Sarbanes Oxley Act: SOX Corporate Governance

Instructions:

• Answer 50 questions in 15 minutes.
• If you are not ready to take this test, you can study here.
• Match each statement with the correct term.
• Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.

1. Objectives of Internal Control
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
annual report
special shareholders' meetings
proxy


2. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
Analysis of the items and amounts that cause the cash balance reported in the bank statement to differ from the balance of the cash account in the ledger in order to determine the adjusted cash balance.
supramajority voting requirement
30


3. Under what conditions may an employee claim protection of SOX?
The employer has 20 days to respond to an employee's complaint to OSHA - The employer has 30 days to object to the administrative law judge's findings and request a hearing - The employer has 60 days to appeal the board's decision to the U.S. Court o
If they provide information to be provided to - or assists in an investigation conducted by: A federal regulatory or law enforcement agency (such as the SEC) - A member of committee of Congress - A person who either has supervisory authority over the
Sarbanes-Oxley
shareholder voting agreement


4. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
If the company or person named can show by clear and convincing evidence that it would have taken the same action against the employee even in the absence of the employees protected activity
They can have their stocks delisted by the national securities exchange and associations
terms - conditions
voting trust


5. Even if the employee provides evidence of individual complaints - OSHA will not investigate under what condition?
They can have their stocks delisted by the national securities exchange and associations
duty of loyalty
Applies only to companies whose stock is traded on public exchanges. Its purpose is to restore public confidence and trust in the financial statements of companies.
If the company or person named can show by clear and convincing evidence that it would have taken the same action against the employee even in the absence of the employees protected activity


6. A system in which a shareholder can accumulate all of his or her votes and vote them all for one candidate or split them among several candidates
termination - demotion - suspension - threats - harassment
A committee of members of the board of directors of a public company - formed to oversee the company's audits and accounting and financial reporting processes. Has a number of legal obligations under SOX. If a public company does not establish a sepa
cumulative voting
duty of care


7. The criminal provision of SOX
supramajority voting requirement
20
Anyone who intentionally harms someone else for providing truthful information to a law enforcement officer relating to the commission of any federal offense faces up to ten years in prison
outside director


8. Public companies and company representatives are not permitted to retaliate against an employee in the __ or __ of his/her employment because the employee provided information - participated in an investigation - or participated in a proceeding relat
If they provide information to be provided to - or assists in an investigation conducted by: A federal regulatory or law enforcement agency (such as the SEC) - A member of committee of Congress - A person who either has supervisory authority over the
duty of loyalty
terms - conditions
inside director


9. What is required to qualify as a protected whistleblower
The employee can file a lawsuit in federal district court
Any officer - contractor - subcontractor - agent - or employee of a company
straight voting
The employee engaged in protected activity - The person accused of retaliation knew of the activity - The employee suffered an adverse employment action - The circumstances create an inference that the adverse employment action was due to the employe


10. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
business judgment rule
dividend
If they provide information to be provided to - or assists in an investigation conducted by: A federal regulatory or law enforcement agency (such as the SEC) - A member of committee of Congress - A person who either has supervisory authority over the
A control for cash recevied throught the mail


11. The employee is required to do what relative to protected whistleblowers?

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12. Public company
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
60
annual report


13. Sox important Organizations that you must know
supramajority voting requirement
proxy
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
Investigations - Legal proceedings


14. Who signs Report for internal contro?
shareholder voting agreement
violation of a director's or officer's duty of loyalty. if proven - corporation can (1) acquire opportunity from director/officer and (2) recover any profits made by the director/officer
E.g. The Management of General Electric Company is responsible for establishing and maintaining adequate internal control over financial reporting for this company With particaipation of the CEO and the CFO.
An employee who wishes to bring a lawsuit claiming that he or she was discriminated or retaliated against in violation of SOX's whistleblower protections must first file a complaint with the Occupational Safety and Health Administration (OSHA) within


15. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
piercing the corporate veil
fiduciary duties
proxy
petition - Administrative Review Board - 10


16. A doctrine that says if a shareholder dominates a corporation and uses it for improper purposes - a court of equity can disregard the corporate entity and hold the shareholder personally liable for the corporation's debts and obligations - also calle
piercing the corporate veil
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
record date
fiduciary duties


17. Voucher System
right of first refusal
supramajority voting requirement
Investigations - Legal proceedings
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.


18. If OSHA does not issue a final decision on the employee's complaint within 180 days after the complaint is filed - the employee can do what?
The requirement that public companies create procedures for anonymous employee complaints is enforced by the SEC. The SEC has issued rules requiring the national securities exchanges and associations to delist the stock of companies that fail to comp
proxy
The employee can file a lawsuit in federal district court
Sarbanes-Oxley Act


19. SOX deadlines

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20. Bank reconcilation steps
board of directors
Cash balance according to bank statement - Add deposit not recorded by bank (outstanding deposit) - Deduct outstanding checks (+/- Errors) - Adjusted Balance - Cash balance according to company - Add note and interest collected by bank - Deduct servi
buy-and-sell agreement
supramajority voting requirement


21. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
The person or company must present it's evidence within 20 days after it receives the complaint
An employee who wishes to bring a lawsuit claiming that he or she was discriminated or retaliated against in violation of SOX's whistleblower protections must first file a complaint with the Occupational Safety and Health Administration (OSHA) within
preemptive rights
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG


22. Example of whistle blowing activities that DOL has found to be covered under SOX.
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
right of first refusal
Analysis of the items and amounts that cause the cash balance reported in the bank statement to differ from the balance of the cash account in the ledger in order to determine the adjusted cash balance.
To protect investors by improving the accuracy and reliability of corporate disclosures - and much of the law seeks to further this goal by imposing strict rules for audits and auditors of publicly traded companies - preventing insider trading and de


23. Additional shares of stock distributed as a dividend
special shareholders' meetings
stock dividend
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders


24. The Board can either adopt the judge's decision as its own or __ the case itself
review
Receiving - keeping - and handling complaints the company receives regarding its accounting - auditing - or internal accounting controls Allowing employees to submit confidential - anonymous complaints and concerns about questionable accounting or
negligence
business judgment rule


25. What provision is enforced by the SEC only?

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26. Sarbanes-Oxley Act of 2002
duty of loyalty
Applies only to companies whose stock is traded on public exchanges. Its purpose is to restore public confidence and trust in the financial statements of companies.
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
inside director


27. Elements of Internal Control
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
The employee engaged in protected activity - The person accused of retaliation knew of the activity - The employee suffered an adverse employment action - The circumstances create an inference that the adverse employment action was due to the employe
Allows a business to reconcile the cash transactions recorded
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication


28. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
The employee can file a lawsuit in federal district court
opportunity was presented to the director/officer in his or her corporate capacity - opportunity is related to or connected with teh corporation's current or propsed business - corporation has the financial ability to take advantage of the opportunit
60
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud


29. A duty that directors and officers have not to act adversely to the interests of the corporation and to subordinate their personal interests to those of the corporation and its shareholders
duty of loyalty
personal liability
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud


30. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
retaliates against a whistleblower
administrative law judge - decision - order
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
duty of care


31. Meetings of a shareholders that may be called to consider and vote on important or emergency issues - such as a proposed merger or amending the articles of incorporation

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32. Bank statement
15
The person or company must present it's evidence within 20 days after it receives the complaint
Allows a business to reconcile the cash transactions recorded
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct


33. Usurping of corporate opportunity

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34. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
negligence
They are not protected
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct


35. What is the stated purpose of SOX?
fiduciary duties
proxy
To protect investors by improving the accuracy and reliability of corporate disclosures - and much of the law seeks to further this goal by imposing strict rules for audits and auditors of publicly traded companies - preventing insider trading and de
30


36. If a hearing is requested - it will be held before an __ who will issue a __ and __.
The employee engaged in protected activity - The person accused of retaliation knew of the activity - The employee suffered an adverse employment action - The circumstances create an inference that the adverse employment action was due to the employe
terms - conditions
Reinstate the worker to the same position - with the same benefits - responsibilities - and seniority - that the worker would have had absent the retaliation - Pay worker all the compensation and benefits lost as a result of the retaliation with inte
administrative law judge - decision - order


37. A distribution of profits of the corporation to shareholders
petition - Administrative Review Board - 10
dividend
interference with employment or livelihood of the informant
Receiving - keeping - and handling complaints the company receives regarding its accounting - auditing - or internal accounting controls Allowing employees to submit confidential - anonymous complaints and concerns about questionable accounting or


38. Bank accounts
voting trust
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
duty of care


39. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
officer
record date
cumulative voting
annual shareholders' meeting


40. Bank reconcilation
Analysis of the items and amounts that cause the cash balance reported in the bank statement to differ from the balance of the cash account in the ledger in order to determine the adjusted cash balance.
retaliates against a whistleblower
Sarbanes-Oxley Act
The person or company must present it's evidence within 20 days after it receives the complaint


41. Either party may request a review of the judge's decision by filing a __ with the __ within __ days after the date on the judge's order
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
petition - Administrative Review Board - 10
If they provide information to be provided to - or assists in an investigation conducted by: A federal regulatory or law enforcement agency (such as the SEC) - A member of committee of Congress - A person who either has supervisory authority over the
They can have their stocks delisted by the national securities exchange and associations


42. Personal liability provision
20
Applies only to companies whose stock is traded on public exchanges. Its purpose is to restore public confidence and trust in the financial statements of companies.
Managers and supervisors who violate SOX by retaliating against whistle blowers may be held personally liable and have to pay judgment awarded to the employee
voting trust


43. An agreement between two or more shareholders that stipulates how they will vote their shares
shareholder voting agreement
preemptive rights
A control for cash recevied throught the mail
Investigations - Legal proceedings


44. A member of a board of directors who is not an officer of the corporation
The person or company must present it's evidence within 20 days after it receives the complaint
duty of care
Sarbanes-Oxley Act
outside director


45. An agreement that requires selling shareholders to sell their shares to the other shareholders or to the corporation at the price specified in the agreement
negligence
buy-and-sell agreement
public companies
duty of obedience


46. What procedures must the audit committee of a public company establish?
Receiving - keeping - and handling complaints the company receives regarding its accounting - auditing - or internal accounting controls Allowing employees to submit confidential - anonymous complaints and concerns about questionable accounting or
Sarbanes-Oxley
all employees who work for public companies as long as they qualify as a whistleblower
A committee of members of the board of directors of a public company - formed to oversee the company's audits and accounting and financial reporting processes. Has a number of legal obligations under SOX. If a public company does not establish a sepa


47. The required number of share that must be represented in person or by proxy to hold a shareholders' meeting - the RMBCA establishes a majority of outstanding share as this term
business judgment rule
quorum
petition - Administrative Review Board - 10
The employee must also serve this notice on the other parties to the dispute (the employer and any other companies or individuals whom the employee accuses of retaliation)


48. Establishes establishes far reaching rules regarding coporate governance; CEO and CFO certification; reimbursement of bonuses and incentive pay; prohibition on personal loans; tampering with evidence; bar from acting as an officer/director
interference with employment or livelihood of the informant
annual shareholders' meeting
record date
Sarbanes-Oxley Act


49. A member of the board of directors who is also an officer of the corporation
duty of care
inside director
right of first refusal
They are not protected


50. Company representative
Any officer - contractor - subcontractor - agent - or employee of a company
public companies
record date
Investigations - Legal proceedings