Financial Reporting and the SEC
In an eight- to ten-page paper (not including the title and reference pages) research and discuss the SECâ€™s company filings requirements. In your paper:
- Describe how investors can use the Securities and Exchange Commissionâ€™s (SEC) EDGAR database (Links to an external site.) to quickly research a companyâ€™s financial information filed on Forms 10-K and 10-Q.
- Identify the differences between the Annual Report send to shareholders and the Annual Report on Form 10-K, which must be filed with the SEC.
- Describe the contents of:
- Form 10-K SEC filings
- Management Discussion and Analysis
- Auditorsâ€™ Report
- Selected Financial Data
- Discuss how the SECâ€s requirement for domestic and foreign companies using US GAAP to provide their financial statements in the XBRL format can improve financial reporting?
- Most publicly traded companies are examined by numerous analysts. Find analystsâ€™ ratings about a company of your choice by visiting biz.yahoo.com/I. Provide a comparison over time and across companies in the same industry by answering the following questions:
- How many analysts rated the company?
- What percentage rated it a strong buy?
- What was the average rating for the week?
- Did the average rating improve or decline relative to the previous week?
- 8 pages
Your paper should be formatted according to APA style as outlined in the Ashford Writing Center (Links to an external site.). It must include at least six scholarly sources, including a minimum of three from the Ashford University Library, in addition to the text.
I wrote some of it here it is
The Securities and Exchange Commission (SEC) is described as a part of the government that monitors a variety of financial reports to ensure trades and exchanges are completed properly throughout businesses in the United States and internationally (Kimmel, Weygandt, Kieso, 2016). Information is limited based on the person who is viewing the financial reports and has many purposes. Shareholders and commissions rely on these reports to verify information that ensures that the company will have long term success (Mauboussin, 2012). This paper will describe the use of EDGAR database and how it pertains to investors, discuss differences between annual reports viewed by shareholders and the form 10-K annual reports, explain content and requirements when U.S. GAAP is used.
Companies will stay compliant with the SEC requirements by submitting proper forms and documents. EDGAR database allows the public to view a companyâ€™s data at no charge. This allows investors to acquire information on the financial and registration information of the company. 10-K and 10-Q forms contain the companyâ€™s financial information that must be submitted to the SEC, the information is then reviewed and compared through tools that are contained within the EDGAR system (Haendler, 2017).
Although 10-K and 10-Q forms show much of the same data the 10-Q forms are filed quarterly and 10-K forms are filed and submitted annually. Late filing can cause audit risks, misinformation provided, and other costs for the company (e.g. DeAngelo, 1981: Becker et. al. 1998). 10-K and 10-Q forms can provide information concerning the companyâ€™s financial statement. However, the information will not provide information to invest safely therefore, the EDGAR system can help investors with information prior to taking that risk of investing with a company.
Differences Between Annual Reports and Shareholder/10-K Forms
The annual report is a report that is designed by the CEO of the company concerning the financial state of the company. This report contains financial date information from prior years and details for new products. This form is reviewed by the shareholders of the company and willprovide information to help the decision if the company is worthwhile investing in. The annual report usually contains charts, graphs, and photos to help encourage the shareholders to invest. Companies that are publicly traded must always have shareholders and they must always be looking for potential investors and comply with the government regulatory agencies on their financial and operational status (Bartlett & Chandler, 1997).
The 10-K form is needed when a company goes public. Reports must be submitted annually to the securities and exchange commission This form is designed to detail financial information, the health of the company, risks that the company has taken and where it stood financially in the prior year. The form will list the cost of operation, describe the type of business, and any questions or concerns by the SEC. The 10-K document will provide lawsuit information if they exist, financial information for the past three years, opinions from management concerning the businessâ€™ financial decisions. The 10-K form must be filed with the SEC. The information to the form can be found in the EDGAR database only if the company filed an annual report. Any company that is publicly traded must have its own website where it can post all annual reports (Bartlett & Chandler, 1997).
Content of Form 10-K SEC Filings
The information contained within the 10-K form will provide all the information needed about the company. This document will give detailed information from how much money was made and what type of products were produced. It also will give detailed information on any bad business decisions or bad investments. It provides legal claim information, present financial statement information, and it details all financial movements made within the company. There are two different 10-K forms used by a company. One is used for information that is provided to SEC and the other is presented to the shareholders. The information will always give detailed information concerning where the company is financially and if it is able to continue to grow(Lee & Hong, 2016). This form will show how the money was invested and spent, gives investors an inside look of where the company is and where it plans to be in the future.
In almost every annual report there is a Management Discussion Analysis. This section is a brief review of prior years and their operational finances throughout those years. These sections are sent to SEC and any investors. In this section, companies can explain any abnormalities that may have happened throughout operation. This allows the public to have the ability to see the company and the financial matters through a business aspect (SEC.gov). Since people want to know what exactly they are investing their money in, this is a good tool to get an oversite of how the companies finances work.
Once the annual report is done an audit report must be done. The audit report is done by someone who is designated who is not in association within to verify all information stated in the report is correct and true to knowledge. There are specific guidelines one must follow to be in compliance with SEC (Kimmel, Weygandt, Kieso, 2016). By having this auditor come and do a report it is giving an opinion that all statements are true and eligible. All reports should be in compliance before being submitted for the audit report.
The selected financial data is a part of the annual report that overviews the whole companyâ€™s finances. This helps to let investors know if the company is a good investment or not. To figure out if a company is a good investment for the investors, they must look at the ratios and how they flow throughout the years (Kimmel, Weygandt, Kieso, 2016). If the company looks strong and healthy with their finances, it will be a good investment. There is a lot to these annual reports, but they are a crucial part to a company and their investors. Investors should always check the annual reports to better understand if their investment is worth it or not.
Bartlett, S. A., & Chandler, R. A. (1997). The Corporate Report and the Private Shareholder: Lee and Tweedie Twenty Years on. The British Accounting Review, 29(3), 245. Retrieved from http://search.ebscohost.com.proxy-library.ashford….
Cao, J., Chen, F., & Higgs, J. L. (2016). Late for a Very Important Date: Financial Reporting and Audit Implications of Late 10-K Filings. Review of Accounting Studies, 21(2), 633â€“671. https://doi-org.proxy-library.ashford.edu/https://…
Haendler, D. M. (2017). Getting to know EDGAR: a refresher on SEC forms and regulations. AALL Spectrum, (6), 54. Retrieved from http://search.ebscohost.com.proxy-library.ashford….
Lee, J., & Hong, Y. (2016). Extraction and visualization of industrial service portfolios by text mining of 10-K annual reports. Flexible Services & Manufacturing Journal, 28(4), 551â€“574. https://doi-org.proxy-library.ashford.edu/10.1007/…
Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2016). Financial accounting: Tools for business decision making (8th ed.). Retrieved from https://content.ashford.edu/
Mauboussin, M.J. (2012). The true measure of success. Harvard Business Review, October 2012. Retrieved from: https://hbr.org/2012/10/the-true-measures-of-succe….