Processes to Ensure Compliance with SEC Regulations By law, every public traded company has to follow certain regulations based on the Securities and Exchange Commission or better known at the SEC (IAC, 2012). The role of the Securities and Exchange Commission or SEC is to protect investors and shareholders by maintaining fair markets (US Securities and Exchange Commission). The SEC enforces two laws: The Securities Act of 1933 (also referred to as the “truth in securities” law) and the Securities Exchange Act of 1934 (US Securities and Exchange Commission). Securities to be sold in the United States are required to be registered with the SEC. As is the case with other publicly held companies, Starbucks does this via the SEC Filing System (IAC, 2012). These filings include a description of the company, a description of the security, information regarding company management, and accountant-certified financial statements (IAC, 2012). Financial filings are made to the SEC quarterly and annually (IAC, 2012). In order to ensure that everyone is on the 'up and up', Starbucks has created a committee whose primary purpose is to keep everyone informed on Starbucks filings to the SEC. This committee is called the Audit and Compliance Committee. The primary purpose of the Audit and Compliance Committee is to oversee the accounting and financial reporting processes of Starbucks Corporation and the internal and external audit processes, and to ensure that all requirements set by the SEC are met (Starbucks Corporation, 2012). The Audit and Compliance Committee has a process of reviewing the audit processes with the upper management and independent auditors, upon completion of their annual audit (Starbucks Corporation, 2012). In fulfilling its purpose, it is the responsibility of the Committee to provide an open avenue of communication between the Board of Directors and management, the internal audit department and the independent auditors (Starbucks Corporation, 2012). The Committee is the Board’s principal agent in ensuring the integrity of management and the adequacy of disclosure to shareholders (Starbucks Corporation, 2012). According to the Audit Compliance Committee Charter that is available on Starbucks.com, the committee shall serve the company by fulfilling the following requirements:
1. Appoint, determine funding and other retention terms for, oversee and, if the Committee determines necessary or appropriate, replace the independent auditors.
2. Review the scope of the independent auditor's audit examination, including their engagement letter, prior to the annual audit of the Company’s consolidated financial statements.
3. Review the Company’s quarterly and annual financial results with management and the independent auditors.
4. Review management’s assessment of the effectiveness of the Company’s internal controls over financial reporting, and the independent auditor’s related attestation.
5. Review periodically, with internal audit and the independent auditors, the
