Latest / VoraPrep Audio — Professional Licensure & Certification Exam Prep / [CPA] FAR: SEC Reporting Requirements for Public Companies
Transcript
- Hey, welcome to VoraPrep Audio. I'm glad you're here. Let's talk about something that feels high-stakes on the FAR exam, because it's high-stakes in the real world: SEC reporting. Picture this. Your client, a public company, just announced that their star CEO is resigning, effective immediately. The market is not happy. The stock is all over the place. So, what's the clock on this? How many days do they have to formally file something with the SEC, and what form do they even use? This isn't just a textbook question. Getting it wrong leads to enforcement actions, big fines, and some very unhappy shareholders. So yes, it's important. Let’s back up for just a second. The whole reason we have these rules is because of the SEC, the Securities and Exchange Commission. Its main job is to protect investors and keep the markets fair and efficient. And how does it do that? By forcing public companies to tell everyone what’s going on. Both the good and the bad. And they have to do it in a consistent and timely way. Think of the SEC filing system as a company's required check-ups with the public. There’s the big annual physical. The quarterly blood-pressure check. And then there's the emergency call to the doctor when something sudden happens. We’ll get to all three. The SEC has two main rulebooks that you'll hear about. Regulation S-X and Regulation S-K. Just think of it like this: Regulation S-X is all about the form and content of the financial statements themselves. The numbers. It makes sure everyone’s balance sheet and income statement look and feel the same, so you can compare Apple to Microsoft. Regulation S-K covers everything else… the non-financial stuff. The story behind the numbers. This is where you find the company’s business description, the risk factors, and that big section called Management’s Discussion and Analysis, or MD and A. Okay, so who has to file these reports? Public companies. But the SEC knows that a massive, multinational corporation and a small, newly public company can't operate on the same timeline. So it creates different categories of filers based on their size. Size is measured by something called "public float." That’s the total market value of the company's stock that's held by the public, not by insiders. The exam needs you to know three classifications. First, you have the large accelerated filers. Their public float is 700 million dollars or more. Because they’re so big and have so many resources, they have the tightest deadlines. They get 60 days after their fiscal year-end to file their big annual report. And they get 40 days after a quarter ends for their quarterly report. Next up are accelerated filers. Their public float is between 75 million and 700 million dollars. They get a little more time. 75 days for the annual report and 40 days for the quarterly. So, that's the same quarterly deadline, but a little more breathing room on the annual. Finally, we have non-accelerated filers. These are the smaller public companies with a public float of less than 75 million dollars. They get the most time: 90 days for the annual report and 45 days for the quarterly. Oh, and one small but important detail. To be considered accelerated or large accelerated, a company also has to have been an SEC filer for at least a year. And it must have already filed at least one annual report. Now let's talk about the reports themselves. The big one, the foundation of it all, is the Form 10-K. This is the comprehensive annual report. The Super Bowl of corporate filings. And, critically, the financial statements inside a 10-K must be audited by an independent accounting firm. A 10-K has four main parts. Part I is the business overview… what they do, what their risks are, where their factories are. Part II is where you find the meat of the financials. The audited statements, market data, and that all-important MD and A. Here's a key detail for the exam. The 10-K includes balance sheets for the last two years. But the income statement, statement of cash flows, and stockholders' equity are for the last three years. Part III is about the people in charge—directors, executives, their compensation. And Part IV is just for exhibits and signatures. That’s the annual check-up. Then you have the quarterly check-up: the Form 10-Q. This is filed for the first three quarters of the company’s fiscal year. You don't file one for the fourth quarter, because all that info just gets rolled into the big annual 10-K. Here is the single most important thing to remember about the 10-Q for the exam. The financial statements in a 10-Q are reviewed, not audited. A review provides a much lower level of assurance than a full audit. It’s a quick check, not a full physical. The 10-Q also has an updated MD and A. to explain what happened during the quarter. Finally, we have that emergency phone call: the Form 8-K. This is the 'current report'. It’s not on a regular schedule like the 10-K or 10-Q. It’s filed when something significant and material happens that investors need to know about right now. And "right now" has a deadline: four business days. Four business days from the event. What kind of event triggers an 8-K? Things like signing a huge, material contract. Or terminating one. Bankruptcy. Buying or selling a major subsidiary. Changing your auditor. A change in who controls the company. And, like in our opening example, when a CEO or other top officer resigns. It's the breaking news report. Let’s walk through a quick example, just like you’d see on the exam. Alpha Corp has a December 31st year-end. At the end of its second quarter, June 30th, its public float was 850 million dollars. They've been filing with the SEC for years. The question is: what’s the deadline for their annual 10-K? First step, always: classify the filer. Their public float is 850 million dollars. That's well above the 700 million dollar threshold. So, Alpha Corp is a large accelerated filer. Second step: what's the rule for that filer? For a large accelerated filer, the 10-K deadline is 60 days after the fiscal year-end. Third step: do the math. The year ends on December 31st, and we need to add 60 days. Let's count the days by month. January has 31 days. February has 28 days, assuming it's not a leap year. So, January and February together are 31 plus 28, which is 59 days. The 60-day deadline means we need one more day after February 28th. That lands us on March 1st. That's the deadline. Where do people get tripped up? Two main places. First, they mix up the deadlines. They'll apply the 90-day non-accelerated deadline to a large accelerated filer, or vice-versa. That’s why you have to classify the filer first. The second big mistake is forgetting that a 10-Q is reviewed, while a 10-K is audited. The exam loves to test that distinction. So, on exam day, here's what you do. When you see a question with a public float number, go straight to your digital scratchpad. First, write down the float. Second, classify the filer: large accelerated, accelerated, or non-accelerated. Third, write down the 10-K and 10-Q deadlines right next to it. This locks in the key facts before you get tangled in the details of the question. If you need a way to remember the reports, think of an SEC. Reporting Pyramid. The base of the pyramid, the biggest part, is the Form 10-K. It’s annual, the least frequent, but the most detailed and comprehensive. It's the foundation. In the middle, you have the Form 10-Q. It's periodic—quarterly—and provides a regular check-up. At the very top, the point of the pyramid, is the Form 8-K. It can be the most frequent, and it's for very specific, urgent news alerts. The 10-K is the annual history book, the 10-Q is the quarterly magazine, and the 8-K is the breaking news tweet. So, to wrap it all up: filer status, which is driven by public float, is everything. It sets the clock. The 10-K is the big, audited annual report. The 10-Q is the smaller, reviewed quarterly update. And the 8-K is for major news, filed within four business days. VoraPrep is a full exam-prep app — lessons, practice questions, and an AI tutor in one place. Get started at Vora Prep dot com.