SEC disclosure project

SEC Disclosure Project – Part 1
What is the purpose of this project?
The purpose of this project is to get you familiar with finding and navigating through the various
financial disclosures required for publicly traded companies. Public companies are required to
conform to the periodic disclosure requirements set forth by the Securities and Exchange
Commission (SEC). Any information that is required to be filed with the SEC will be available
on the SEC EDGAR website: https://www.sec.gov/edgar/searchedgar/companysearch.html.
How do I get started on this project?
For this project, everyone is being assigned the company:
Company name:
Apple Inc.
Ticker symbol:
AAPL
Using the SEC EDGAR link above, search for your company’s name (or ticker symbol). (Hint:
When you type your company’s name into the search field, a drop-down list of choices will
appear; click on your company’s name rather than clicking the “Search” button.) Click the “View
filings” button toward the left-hand side of the screen. You will now see a list of your company’s
most recent SEC filings. You can also search for certain types of SEC filings by using the
“Search table” field.
On the following pages, you’ll be asked to search for certain SEC filings that companies are
required to make and that are most relevant for an accountant/auditor to understand. Once you
find the applicable document, you will be asked to search for and report certain pieces of
information (it’s like a scavenger hunt for accountants!). The following pages provide spaces for
you to document the information you find during your search. (Make sure you answer all 33
questions.)
. It will be graded based on effort, completeness, and the extent to which you follow the
instructions. Companies have some flexibility in how they report the information in these filings,
so it may require a little searching to find the relevant information.
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10-K Filing
10-K filings provide investors with comprehensive information about the financial condition of
the company, new developments, and the risks of investment. The audited financial statements
are part of the 10-K filing. Companies file one 10-K per year (i.e., it’s their “annual report”).
Once you search for your company within the EDGAR database, it should return a list of the
company’s most recent SEC filings. Locate the company’s most recent 10-K filing. You can
quickly find this by typing “10-K” into the Search field. Once you locate the latest 10-K, before
you click on the document link, answer the following questions:
Your answers go here:
1. What is the Filing Date of this 10-K filing?
2. What is the fiscal year-end (i.e., “Reporting
Date” or “Period of Report”)?
Next, click the link to access the annual report (next to “10-K”). Once in the filing, you’ll need to
identify the most pertinent sections of the 10-K (using the Table of Contents at the beginning of
the document may be helpful) and answer the following questions:
3. What is the company’s filing status (Large
Accelerated Filer, Accelerated Filer, Non- Accelerated
Filer, and/or Smaller Reporting Company)?
Item 1. Business. This section of the 10-K provides investors with information about the nature
of the business for which they are investing.
4. This section often starts with a
description of the company’s business.
Provide a brief (one sentence) description
of your company’s primary business
activities.
5. How many employees does your
company have?
6. What is the CFO’s name? (If you can’t
find this information in Item 1 of the 10K, try searching for “Chief Financial
Officer” using CTRL+F.)
Item 1A. Risk Factors. These risks are important for investors to understand from the
perspective of their investment.
7. Identify at least one risk that you
think would be of particular interest
or concern to investors.
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Item 5. Market for Registrant’s Common Equity. This section discusses matters related to the
company’s sale of equity securities (i.e., stock).
8. Where does the company list its common
stock for trading (i.e., on what stock exchange)?
9. How many shareholders of common stock
does the company have?
10. Did anything interesting happen with the
company’s stock this year (e.g., sale,
repurchase, stock split)? If so, explain.
Item 7. Management’s Discussion and Analysis. This section provides a narrative description
of a company’s financial statements and operations that helps investors to see the company
through the eyes of management.
11. What are some major highlights or
developments in the company’s financial or
operational performance in the past year?
(Discuss at least two.)
12a. During 2023, which segment of the
company generated the highest revenue?
12b. During 2023, which product or service
generated the highest revenue?
13. The section on “Critical Accounting
Estimates” describes aspects of the company’s
accounting that involve the greatest subjectivity
and complexity and require the most judgment
on the part of management. What items/accounts
did the company list as being critical accounting
estimates?
Item 8. Financial Statements and Supplementary Data. This is the section of the 10-K that we
focus on the most in accounting: the financial statements and footnotes. (Some companies may
report this section of the 10-K in a separate “Exhibit” rather than in the main 10-K document
itself. If this is the case, the Item 8 section will tell you the Exhibit number and you will need to
go back to where you first clicked on the link to open the 10-K document to find that Exhibit.)
Independent Auditors’ Report
14a. Take a look at the Independent Auditor’s
Report (it should be the first or last item in
this section). What firm audits this company?
14b. Auditors must report “Critical Audit
Matters” which discuss the items that the
auditors found to be most challenging,
subjective, or complex. What item(s) did the
auditors list as Critical Audit Matters?
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Income Statement
15a. How much Research & Development
Expense did the company record this year?
15b. Did R&D Expense increase or decrease
compared to last year? By what percent did
R&D Expense increase (or decrease)? (Hint:
to calculate the change from one year to the
next, use the following formula: (Current
Year # – Prior Year #) / Prior Year #
16. What amount of Basic EPS did the
company report for the current year?
Statement of Comprehensive Income
17. Did the company report any unrealized
gains or losses related to changes in the fair
value of its debt securities? If so, what
amount?
Balance Sheet
18. Does the company classify more of its
marketable securities (i.e., investments) as
current or non-current in nature?
Footnotes
19. How many footnotes (i.e., notes to the financial
statements) does this company have? (Hint: each footnote
should be numbered.)
20. What is the title of the company’s first footnote (i.e.,
what topic does it related to)?
21. Find the company’s footnote related to Financial
Instruments. What level of the fair value hierarchy is used
most frequently to determine the fair value of most of the
company’s investment securities (Level 1, Level 2, or Level
3)?
22. Find the company’s footnote related to Property, Plant
and Equipment. What amount of depreciation expense did
the company report for the current year?
23a. Find the company’s footnote related to Leases.
According to the table detailing “Lease-Related Assets and
Liabilities,” in what line item of the balance sheet does the
company report Right-of-Use Assets related to Operating
Leases?
23b. Based on the same table described in item 23a above, in
what line item of the balance sheet does the company report
Right-of-Use Assets related to Finance Leases?
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24. Find the company’s footnote related to Shareholders’
Equity. Under the company’s Share Repurchase Program,
how many shares of common stock did the company
repurchase during the current year (if any) and how much
money was spent on the repurchase of stock?
DEF 14A Filing
Shortly after the 10-K filing date, the company will file a DEF 14A (i.e., a Proxy Statement).
This filing provides important information for shareholders to prepare them for the annual
meeting and for shareholder voting. This filing includes important information about executive
compensation, including ‘‘performance-based’’ or ‘‘incentive-based’’ compensation, which can
vary significantly (think millions of dollars) with the performance of the company (e.g., based on
how profitable the company is).
Locate the company’s latest DEF 14A filing within the SEC EDGAR database (i.e., you’ll need
to go back to where you originally searched for the “10-K” and instead do a search for “DEF
14A”). Be sure you click on the one that says “Other definitive proxy statements.” Once you find
the latest DEF 14A, answer the following questions:
25. Find the “Executive Compensation Tables” (make
sure it’s the table and not just a discussion) (Hint: the
beginning of the document contains a table of contents).
How much did the Chief Executive Officer (CEO) get
paid in total in the most recent year?
26. Using this same Executive Compensation Table,
Salary:
what amount of the CEO’s pay in the most recent year is
attributable to salary vs. stock awards? (You can ignore
Stock awards:
other forms of compensation.)
27. Companies are required to report a CEO Pay Ratio,
which indicates the ratio of CEO pay vs. the amount of
pay for the median company employee (i.e., an everyday
employee). What is the CEO Pay Ratio for the current
year? (It’s probably ridiculous.) (Hint: You can use
CTRL+F to search for “CEO Pay Ratio”)
28. Tell me one of the “proposals” that shareholders will
be voting on at the annual shareholder meeting.
10-Q Filing
10-Q filings provide interim (i.e., periodic) information to shareholders between 10-K filings.
Navigate back to the company’s list of SEC filings within the EDGAR database and search for
“10-Q” filings.
29. What is the reporting date of your
company’s most-recently issued 10-Q?
30. Based on the list of 10-Q filings, how
many 10-Qs does a company make each year?
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31. Open the most recent 10-Q filing. Quickly
scroll through the filing and find the financial
statements. Are the financial statements in a
10-Q filing audited or unaudited?
8-K Filings
8-K filings provide investors with timely information about material transactions that occur
throughout the year. Some companies will have dozens of 8-K filings each year, while other
companies have less than a handful. Companies file 8-Ks for events such as CEO or CFO
turnover, auditor changes, cybersecurity breaches, and restatements of the financial statements.
Navigate back to the list of filings for your company within the EDGAR database and search for
“8-K” filings. Answer the following questions:
32. How many 8-Ks did the company file during
2023?
33. Open the 8-K filing with a Reporting Date of For:
“2023-03-10.” This 8-K provides the results of
the last shareholder vote (from the 2022
Against:
shareholder meeting). The second item listed
provides the voting results for deciding whether
EY should be reappointed as the company’s
auditor. How many votes were in favor of
reappointment? How many were against?
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