Public companies work under the mandatory disclosure that consists of the security act of 1933 and the Security Act of 1934. The laws detail the disclosure law when it comes to the company’s financials, operating activities, management, compensation and other production areas (Inc, 2017). The organizations have to adhere to the rules, and SEC (Security and Exchange Commission) is the one that oversees that. The development of the laws was to protect investors through disclosure of business and financial information, which is essential when it comes to making an investment decision. The SEC regulations require that public companies disclose business and fiscal data in the form of reports for both the SEC and the shareholders. The reports can be annual or quarterly and the form required is the form 10-K report (Reference for Business, 2017).
The SEC has another responsibility to make changes to the amendment over time. The changes are a result of new accounting rules adopted in the accounting profession. The changes amended to the disclosure system make it less stressing for public corporations by standardizing different forms and eliminating the different report requirement for the SEC and Shareholders (Inc, 2017). The SEC has to ensure that companies strictly follow the acts and guidelines and the Integrated Disclosure System assists SEC to achieve its role. It has a basis in the fact that shareholders should have the same information as that of newly issued securities present in secondary markets (Gillis, 1973). It has only one primary purpose, which is to achieve uniformity between the annual reports and the SEC filling. Its use increases the quality of disclosure and lightens the load when it comes to annual reporting (Reference for Business, 2017).
References
Disclosure Laws and Regulations. Reference for Business. Retrieved from http://www.referenceforbusiness.com/encyclopedia/Dev-Eco/Disclosure-Laws-and-Regulations.html
Gillis, J. G. (January 01, 1973). Securities Law and Regulation: The Growing Spectre of Inside Information. Financial Analysts Journal, 29, 1, 93-94. Retrieved from https://www.jstor.org/stable/4478415?seq=1#page_scan_tab_contents
SEC Disclosure Laws and Regulations. Inc. Retrieved from http://www.inc.com/encyclopedia/sec-disclosure-laws-and-regulations.html
