Test your basic knowledge |

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. The penalties that may be imposed under SOX.
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.
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
annual shareholders' meeting
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

2. 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
petition - Administrative Review Board - 10
negligence
cumulative voting
termination - demotion - suspension - threats - harassment

3. Elements of Internal Control
30
quorum
annual report
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication

4. 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
petition - Administrative Review Board - 10
The employee can file a lawsuit in federal district court
interference with employment or livelihood of the informant
A control for cash recevied throught the mail

5. Under what conditions may an employee claim protection of SOX?
15
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
60

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

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

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

9. 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
fiduciary duties
right of first refusal
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
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.

10. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
preemptive rights
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
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
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)

11. 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

12. 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
record date
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.
straight voting
30

13. The Board can either adopt the judge's decision as its own or __ the case itself
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)
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
officer
review

14. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
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
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
public companies

15. What is one of the most important controls to protect cash received in over-the-counter sales?
Cash Register
Investigations - Legal proceedings
straight voting
shareholder voting agreement

16. 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
special shareholders' meetings
quorum
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
duty of loyalty

17. 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
Sarbanes-Oxley Act
board of directors
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)

18. Public company
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
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.
interference with employment or livelihood of the informant
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

19. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
A control for cash recevied throught the mail
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
record date
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

20. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
shareholder voting agreement
duty of care
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
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

21. The employee must also service the notice on whom?
supramajority voting requirement
terms - conditions
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 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. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
annual shareholders' meeting
officer
dividend
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

23. The SEC regulations to not require companies to follow what?
derivative lawsuit
board of directors
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)
straight voting

24. Bank statement
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
Allows a business to reconcile the cash transactions recorded
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
proxy

25. 'The employee's claim of shareholder fraud does not have to be correct.'
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
inside director
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
special shareholders' meetings

26. 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
special shareholders' meetings
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)
public companies
proxy

27. What provision is enforced by the SEC only?

28. 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
The person or company must present it's evidence within 20 days after it receives the complaint
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)
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud

29. Sox important Organizations that you must know
Cash Register
Allows a business to reconcile the cash transactions recorded
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
preemptive rights

30. To be protected by sox an employee must do one of what activities?
dividend
special shareholders' meetings
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
quorum

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

32. If a hearing is requested - it will be held before an __ who will issue a __ and __.
outside director
record date
interference with employment or livelihood of the informant
administrative law judge - decision - order

33. Voucher System
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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
duty of loyalty
60

34. 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
The employee can file a lawsuit in federal district court
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

35. Company representative
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
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)
buy-and-sell agreement
Any officer - contractor - subcontractor - agent - or employee of a company

36. Even if the employee provides evidence of individual complaints - OSHA will not investigate under what condition?
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
60
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
Sarbanes-Oxley Act

37. Types of proceedings protected under SOX?
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
Investigations - Legal proceedings
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
20

38. 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
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
Sarbanes-Oxley Act
annual shareholders' meeting
The employee can file a lawsuit in federal district court

39. 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.
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
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

40. Internal Complaint Procedures
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
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.
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

41. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
personal liability
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
business judgment rule
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

42. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
proxy
Allows a business to reconcile the cash transactions recorded
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)
negligence

43. 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
The employee can file a lawsuit in federal district court
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
Sarbanes-Oxley Act

44. SOC record keeping requirements
voting trust
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
personal liability
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

45. 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
stock dividend
Investigations - Legal proceedings
The person or company must present it's evidence within 20 days after it receives the complaint

46. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
60
proxy
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
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

47. SOX (or SARBOX)
Sarbanes-Oxley Act
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)
30
Sarbanes-Oxley

48. 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
interference with employment or livelihood of the informant
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.
The person or company must present it's evidence within 20 days after it receives the complaint

49. 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
termination - demotion - suspension - threats - harassment
piercing the corporate veil
buy-and-sell agreement
personal liability

50. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
special shareholders' meetings
quorum
Investigations - Legal proceedings
30