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

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2. SOC record keeping requirements
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
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.
annual shareholders' meeting
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.

3. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
Allows a business to reconcile the cash transactions recorded
30
negligence
15

4. Bank reconcilation
voting trust
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.
Cash Register
buy-and-sell agreement

5. Sarbanes-Oxley Act of 2002
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
annual shareholders' meeting
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
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.

6. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
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
preemptive rights
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

7. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
inside director
They can have their stocks delisted by the national securities exchange and associations
quorum
Cash Register

8. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
60
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
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

9. Bank statement
Sarbanes-Oxley Act
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
Allows a business to reconcile the cash transactions recorded
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

10. Examples of complaints found not to be covered under SOX
preemptive rights
fiduciary duties
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)
Allows a business to reconcile the cash transactions recorded

11. 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
They can have their stocks delisted by the national securities exchange and associations
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
They are not protected
buy-and-sell agreement

12. What provision is enforced by the SEC only?

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13. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
voting trust
review
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
petition - Administrative Review Board - 10

14. To be protected by sox an employee must do one of what activities?
termination - demotion - suspension - threats - harassment
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
60
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct

15. 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
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
cumulative voting
administrative law judge - decision - order
petition - Administrative Review Board - 10

16. 'The employee's claim of shareholder fraud does not have to be correct.'
administrative law judge - decision - order
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
Allows a business to reconcile the cash transactions recorded

17. What are the conditions under which OSHA will investigate individual complaints?
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
20
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
fiduciary duties

18. Additional shares of stock distributed as a dividend
stock dividend
Investigations - Legal proceedings
cumulative voting
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

19. The number of directors necessary to hold a board meeting or transact business of the board
duty of loyalty
business judgment rule
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
quorum

20. 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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21. A member of the board of directors who is also an officer of the corporation
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
They can have their stocks delisted by the national securities exchange and associations
all employees who work for public companies as long as they qualify as a whistleblower
inside director

22. A panel of decision makers who are elected by the 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
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
board of directors
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

23. The criminal provision of SOX
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.
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 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)
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations

24. 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
Sarbanes-Oxley Act
duty of loyalty
terms - conditions
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations

25. Why did Congress pass SOX?
record date
The person or company must present it's evidence within 20 days after it receives the complaint
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
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders

26. What procedures must the audit committee of a public company establish?
30
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
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.
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

27. 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
piercing the corporate veil
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
right of first refusal
retaliates against a whistleblower

28. Objectives of Internal Control
piercing the corporate veil
voting trust
Allows a business to reconcile the cash transactions recorded
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations

29. Elements of Internal Control
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
duty of loyalty
A control for cash recevied throught the mail
inside director

30. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
business judgment rule
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.
fiduciary duties

31. How does this Act define 'harm'?
duty of loyalty
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
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
interference with employment or livelihood of the informant

32. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
They are not protected
supramajority voting requirement
Investigations - Legal proceedings
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud

33. The Board can either adopt the judge's decision as its own or __ the case itself
cumulative voting
administrative law judge - decision - order
review
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

34. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
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 care
The person or company must present it's evidence within 20 days after it receives the complaint
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.

35. What is one of the most important controls to protect cash received in over-the-counter sales?
retaliates against a whistleblower
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
Cash Register
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)

36. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
30
quorum
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
Investigations - Legal proceedings

37. 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
business judgment rule
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
retaliates against a whistleblower

38. A member of a board of directors who is not an officer of the corporation
inside director
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
annual report
outside director

39. Voucher System
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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
cumulative voting

40. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
inside director
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
The person or company must present it's evidence within 20 days after it receives the complaint
derivative lawsuit

41. 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
15
quorum
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
interference with employment or livelihood of the informant

42. 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
officer
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.
terms - conditions

43. SOX (or SARBOX)
Sarbanes-Oxley
special shareholders' meetings
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
buy-and-sell agreement

44. SOX creates __ for company representatives.
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
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
15
personal liability

45. Even if the employee provides evidence of individual complaints - OSHA will not investigate under what condition?
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
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
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

46. Example of whistle blowing activities that DOL has found to be covered under SOX.
retaliates against a whistleblower
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
They are not protected
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud

47. What is the stated purpose of 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
business judgment rule
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 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

48. 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)
officer
retaliates against a whistleblower
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

49. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
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
duty of loyalty
They are not protected
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct

50. 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
inside director
shareholder voting agreement
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)
straight voting