Topic: SEC Reporting Requirements. Clever Manufacturing Co., a public company that files various forms wit the SEC, has recently been considered to be a very attractive growth stock and has been touted as a “buy” recommendation by various stock analysts. However, there have been recent disagreements among the members of its Board of Directors and between management and the independent auditors over various accounting issues. It seems that management over the last few years always adjusts the board’s accounting estimates in a direction that increases income for the period. Two board members have disagreed with management’s changing its estimates and have asked for advice from the independent accounting firm.

After some heated debates among the bard, management, and the independent accounting firm, two board members have resigned from the board. After further discussion with the accounting firm, the accounting firm decided to withdraw as independent auditors of Clever Manufacturing. The public company, Clever might need to inform the SEC of these changes on an SEC Form 8-k. Management disagrees and informs the controller to keep quiet as to these disagreements, as public disclosure could have a negative impact on the company’s stock price.

The controller asks for your advice as to whether this type of inside discussion among the board, management, and independent accounting firm needs to be reported to the SEC.

Required: Access the SEC’s website, and, under rules and forms, determine whether the resignation of the two board members and the accounting firm needs to be disclosed to the SEC, and, if so, when. (Hint: Search for Form 8-k requirements.)