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Sarbanes Oxley Act: SOX Corporate Governance

Subjects : certifications, sarbanes-oxley

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. A distribution of profits of the corporation to shareholders
dividend
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
outside director
The person or company must present it's evidence within 20 days after it receives the complaint

2. 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
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
all employees who work for public companies as long as they qualify as a whistleblower
piercing the corporate veil

3. 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
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
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
straight voting
negligence

4. 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

5. 'The employee's claim of shareholder fraud does not have to be correct.'
stock dividend
straight voting
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
30

6. Employees wishing to bring a lawsuit claiming they were discriminated or retaliated against in violation of SOX's whistleblower protection must first do what?

7. The SEC regulations to not require companies to follow what?
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)
inside director
administrative law judge - decision - order
30

8. Additional shares of stock distributed as a 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
dividend
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
stock dividend

9. 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
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
derivative lawsuit
quorum
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations

10. Elements of Internal Control
straight voting
officer
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication

11. 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)
The employee can file a lawsuit in federal district court
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
60

12. 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?
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)
annual shareholders' meeting
fiduciary duties
The employee can file a lawsuit in federal district court

13. Usurping of corporate opportunity

14. Bank reconcilation
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
20
15
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.

15. 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
terms - conditions
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.
Sarbanes-Oxley Act
30

16. Sarbanes-Oxley Act of 2002
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
30
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.
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.

17. Remittance Advice
A control for cash recevied throught the mail
60
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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.

18. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
dividend
fiduciary duties
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
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

19. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
termination - demotion - suspension - threats - harassment
Sarbanes-Oxley
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
straight voting

20. Why did Congress pass SOX?
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
administrative law judge - decision - order
20
derivative lawsuit

21. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
derivative lawsuit
30
interference with employment or livelihood of the informant
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud

22. Types of proceedings protected under SOX?
termination - demotion - suspension - threats - harassment
interference with employment or livelihood of the informant
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
Investigations - Legal proceedings

23. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
15
administrative law judge - decision - order
straight voting
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)

24. SOX (or SARBOX)
duty of loyalty
The person or company must present it's evidence within 20 days after it receives the complaint
Sarbanes-Oxley
Sarbanes-Oxley Act

25. How does this Act define 'harm'?
interference with employment or livelihood of the informant
retaliates against a whistleblower
administrative law judge - decision - order
cumulative voting

26. Objectives of Internal Control
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
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
derivative lawsuit
special shareholders' meetings

27. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
annual report
They are not protected
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

28. Example of whistle blowing activities that DOL has found to be covered under SOX.
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
special shareholders' meetings
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
duty of obedience

29. The company or person must present evidence within __ days after receiving notice of the complaint.
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
20
The employee can file a lawsuit in federal district court
A control for cash recevied throught the mail

30. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
retaliates against a whistleblower
voting trust
The person or company must present it's evidence within 20 days after it receives the complaint
30

31. Even if the employee provides evidence of individual complaints - OSHA will not investigate under what condition?
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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
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
Allows a business to reconcile the cash transactions recorded

32. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
officer
inside director
duty of obedience
60

33. Voucher System
administrative law judge - decision - order
The person or company must present it's evidence within 20 days after it receives the complaint
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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

34. Bank reconcilation steps
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
Cash Register
right of first refusal
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

35. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
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
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
annual shareholders' meeting
business judgment rule

36. A panel of decision makers who are elected by the shareholders
board of directors
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
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
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed

37. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
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
record date
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
board of directors

38. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
administrative law judge - decision - order
board of directors
quorum
negligence

39. Personal liability provision
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
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
Investigations - Legal proceedings
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders

40. Audit committee

41. What is one of the most important controls to protect cash received in over-the-counter sales?
petition - Administrative Review Board - 10
Sarbanes-Oxley
outside director
Cash Register

42. 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
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
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
Investigations - Legal proceedings
duty of obedience

43. Under what conditions may an employee claim protection of SOX?
personal liability
record date
outside director
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

44. 4 elements that must be proven to show usurping of corporate opportunity:

45. The number of directors necessary to hold a board meeting or transact business of the board
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
quorum
retaliates against a whistleblower
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

46. The penalties that may be imposed under SOX.
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
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
Sarbanes-Oxley Act
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

47. Sox important Organizations that you must know
public companies
voting trust
record date
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG

48. Public company
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)
supramajority voting requirement
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
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)

49. What new employee right was created by SOX?
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
termination - demotion - suspension - threats - harassment
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
proxy

50. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
termination - demotion - suspension - threats - harassment
They are not protected
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