BEC CPA Exam Notes

BEC CPA Exam Notes SU 1 (18% of test) - ANSWER-Corporate Governance Basic Corporate Documents - ANSWER-Articles of Incorporation: Corp's name, # Share authorized, Address of Registered Office, Name of Registered Agent, Name and Address of each incorporator Filed with secretary of state Articles of Incorporation are general. Bylaws: contain information about managing affairs of corporation. Bylaws are detailed. Common and Preferred Shareholders - ANSWER-Common have contributed basic capital for the corporation to carry on business. Preferred have a contractual right to dividends and liquidation rights before common shareholders. Board of Directors - ANSWER-Board acts on behalf of S/H. Major decisions made by board. Board selects officers. Board declares dividends. Directors owe a fiduciary duty to corporation. Business Judgment Rule - ANSWER-Protects and officer or director from honest mistakes of judgment. Corporate Opportunity - ANSWER-Director must give corporation first right of refusal. SOX Reporting - ANSWER-Targets officers, BOD, and Public Auditors It is applicable to issuers. Each member of audit committee must be an independent member of BOD (cannot receive compensation from corp.) One must be a financial expert. Audit Committee reports to BOD not management. PCAOB regulates accounting profession. Sec 302 of SOX - ANSWER-CEO and CFO certify financial statements free from material misstatements, responsible for system of internal controls, and informed audit committee of any deficiencies. Also report any fraud whether or not material.