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Summary
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Addresses
requirement that financial statements and related disclosure fairly present
a company's financial condition and results of operations
- Fairly presents is often used in standard contractual representations and
warranties, typically with specific reference to GAAP
- Fairly presents is now used in the CEO / CFO certifications that were mandated by
the Sarbanes-Oxley Act, without reference to, or qualification by, GAAP
- SEC's
view is that compliance with GAAP is not sufficient - and does not fairly present - if it fails to provide a materially accurate and complete
picture of a company's financial condition, results of operations and cash flows
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Notable
Cases / Enforcement Actions
SEC_CODE_REF_0090001192884
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United
States v Simon (2nd Cir 1969)
- Conformity to GAAP did not prevent jury from finding that financial
statements failed to fairly present company's financial condition
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425 F.2d 796 (2d Cir. 1969)
In re Caterpillar Inc (SEC C&D
1992)
- Failed to separately discuss the results of a
foreign subsidiary in MD&A, even though GAAP didn't require separate financial
statements
In re Edison Schools Inc (SEC C&D
2002)
- Use of gross revenue and expense items, instead of net revenue, didn't
provide an accurate view of company's results
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SEC press release
SEC
citation
- Note: Simon,
Caterpillar and Edison Schools are cited by SEC in its
Release adopting final rules for CEO / CFO certification pursuant to
Sarbanes-Oxley Act § 302
- See Release 33-8124
- At note 56, Release also cites Rule
12b-20
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Related Topics
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