infrequent items
  • Liquidity
  • Capital resources
  • Significant uncertainties
  • Forecasted data may be presented.


Q: What disclosures are required under Regulation S-X?

A: In general, the accounting rules under Regulation S-X parallel generally accepted accounting principles (GAAP). However, some disclosure rules under Regulation S-X are more expansive. For example, financial statements filed with the SEC require these disclosures that are not usually included in financial statements under GAAP:

  • Lines of credit
  • Compensating balance arrangements
  • Current liabilities if they represent in excess of 5 percent of the entity’s total liabilities

Q: What disclosures are mandated under Regulation S-K?

A: Regulation S-K provides disclosures for information that is not part of the financial statements and includes:

  • General data, such as the SEC’s policies on projections and security ratings
  • Selected financial information and changes in and disagreements with the independent auditor applicable to accounting matters and financial disclosures
  • Description of the company’s securities, market price of such securities, dividends paid, and associated stockholder matters
  • Description of the business, its property, and litigation
  • Disclosures related to directors and executive officers, executive pay, and security ownership of management
  • Recent sales of unregistered securities and indemnification of directors and officers


Q: What does Regulation S-B apply to?

A: Regulation S-B relates to financial and nonfinancial information in registration statements of small businesses.


Q: What information must be filed annually with the SEC?

A: To comply with the Securities Act of 1934, most registrants must file each year a Form 10-K. It is due within 60 days after the reporting year-end. Some required disclosures are financial statements, management’s discussion of operations, litigation, executive compensation, and related party transactions. The rules apply to public companies having a market value capitalization of $75 million or more.


Q: What if something important suddenly happens?

A: Form 8-K has usually within 15 days to be filed immediately after a significant event occurs materially affecting the company’s financial status and/or operating performance. Such events may include bankruptcy, acquisition or disposition of assets, change in control, change in out-side auditor, and other important issues (e.g., litigation).


Q: What information should be filed on an interim basis?

A: Form 10-Q is a quarterly filing updating for changes in financial position and operations since the filing of the last Form 10-K. Form 10-Q is due within 35 days after the end of each of the first three fiscal quarters.


Q: What about electronic information?

A: The SEC’s electronic data-gathering, analysis, and retrieval (EDGAR) system for public companies has registration, documents, and other data available via online databases. You can use EDGAR to obtain information, for research purposes, on how other entities have filed information to the SEC.


Q: What about takeover regulation?

A: If an investor acquires more than a 5 percent ownership interest of a company, it must file with the Securities and Exchange Commission (SEC), target business, and its stockholders the investor’s identity, the source of financing, and the purpose of the acquisition.


Q: What about unresolved matters?

A: In 2006, the SEC required most business entities to include a footnote on ‘‘unresolved staff comments’’. The company must disclose any significant comments from an SEC review of its filings, issued more than 180 days before year-end or still unresolved by the date of Form 10-K. Examples of such matters include accounting violations, disclosures or procedural questions, and financial statement item restatements.


Q: How about significant financial statement misstatement?

A: SEC Staff Accounting Bulletin (SAB) No. 108 gives guidance on quantifying material financial statement misstatement including the effect of carryover and reversal of prior-year restatements. The SEC will not object to a company making a one-time cumulative effect adjustment to correct mistakes, from prior years, that are qualitatively and quantitatively immaterial, based on appropriate use of the registrant’s previously used approach.

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