Audit, Compliance and Risk Blog

Knight Capital Pays $12 Million for SEC Violations

Posted by Viola Funk on Thu, Oct 31, 2013

In the wake of a Securities and Exchange Commission (SEC) investigation, Knight Capital Americas LLC has agreed to pay a $12 million penalty for violating the SEC’s market access rule. On August 1, 2012, Knight Capital’s automated equity router incorrectly sent 4 million orders into the market in the first 45 minutes of trading while attempting to fill a mere 212 customer orders. Stock prices of nearly 150 companies listed on the NYSE were severely disrupted, and Knight Capital’s stock price collapsed. SEC sleuthing revealed that the glitch was the result of deploying new code in an old, compromised router.

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Tags: Corporate Governance, Business & Legal, SEC

SEC Proposes Controversial Pay Ratio Reporting Requirements

Posted by Jon Elliott on Mon, Oct 07, 2013

On September 18 the Securities and Exchange Commission (SEC) proposed to require public companies to calculate and disclose the pay ratio between their principal executive officer (PEO) and other employees:

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Tags: Corporate Governance, Business & Legal, SEC, Accounting & Tax

CEO/Worker Pay Ratio—SEC Proposes Controversial and Costly Statistic

Posted by Ron Pippin on Wed, Oct 02, 2013

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Tags: Corporate Governance, SEC, Accounting & Tax, Accountants

An Autumn Update on Accounting and Auditing Matters

Posted by Ron Pippin on Tue, Sep 17, 2013


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Tags: SEC, Accounting & Tax, Lease Accounting, Audit Standards, Accountants

Directors' & Officers' Liability: Delaware's "Entire Fairness" Test

Posted by Jon Elliott on Mon, Sep 09, 2013

Directors and officers owe formal duties to their corporations and shareholders, commonly called “fiduciary duties” from the Latin root words for “trust.”  These duties developed over centuries of common law, and now appear in state corporation codes.  Most interpretations of these duties and how to meet them actually appear in court decisions, arising in cases where aggrieved shareholders sue claiming that a company’s directors and/or officers have breached one or more of these duties.

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Tags: Corporate Governance, Business & Legal, SEC, SOX

Significant New Auditing Standards—Part 2, Tenure/Other Information

Posted by Ron Pippin on Wed, Aug 28, 2013

This is the second of a two-part discussion on the August 13, 2013, the Public Company Accounting Oversight Board (PCAOB) proposal that would result in two new auditing standards. In the first article, I discussed the proposed concept of “critical audit matters” or CAMs. In this article, I discuss the proposed requirements to disclose how long the auditor has been auditing the company and to provide some assurance on “other information” that a registrant must file in an annual filing with the Securities and Exchange Commission (SEC). I conclude this article with some summary thoughts.

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Tags: Corporate Governance, Business & Legal, SEC, Accounting & Tax, Audit Standards, Accountants

Significant New Auditing Standards—Part 1, Critical Audit Matters

Posted by Ron Pippin on Fri, Aug 23, 2013

On August 13, 2013, the Public Company Accounting Oversight Board (PCAOB) issued a lengthy, 294-page proposal that would create two new auditing standards and amend several existing rules. If finalized, it will likely increase the work load of auditors. Presumably, the PCAOB proposed these rules, not to “help” the pocketbooks of auditors but rather to provide more useful information to investors. Much of this proposal resulted from feedback the PCAOB received on its June 21, 2011, “concept release” on possible changes to the auditor’s reporting model. The PCAOB has now answered my question from a prior blog article, “Where Is the Regulator of Auditors of Public Companies?"

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Tags: Corporate Governance, Business & Legal, SEC, Accounting & Tax, Audit Standards, Accountants

Internal Controls—An Updated Framework Has Arrived!

Posted by Ron Pippin on Fri, Aug 16, 2013

On May 14, 2013, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) issued its final revised “Framework” for internal control reporting. Many accountants and other readers may raise the question, who is COSO and what do they do? Yes, accountants are quite familiar with guidance issued by the Financial Accounting Standards Board (FASB), the Securities and Exchange Commission (SEC), and other standard-setters, but COSO is not a standard-setter. So, this latest version of the COSO Framework arguably is a “sleeper” when it comes to guidance that may affect accountants.

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Tags: Corporate Governance, Business & Legal, SEC, Accounting & Tax, Lease Accounting, Audit Standards, Accountants

Recent Changes to Disclosure Requirements for SEC Registrants

Posted by STP Editorial Team on Tue, Aug 13, 2013

Actions by the SEC, other federal agencies and the courts continue to change or propose changes to the rules concerning the disclosures that publicly listed companies must make. They are responding to the latest series of U.S. federal laws aimed at improving corporate accountability and enhancing growth in a slow economy. Most recently, a court has vacated the SEC rule on disclosure of payments by resource extraction issuers, and the U.S. Government Accountability Office (GAO) has recommended further disclosures about auditor attestation, as follows:

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Tags: Corporate Governance, Business & Legal, SEC, Audit Standards

Reconsidering “Accredited Investors” and How They’re Protected

Posted by Jon Elliott on Mon, Jul 29, 2013

The Securities and Exchange Commission (SEC) was created 80 years ago to protect investors, while also nurturing the growth of efficient and transparent markets for securities.  Over the intervening years, the balance between protection and growth has shifted many times, leading to many sets of requirements with conditions and exemptions to parse in order to determine entrepreneurs’ notice and filing requirements, and the range of investor opportunities and protections.

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Tags: Corporate Governance, Business & Legal, SEC