The accountant may also be called on to keep tabs on changes in the holdings of company securities by various corporate insiders and significant stockholders. All these individuals are personally responsible for reporting such changes to the SEC, however they frequently alter the reporting burden to the company. If this is so, the accountant has to know more about the Forms 3, 4, and 5, which are clarified in the Insider Securities Reporting chapter. Segment information. This is the separate reporting of various types of information about the various business segments that comprise the provider. This topic is covered in the Segment Reporting chapter.
The next issue for a public company is the fact that it must integrate into its financial statements further information which is not required for a private company. The following topics are only necessary for a public company: Interim reporting. This is a loosely-defined set of concepts regarding how data is to be reported in the quarterly financial statements leading up to the full-year financial statements. This topic is addressed in the Interim reporting chapter.
In addition, there are two themes a publicly-held business is very likely to tackle more often than a personal one. Since one of the main reasons for going public is to raise money, it may be reasonably presumed that a public business will actively sell stocks, and may also issue bonds to investors. Given the increased likelihood of these actions, we have also covered the accounting for stock sales and debt issuances in the Stock Issuances Accounting and Debt Accounting chapters, respectively.
The accounting for these activities isn’t different for public companies — it is just more frequently utilized. Every SAB typically deals with a very specific situation, a few of which are only pertinent to a certain industry. Some businesses may discover that SABs do not apply to them at all, and so simply have to adhere to the orders of GAAP. Public Company Accounting A third issue for a public company is the amount of reporting that must be submitted with the SEC. The quarterly results of the company must be filed every three weeks on the Form 10-Q, while annual reports are filed following the conclusion of their fiscal year on the Form 10-K.
Additionally, any material occurrences (covering a wide swathe of company actions ) must be filed on the Form 8-K. A personal company controller could be astonished at the excruciating amount of detail required for these offenses, especially the Form 10-K. To emphasize the draconian amount of coverage required, we’ve provided extensive documentation and examples of this Form 10-K from the Annual and Quarterly Reporting chapter, which also addresses the Form 10-Q. The requirements of the Form 8-K are noted in the Form 8-K Reporting chapter.
A business that wants to become a publicly-held entity will discover that the bookkeeping, reporting, and fund raising rules are substantially different than in the private sector. Additional accounting standards are employed to publicly-held businesses, while the Securities and Exchange Commission (SEC) requires that highly detailed reports be filed with it onto a rigid schedule. If an organization wishes to sell securities to investors, there are a number of requirements that must initially be fulfilled. Earnings per share. That is a calculation of earnings per share that can be complex, based on the equity arrangement of the company.
This topic is covered in the Revenue per Share Reporting chapter. The accounting scenario within an publicly-held company varies markedly from that which is encountered in a personal entity. This is not suitable for a public business, which should use the accrual basis of accounting, where revenue is recognized as it’s earned, and expenses are recognized when incurred.
More especially, a publicly-held firm follows the accounting criteria set forth under GAAP, which can be explained in the next section. These principles are highly detailed, and require that company transactions be recorded and reported in a really specific manner. Consequently, a public company must ensure that its accounting methods meet the needs of GAAP. In this chapter, we provide a broad summary of the kinds of accounting and financing issues that a public business faces, and note which chapters within this book contain more detailed info.
Additionally, we provide a summary of many topics which are prevalent throughout the novel — that the SEC, Generally Accepted Accounting Principles (GAAP), and several lesser but related topics.