Simulation 3: SEC Registrant – Part I
Purpose:
The primary purpose of this case is to help you become familiar with the content of filings that public companies (“Registrants”) include in various filings that they make with the Securities and Exchange Commission. As a public accountant you will need to be very well versed in all accounting and auditing matters since in the eyes of the SEC, the independent registered public accounting firm is considered “Expert” in accounting and auditing.
Required:
To successfully complete this case you will need to search for and analyze various reports and information contained on the selected Company’s web site and/or on the SEC web site and perhaps, other sites as well. The financial and proxy information should be from the most recently filed Annual Report on Form 10 K (which for many companies on the list could be the year ended December 31, 2020) and the Proxy Statement, which for December 31, 2020 year-end companies was most likely filed in the March to May, 2021 timeframe. In preparing your report, where noted in each question, please set forth the exact source of the information you cite for each question. (For example – Form 10 K, Item 1, Business). For some questions, you may wish to include a copy of certain documents as an attachment to your case.
PICK YOUR OWN COMPANY – INDIVIDUAL PROJECT
Briefly describe (and cite source for each):
the company,
the location of its corporate headquarters,
its business,
its area of operations,
major products
operating segments,
major competitors,
Describe at least 5 risk factors and the possible impact on the Company if it does not successfully manage these risks. ( cite source)
Why would auditors want to know about their clients’ business-related risks?
Describe The Company’s audit committee and its duties. (cite sources for each)
Who is the designated financial expert on the audit committee? ( cite source) Does the designation as only one individual as a financial expert seem adequate for the complexity of The Company and the requirements of the Sarbanes-Oxley Act?
Review the audit committee’s report and describe its primary contents.
Describe the Audit Committee Charter
Who is the auditor for The Company? ( cite sources for each)
What were the fees charged for audit services for each of the last two fiscal years?
What were the type and amounts of other fees for services for each of the last two fiscal years?
Describe and conclude on the process used by the Audit Committee to determine the independence of the independent registered public accounting firm.
Formatting: Your response should not exceed 2 single spaced pages (note the increase in page limit). Please review your syllabus for all other formatting and submission guidelines. The due date for this project is also indicated on your syllabus.
Simulation 3: SEC Registrant – Part II
Purpose: The primary purpose of this case is to help you become familiar with the content of filings that public companies (“Registrants”) include in various filings that they make with the Securities and Exchange Commission. As a public accountant you’ll need to be very well versed in all accounting and auditing matters since in the eyes of the SEC, the independent registered public accounting firm is considered “Expert” in accounting and auditing.
Required:
To successfully complete this case you will need to search for and analyze various reports and information contained on the selected Company’s web site and/or on the SEC web site and perhaps, other sites as well. The financial and proxy information should be from the most recently filed Annual Report on Form 10 K (which for many companies on the list could be the year ended December 31, 2020) and the Proxy Statement, which for December 31, 2020 year- end companies was most likely filed in the March to May, 2021 timeframe. In preparing your report, where noted in each question, please set forth the exact source of the information you cite for each question. (For example – Form 10 K, Item 1, Business).
For some questions, include a copy of certain documents as an attachment to your case.
USE THE SAME COMPANY THAT WAS ASSIGNED TO YOU IN PART I
Name of Company and date of annual report examined.
The Sarbanes-Oxley Act of 2002, modified the requirements in the Exchange Act rules such that, effective starting in 2002, principal executive officers of publicly traded companies must include certain certifications in the annual report on Form 10K and also in the quarterly reports on Form 10-Q.
Name each certification report in the annual report on Form 10K and the section of the Sarbanes Oxley act that requires it
Specify the name and title of the executive officer who signed each of the certification reports included in the annual report on Form 10K. ( cite source for each)
Why do you think Congress felt that it was necessary to require executive officers to make affirmative claims such as these reports and certifications?
What are related party transactions?
Why do related party transactions pose a risk to audit firms?
Read about the related parties at The Company. Are there any situations that cause you particular concern?
Read management’s report on internal control ( cite source)
What did management conclude about the effectiveness of its internal controls?
What basis did management use to make that assessment?
Did the auditors agree with management’s assessment of the effectiveness of its internal controls?
Does the Company have any comments made by the staff of the SEC that were unresolved when its latest Form 10K was filed?
Read the report of the independent registered public accounting firm for The Company. Notice that the report clearly articulates differential responsibilities on the part of management versus the audit firm.
Why is it important that the audit firm articulate these responsibilities in this way?
Name the independent registered public accounting firm
What type of opinion did the independent registered public accounting firm render on the latest financial statements?
Were there any modifications to the report of the independent registered public accounting firm. If so, describe the modification and the reason for it
Based on your research and readings about the Company state and explain your conclusion about whether the independent registered public accounting firm should continue to serve as the auditor for the Company.
Formatting:
Your response should not exceed 2 single spaced pages (note the increase in page limit). Please review your syllabus for all other formatting and submission guidelines. The due date for this project is also indicated on your syllabus.
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