A 10-K is a comprehensive report filed annually by a publicly-traded company about its financial performance and is required by the SEC. The report contains much more detail than a company's annual report which is sent to its shareholders before an annual meeting. Some of the information a company is required to document in the 10-K includes its history, organizational structure, financial statements, earnings per share, subsidiaries, executive compensation, and any other relevant data.
The SEC requires this report to keep investors aware of a company's financial condition and to allow them to have enough information before they buy or sell shares in the corporation, or before investing in the firm’s corporate bond. The 10K includes five distinct section; business, risk factors, selected financial data, management's discussion and analysis, and financial statements and supplementary data.
The SEC form 10-Q is a comprehensive report of a company's performance that must be submitted quarterly by all public companies to the SEC. The 10Q is generally an unaudited report.
In the 10-Q, firms are required to disclose relevant information regarding their financial position. There is no filing after the fourth quarter because that is when the 10-K is filed. There are two parts to a 10-Q filing. The first part contains relevant financial information covering the period. This includes condensed financial statements, management discussion and analysis on the financial condition of the entity, disclosures regarding market risk and internal controls.
It is critical that accountants and auditors understand all aspects and requirements of the 10K and 10Q process including understanding of how specific regulations like Sarbanes-Oxley and others are embedded within these statements.
Because of the depth and nature of the information they contain, 10-Ks are fairly long and tend to be complicated. But investors must understand that this is one of the most comprehensive and most important documents a public company can publish on a yearly basis. It is also critical to understand the requirements and expectations of form 10Q.
Publication Date: April 2021
Designed For
Finance professionals, Accounting professionals, Auditing Professionals, Compliance Professionals
Board and Executive management of public companies or companies considering an IPO.
Topics Covered
- Purpose and Usage
- Critical Components of the 10-K
- Changes Adopted in Late 2020
- Wal-Mart FS Comparative Composition 1999-2020
- Critical Components of the 10-Q
- Filing Timing Requirements
- Summary
- Appendix Wal-Mart 10K
- Appendix 10Q Example of FS
Learning Objectives
- Recognize the purpose and usage of a company's 10Q and 10K from a company viewpoint as well as an investor viewpoint
- Describe the five critical component sections of the 10K and understand their usage and benefit to companies and investors
- Identify the critical components of sections of the 10Q and expectations of investors, employers and the SEC
- Recognize how to focus on criticality of MD&A, footnotes and risk factor sections
- Recognize examples of 10K and 10Q
- Identify what is covered in the business section of the 10-K
- Recognize what is included within item 6 which represents "Consolidated Financial Data"
- Recognize what is typically disclosed within the notes to the financial statements
- Identify what comparative periods the 10-Q uses
Level
Basic
Instructional Method
Self-Study
NASBA Field of Study
Accounting (2 hours)
Program Prerequisites
None
Advance Preparation
None
Instructor
Lynn Fountain
Lynn Fountain has over 38 years of experience spanning public accounting, corporate accounting and consulting. 20 years of her experience has been working in the areas of internal and external auditing and risk management. She is a subject matter expert in multiple fields including internal audit, ethics, fraud evaluations, Sarbanes-Oxley, enterprise risk management, governance, financial management and compliance. Lynn has held two Chief Audit Executive (CAE) positions for international companies. In one of her roles as CAE, she assisted in the investigation of a multi-million-dollar fraud scheme perpetrated by a vendor that spanned 7 years and implicated 20 employees. The fraud was formally investigation by the FBI and resulted in 5 indictments estimating a $13M fraud loss.
Ms. Fountain is currently engaged in her own consulting and training practice. She is a highly sought-after trainer and international speaker. In addition, Ms. Fountain has assisted numerous companies with enterprise risk management frameworks, internal audit processes and financial accounting. She also serves as a discussion leader for the AICPA for numerous classes finance, accounting and risk management topics.
Ms. Fountain is the author of three separate technical books. Her first book released in 2015 by the Institute of Internal Auditors Foundation is entitled “Raise the Red Flag – The Internal Auditors Guide to Fraud Evaluations”. Her second book “Leading the Internal Audit Function” was released in October 2015 by Taylor & Francis Publications. This book serves as the initial launch for a series of leading practice internal audit and information technology publications. Her third book “Ethics and the Internal Auditor’s Dilemma” was released in December 2016.
Ms. Fountain obtained her BSBA from Pittsburg State University and her MBA from Washburn University in Kansas. She has her CPA, CGMA, CRMA credentials.