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. SOX deadlines

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2. 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
quorum
dividend
20
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


3. Audit committee

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4. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
record date
20
business judgment rule
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.


5. A system in which each shareholder votes the number of share he or she own on candidates for each of the positions open - also called noncumulative voting
20
preemptive rights
straight voting
retaliates against a whistleblower


6. A member of a board of directors who is not an officer of the corporation
They are not protected
duty of obedience
special shareholders' meetings
outside director


7. Personal liability provision
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.
Cash Register
straight voting
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


8. What provision is enforced by the SEC only?

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9. Public company
straight voting
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
annual shareholders' meeting
Allows a business to reconcile the cash transactions recorded


10. 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
quorum
The financial safeguards imposed by SOX include numerous reporting requirements - but there are no reporting requirements associated solely with its whistleblower provisions - The National securities exchanges and commissions may require public compa
cumulative voting
The employee can file a lawsuit in federal district court


11. Bank reconcilation steps
They can have their stocks delisted by the national securities exchange and associations
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
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
outside director


12. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
Sarbanes-Oxley Act
terms - conditions
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
termination - demotion - suspension - threats - harassment


13. What new employee right was created by SOX?
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
inside director
Creates employee whistleblower protections: Employees who complain of - or provide information about - actions they believe to be shareholder fraud are protected from discrimination and retaliation. The law also obligates covered companies to create
The financial safeguards imposed by SOX include numerous reporting requirements - but there are no reporting requirements associated solely with its whistleblower provisions - The National securities exchanges and commissions may require public compa


14. The number of directors necessary to hold a board meeting or transact business of the board
interference with employment or livelihood of the informant
inside director
quorum
terms - conditions


15. What is the stated purpose of SOX?
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
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
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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.


16. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
public companies
record date
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.


17. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
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.
voting trust
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)
Any officer - contractor - subcontractor - agent - or employee of a company


18. A panel of decision makers who are elected by the shareholders
proxy
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.
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
board of directors


19. Types of proceedings protected under SOX?
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
60
annual shareholders' meeting
Investigations - Legal proceedings


20. 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
right of first refusal
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
petition - Administrative Review Board - 10
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed


21. The SEC regulations to not require companies to follow what?
review
personal liability
public companies
The SEC regulations do not require companies to follow particular procedures for taking employee complaints (such as setting up an ethics hotline or a Web-based complaint system)


22. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
The employee can file a lawsuit in federal district court
petition - Administrative Review Board - 10
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
They can have their stocks delisted by the national securities exchange and associations


23. How does this Act define 'harm'?
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
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
quorum
interference with employment or livelihood of the informant


24. What is required to qualify as a protected whistleblower
duty of care
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
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
negligence


25. The penalties that may be imposed under SOX.
duty of obedience
negligence
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
quorum


26. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
duty of care
30
They can have their stocks delisted by the national securities exchange and associations
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


27. SOC record keeping requirements
interference with employment or livelihood of the informant
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
The financial safeguards imposed by SOX include numerous reporting requirements - but there are no reporting requirements associated solely with its whistleblower provisions - The National securities exchanges and commissions may require public compa


28. Who signs Report for internal contro?
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.
negligence
administrative law judge - decision - order
business judgment rule


29. 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
annual shareholders' meeting
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
60


30. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
preemptive rights
There is no avenue for employee complains regarding a public company's failure to adopt an appropriate system for confidential employee complaints. This provision is enforced by the SEC only.
supramajority voting requirement
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.


31. 4 elements that must be proven to show usurping of corporate opportunity:

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32. SOX creates __ for company representatives.
supramajority voting requirement
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
stock dividend
personal liability


33. Voucher
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
duty of loyalty
dividend
board of directors


34. SOX (or SARBOX)
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
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
Sarbanes-Oxley
30


35. A duty that directors and officers of a corporation have to act within the authority conferred upon them by state corporation codes - the articles of incorporation - the corporate bylaws - and the resolutions adopted by the board of directors
Sarbanes-Oxley Act
30
The person or company must present it's evidence within 20 days after it receives the complaint
duty of obedience


36. The employee must also service the notice on whom?
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)
outside director
terms - conditions
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


37. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
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
Employees who complain of violations of state law - or those who complain of violations of internal company policies or procedures (unless the violation could also mislead shareholders)
officer


38. The company or person must present evidence within __ days after receiving notice of the complaint.
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.
supramajority voting requirement
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct


39. Bank statement
The SEC regulations do not require companies to follow particular procedures for taking employee complaints (such as setting up an ethics hotline or a Web-based complaint system)
record date
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
Allows a business to reconcile the cash transactions recorded


40. 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?
30
The employee can file a lawsuit in federal district court
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
fiduciary duties


41. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
inside director
They are not protected
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
petition - Administrative Review Board - 10


42. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
negligence
annual report
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
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


43. What are the conditions under which OSHA will investigate individual complaints?
dividend
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
annual report
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


44. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
public companies
retaliates against a whistleblower
business judgment rule
officer


45. An agreement that requires a selling shareholder to offer his or her shares for sale to the other parties to the agreement before selling them to anyone else
derivative lawsuit
right of first refusal
personal liability
They can have their stocks delisted by the national securities exchange and associations


46. A meeting of the shareholders of a corporation that must be held by the corporation to elect directors and to vote on other matters

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47. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
officer
preemptive rights
proxy


48. Why did Congress pass SOX?
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
interference with employment or livelihood of the informant
duty of obedience


49. The criminal provision of SOX
board of directors
annual shareholders' meeting
There is no avenue for employee complains regarding a public company's failure to adopt an appropriate system for confidential employee complaints. This provision is enforced by the SEC only.
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


50. What is one of the most important controls to protect cash received in over-the-counter sales?
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Cash Register
termination - demotion - suspension - threats - harassment
derivative lawsuit