Financial Reporting Timeline

ACG 6805 – Accounting Theory

Brenda Mullins-Hersey

Financial Reporting Timeline

Due: Jan 20, 2015

The 1930’s and 1940’s

1933 – The Securities Act of 1933

* Purpose - To regulate the initial sale of securities to investors. It provides investors and the public with financial information (including but not limited to financial statements) concerning the securities for sale via the public markets. It also discourages “deceit, misrepresentations, and other fraud in the sale of securities.” (The Laws that Govern the Securities Industry, 2015)

* Reason for passage – After the stock market crash of 1929, and the Great Depression, the government stepped in to prevent companies from over selling their worth, and subsequently brokers over estimating the return on investment (Why Securities Laws?, 2015) by requiring release of company’s financial information. The availability of this information allowed investors to come to better business decisions. This act works in tandem with The Securities Act of 1933.

* Effect on financial reporting – Requires a wholesale disclosure of material information (“issuer's business, past business performance, information about the issuer's officers and managers, audited financial statements of past business performance, executive compensation, risks of the business, tax and legal status,  and the terms and information about the securities issued”) through the registration process in regards to the sale of securities. (Why Securities Laws?, 2015)

1934 – The Securities Act of 1934 (Exchange Act)

* Purpose – To regulate the transactions of securities (thus the term “exchange act”) within the market after the initial sale occurs. Created the Securities Exchange Commission (SEC), and is the first legislation to require independent oversight of financial reporting (auditing). (Why Securities Laws?, 2015)

* Reason for passage - After the stock market crash of 1929, and the Great Depression, the government stepped in to...