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Accounting and Auditing Research and Databases: Practitioner's Desk Reference by Thomas C. Pearson, Natalie Tatiana Churyk, Thomas R. Weirich

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SEC Accounting for Public Companies

The U.S. SEC was established by the Securities Exchange Act of 1934. The law charged the SEC with the duty of ensuring full and fair disclosures of all material facts relating to publicly traded securities. Public companies, those with more than $10 million in assets whose securities are held by more than 500 owners, must comply with U.S. securities laws, such as filing annual and quarterly reports with the SEC. Congress empowered the SEC to specify the documents that public companies must file with the SEC and prescribe the accounting principles used in generating the financial data.

The SEC has the statutory authority to issue rules and regulations, interpretation releases, and staff policy. The SEC term rules and regulations refers to all rules and regulations adopted by the SEC, including the forms and instructions that are used to file registration statements and periodic reports. Interpretation releases include a variety of items such as Financial Reporting Releases that prescribe accounting principles to be followed and Accounting Enforcement Releases that announce enforcement actions. Staff policy appears in multiple locations such as Staff Accounting Bulletins (SABs) and no-action letters. A detailed discussion of each appears later in the chapter.

The SEC is comprised of five commissioners appointed by the president of the United States. All other SEC employees are accountants, lawyers, economists, and analysts. The commissioners are ...

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