Question

*List the due process steps followed by the FASB to establish financial accounting and reporting standards. You can find the answer at fasb.org.

*List the purpose of forms 10-Q, 10-K, and 8-K that a U.S. registrant is required to file with the U.S. Securities and Exchange Commission under the Securities and Exchange Act of 1934.

*List the significant components of Form 10-Q and Form 10-K filed with the U.S. Securities and Exchange Commission.

Answer 1

List the due process steps followed by the FASB to establish financial accounting and reporting standards.

Financial Accounting Standards Board has established the following procedures for developing accounting standards. These procedures are used for major projects. Not all of the steps may be necessary for projects focused on narrower application and implementation issues. Many other steps are followed during the course of the project that are not specifically required by the Board’s Rules of Procedures.

1. The Board receives requests/recommendations for possible projects and reconsideration of existing standards from various sources.
2. The FASB Chairman decides whether to add a project to the technical agenda, subject to oversight by the Foundation's Board of Trustees and after appropriate consultation with FASB Members and others.
3. The Board deliberates at one or more public meetings the various issues identified and analyzed by the staff.
4. The Board issues an Exposure Draft. (In some projects, a Discussion Paper may be issued to obtain input at an early stage that is used to develop an Exposure Draft.)
5. The Board holds a public roundtable meeting on the Exposure Draft, if necessary.
6. The staff analyzes comment letters, public roundtable discussion, and any other information. The Board redeliberates the proposed provisions at public meetings.
7. The Board issues an Accounting Standards Update describing amendments to the Accounting Standards Codification.

Purposes of form 10-Q:- The SEC form 10-Q is a comprehensive report of a company's performance that must be submitted quarterly by all public companies to the Securities and Exchange Commission. In the 10-Q, firms are required to disclose relevant information regarding their financial position. There is no filing after the fourth quarter, because that is when the 10-K is filed.

Federal securities laws mandate that publicly traded companies must provide certain information. These disclosures may occur periodically or as specific events occur. A company utilizes Form 10-Q upon the completion of each quarter to disclose unaudited financial statements and give an overview of the company’s financial situation. The exact filing dates depend on the organization’s fiscal year, but it is necessary to file three 10-Q reports each year.

Significant Components of form 10-Q Filing

There are two parts to a 10-Q filing. The first part contains relevant financial information covering the period. This includes condensed financial statements; management discussion and analysis on the financial condition of the entity; disclosures regarding market risk; and internal controls. The second part contains all other information. This includes legal proceedings; unregistered sales of equity securities; the use of proceeds from the sale of unregistered sales of equity; and defaults upon senior securities. The company disclosed any other information – including the use of exhibits – in this section.

Purposes of form 10-K:- A 10-K is a comprehensive summary report of a company's performance that must be submitted annually to the Securities and Exchange Commission (SEC). Typically, the 10-K contains much more detail than the annual report, particularly what an investor would want to know prior to buying or selling shares of stock in the corporation or investing in the firm’s corporate bonds.

Significant Components of Form 10-K Filing   

The government requires companies to furnish 10-K forms so that investors have fundamental information about companies so that they can make an informed investment decision.

The 10-K includes five distinct sections:

• Business provides an overview of the company’s main operations, including its products and services, i.e., how it makes money.
• Risk Factors outlines any and all risks that the company faces or could face in the future, typically listed in order of importance.
• Selected Financial Data details specific financial information about the company over the last five years. The idea behind this section is present more of a near-term view of the company’s recent performance
• Management’s Discussion and Analysis of Financial Condition and Results of Operations, known as MD&A, gives the company an opportunity to explain its business results from the previous fiscal year. This section is where the company can tell its story in its own words.
• Financial Statements and Supplementary Data includes the company’s audited financial statements, including the income statement, balance sheets and statement of cash flows. Also included is a letter from the company’s independent auditor certifying the scope of their review.

Purposes of form 8-K:- An 8-K is a report of unscheduled material events or corporate changes at a company that could be of importance to the shareholders or the Securities and Exchange Commission (SEC). Also known as a Form 8-K, the report notifies the public of events reported including acquisition, bankruptcy, resignation of directors or a change in the fiscal year.

Significant Components of Form 8-K Filing

The U.S government enables investors to get a clear view of a company's history and progress, and a glimpse of its future, through a set of required filings. These filings are registration statements, formal and periodic reports and other forms that are provided to the U.S. Securities and Exchange Commission (SEC).

The SEC is a regulatory watchdog, which was created in the 1930s to help stop stock manipulation and fraud. It collects documents detailing the financial and operational health of domestic and foreign companies that have stock owned and traded by the public.

The SEC checks the quality of information provided in those forms and makes sure the information meets certain requirements. Many investors take a look at these filings as well and often select a particular form over another. They study the forms for the clues they may offer, a quick analysis of the company's performance, or for a more comprehensive description of its activities. Let's take a look at the SEC filings available to investors and what they can tell you about a company.