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I need to begin with the standard SEC disclaimer: Then I will talk about two mini-case studies: Our office was established by a statutory mandate of Congress three and a half years ago, and my supervisor, Rick Fleming, is the Commission's first Investor Advocate.
Our Office mission is to be the eyes and ears for investors and, when necessary, to provide a voice for them in Washington. We seek to ensure that the interests of investors are considered as policy decisions are made at the SEC and also at the self-regulatory organizations SROs that the Commission oversees.
We enjoy a significant level of independence within the SEC. Each year we issue two reports to Congress and, by law, no one at the SEC outside our Office is permitted to review or comment on our Reports before we send them to Congress. Sometimes we are described as a watchdog, but we believe that it is important for us to work constructively as part of the team with our colleagues at the Commission.
We aim to be part of the policymaking process, with a seat at the table while decisions are still being made, rather than standing outside that process and only expressing our views or criticizing decisions after they are made.
We also seek to inform policy decisions by studying investor behavior. We are responsible for conducting investor research, which may encompass surveys, focus groups, and other methods to gain insight into investor behavior and provide data to inform policy choices. This is an outside body that provides recommendations to the Commission.
Our Office has a staff of about a dozen people, and each year we review about two dozen SEC rule proposals plus around SRO proposals. To manage the workflow and enhance our impact, we identify half a dozen priorities each year, which include accounting and auditing issues.
I will pause at the end of each issue to give you a chance to ask questions. These two mini-case studies are meant to give you a sense of the policymaking process and the dilemmas that policymakers wrestle with. They also will illustrate a fundamental difference between outside investors and managers inside the company, including many of you.
Materiality As management accountants, you collect, organize, and report financial information that you and other managers and executives at your companies want to see.
Investors also have a critical need to see the financial information of the companies in which they invest, and they may use it in many of the same ways that you probably do: But there is a big difference between investors and company managers.
You are on the inside, and you have access to all the internal information you want; investors are on the outside, and they have no direct access.
In economic terms, investors face informational asymmetries. They must rely on the disclosures that public companies make. Our securities laws and SEC regulations require public companies to provide disclosures in such forms as audited financial statements, quarterly and annual statements on forms Q and K, and individual sections within reports, such as the management discussion and analysis.
Materiality provides the core answer to this question. But how do we determine what is material? More specifically, in its proposed Update on the Conceptual Framework, FASB proposed to remove its own definition of materiality and instead to rely on the courts to provide the definition.
First, materiality is a legal concept; and, second, it is not up to FASB to define it. Materiality is a legal concept. In the United States, a legal concept may be established or changed through legislative, executive, or judicial action.
The Board observes but does not promulgate definitions of materiality. Currently, the Board observes that the U. That simple one-word change would significantly alter the definition of materiality. I think it is fair to say that FASB did not expect its proposals to stir up the controversy that followed.
A number of investors and investor associations voiced vigorous objections, and the SEC Investor Advisory Committee held a public discussion and then weighed in with its own letter to FASB. On the contrary, investors, preparers and some accounting firms have been harnessing technology to analyze greater and greater amounts of data.
In fact, the next presentation today will discuss the impact on accounting of one such innovation, Robotic Process Automation.
In the back-and-forth of the arguments in this public debate, a handful of related issues struck me as raising fundamental questions. To demonstrate securities fraud, one must show not only that a statement is misleading, and that investors relied upon it, but also that the defendant had the intent to deceive, manipulate, or defraud.
In other words, a definition of materiality suited to the antifraud provisions of federal securities laws may not be the most suitable in the context of accounting standards. The Council of Institutional Investors argued: Even though the Supreme Court first defined materiality in the context of an anti-fraud provision,  that definition has since been recognized as applying for any purpose under our federal securities laws and in every type of federal securities law violation.
This raises another fundamental question: But even if FASB is not responsible for defining materiality, where do we turn for authoritative guidance on how to apply that definition?case solutions fundamentals of pdfcorporate finance 9th edition mini case solutions essay case solutions fundamentals of corporate finance ross process fundamentals harvard case solution & analysisdownload.
Mini Case: 10 - 1 Chapter 10 The Basics of Capital Budgeting: Evaluating Cash Flows ANSWERS TO SELECTED END-OF-CHAPTER QUESTIONS a. Capital budgeting is the whole process of analyzing projects and deciding whether.
“Cases in Health Care Management is a text which provides instructors with over new and dynamic case studies that will greatly assist teaching and learning.
The construction of this book gets students engaged and very much into active learning. Mini-Case Study: Bullock Gold Mining Seth Bullock, the o wner of Bullock Gold Mining, is evaluating a new gold mine in South Dakota. Dan Dority, the company's geologist, has .
Mini Case - Chapter 18 This mini case question is from: Financial Management: Theory and Practice 13th Ed. Lewis Securities Inc. has decided to acquire a new market data and quotation system for its Richmond home office.
mini case #1 at end of chapter 9 softec Product Questions a-g Mini-case in finance (time value of money) (Solved) October 28, Again I apologize, and hope you will help me meet the deadline, which by tomorrow 12pm. Thank you Read the mini case at the end of Chapter 5.