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Sarbanes Oxley Act: SOX Corporate Governance

Subjects : certifications, sarbanes-oxley

Instructions:

Answer 50 questions in 15 minutes.
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Match each statement with the correct term.
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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. Types of proceedings protected under SOX?
proxy
Investigations - Legal proceedings
Any officer - contractor - subcontractor - agent - or employee of a company
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

2. 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
quorum
straight voting
Sarbanes-Oxley

3. The Board can either adopt the judge's decision as its own or __ the case itself
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
review
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

4. What are the conditions under which OSHA will investigate individual complaints?
public companies
stock dividend
personal liability
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

5. Bank statement
termination - demotion - suspension - threats - harassment
Allows a business to reconcile the cash transactions recorded
duty of loyalty
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

6. A member of a board of directors who is not an officer of the corporation
outside director
20
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.
negligence

7. An agreement between two or more shareholders that stipulates how they will vote their shares
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)
administrative law judge - decision - order
shareholder voting agreement
interference with employment or livelihood of the informant

8. What is required to qualify as a protected whistleblower
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
proxy
outside director
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

9. Voucher
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
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
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 document that serves as proof of authority to pay cash or issue an electronic funds transfer.

10. What is the stated purpose of SOX?
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
stock dividend
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 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

11. How does this Act define 'harm'?
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
interference with employment or livelihood of the informant
Sarbanes-Oxley Act

12. Bank accounts
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
inside director
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
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

13. Special-purpose cash funds
special shareholders' meetings
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
annual report
The employee can file a lawsuit in federal district court

14. 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
cumulative voting
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
buy-and-sell agreement
outside director

15. Bank reconcilation steps
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
voting trust
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
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

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

17. 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
officer
proxy
30

18. Usurping of corporate opportunity

19. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
Cash Register
public companies
The person or company must present it's evidence within 20 days after it receives the complaint
termination - demotion - suspension - threats - harassment

20. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
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
voting trust
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
quorum

21. 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
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
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
duty of care
duty of loyalty

22. 4 elements that must be proven to show usurping of corporate opportunity:

23. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
straight voting
public companies
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

24. Internal Complaint Procedures
all employees who work for public companies as long as they qualify as 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
petition - Administrative Review Board - 10
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG

25. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
duty of obedience
annual report
inside director
buy-and-sell agreement

26. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
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.
15
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
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.

27. SOX (or SARBOX)
They are not protected
annual report
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

28. The number of directors necessary to hold a board meeting or transact business of the board
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
quorum
duty of care
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations

29. What employees are protected under SOX?
derivative lawsuit
all employees who work for public companies as long as they qualify as a whistleblower
cumulative voting
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

30. Who signs Report for internal contro?
negligence
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.
preemptive rights
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

31. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
duty of care
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
They are not protected

32. What procedures must the audit committee of a public company establish?
stock dividend
cumulative voting
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
annual report

33. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
right of first refusal
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
business judgment rule
duty of obedience

34. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
They can have their stocks delisted by the national securities exchange and associations
review
quorum
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud

35. A distribution of profits of the corporation to shareholders
personal liability
petition - Administrative Review Board - 10
dividend
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

36. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
inside director
record date
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
20

37. Sox important Organizations that you must know
negligence
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
30
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG

38. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
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
retaliates against a whistleblower
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
board of directors

39. Why did Congress pass SOX?
annual shareholders' meeting
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG

40. Audit committee

41. 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
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
special shareholders' meetings
Any officer - contractor - subcontractor - agent - or employee of a company

42. What provision is enforced by the SEC only?

43. 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
shareholder voting agreement
Any officer - contractor - subcontractor - agent - or employee of a company
negligence
piercing the corporate veil

44. 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
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
voting trust
duty of loyalty

45. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
derivative lawsuit
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
They are not protected
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

46. Public company
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
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)
A control for cash recevied throught the mail
proxy

47. The company or person must present evidence within __ days after receiving notice of the complaint.
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
straight voting
20
termination - demotion - suspension - threats - harassment

48. SOX creates __ for company representatives.
terms - conditions
personal liability
public companies
60

49. Sarbanes-Oxley Act of 2002
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
fiduciary duties
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.
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

50. What new employee right was created by SOX?
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
15
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
quorum