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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 report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
annual report
Sarbanes-Oxley Act
They can have their stocks delisted by the national securities exchange and associations
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)

2. 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

3. 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
They can have their stocks delisted by the national securities exchange and associations
shareholder voting agreement
quorum
piercing the corporate veil

4. A member of a board of directors who is not an officer of the corporation
60
outside director
cumulative voting
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

5. Public company
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
Sarbanes-Oxley Act
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
shareholder voting agreement

6. The number of directors necessary to hold a board meeting or transact business of the board
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
duty of obedience
The person or company must present it's evidence within 20 days after it receives the complaint
quorum

7. A member of the board of directors who is also an officer of the corporation
review
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
inside director
Allows a business to reconcile the cash transactions recorded

8. Sarbanes-Oxley Act of 2002
public companies
outside director
Allows a business to reconcile the cash transactions recorded
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.

9. Who signs Report for internal contro?
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
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.
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

10. The employee must also service the notice on whom?
quorum
Sarbanes-Oxley Act
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)
They can have their stocks delisted by the national securities exchange and associations

11. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
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
buy-and-sell agreement
officer
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG

12. SOX (or SARBOX)
Any officer - contractor - subcontractor - agent - or employee of a company
30
Sarbanes-Oxley
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.

13. Special-purpose cash funds
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
They can have their stocks delisted by the national securities exchange and associations
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.

14. What new employee right was created by SOX?
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
30
inside director
Allows a business to reconcile the cash transactions recorded

15. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
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
shareholder voting agreement
Sarbanes-Oxley
termination - demotion - suspension - threats - harassment

16. 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
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
terms - conditions
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
30

17. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
shareholder voting agreement
record date
60
quorum

18. Bank reconcilation steps
Sarbanes-Oxley Act
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
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
15

19. An agreement between two or more shareholders that stipulates how they will vote their shares
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
interference with employment or livelihood of the informant
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
shareholder voting agreement

20. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
stock dividend
duty of care
retaliates against a whistleblower

21. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
business judgment rule
duty of care
all employees who work for public companies as long as they qualify as a whistleblower
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations

22. How does this Act define 'harm'?
all employees who work for public companies as long as they qualify as a whistleblower
piercing the corporate veil
cumulative voting
interference with employment or livelihood of the informant

23. What is required to qualify as a protected whistleblower
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
duty of care
duty of obedience

24. A written document that a shareholder signs - authorizing another person to vote his or her shares at the shareholders' meetings in the event of the shareholder's absence
retaliates against a whistleblower
shareholder voting agreement
proxy
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

25. 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
terms - conditions
A control for cash recevied throught the mail
inside director

26. What is one of the most important controls to protect cash received in over-the-counter sales?
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
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
Cash Register
The employee can file a lawsuit in federal district court

27. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
public companies
20
annual report
They can have their stocks delisted by the national securities exchange and associations

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

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

30. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
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
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
public companies
derivative lawsuit

31. Internal Complaint Procedures
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)
quorum
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
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

32. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
They are not protected
Allows a business to reconcile the cash transactions recorded
dividend
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

33. 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
proxy
preemptive rights
60
duty of loyalty

34. The company or person must present evidence within __ days after receiving notice of the complaint.
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
stock dividend
20
annual shareholders' meeting

35. 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
buy-and-sell agreement
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.
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
straight voting

36. 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
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
duty of obedience
terms - conditions
administrative law judge - decision - order

37. 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
inside director
stock dividend
cumulative voting
Any officer - contractor - subcontractor - agent - or employee of a company

38. Sox important Organizations that you must know
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
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
business judgment rule
Cash Register

39. A panel of decision makers who are elected by the shareholders
15
annual report
board of directors
Any officer - contractor - subcontractor - agent - or employee of a company

40. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
annual report
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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
preemptive rights

41. What provision is enforced by the SEC only?

42. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
review
fiduciary duties
Investigations - Legal proceedings
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud

43. What is the stated purpose of SOX?
officer
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
They are not protected
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.

44. To be protected by sox an employee must do one of what activities?
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
30
annual report
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct

45. Under what conditions may an employee claim protection of SOX?
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
15
preemptive rights
duty of loyalty

46. Company representative
quorum
30
Any officer - contractor - subcontractor - agent - or employee of a company
annual report

47. Remittance Advice
officer
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
Any officer - contractor - subcontractor - agent - or employee of a company
A control for cash recevied throught the mail

48. Types of proceedings protected under SOX?
straight voting
stock dividend
Investigations - Legal proceedings
Sarbanes-Oxley

49. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
negligence
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
annual shareholders' meeting

50. Bank statement
Allows a business to reconcile the cash transactions recorded
derivative lawsuit
They can have their stocks delisted by the national securities exchange and associations
review