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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. What is the stated purpose of SOX?
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
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
record date
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.

2. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
60
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
derivative lawsuit
duty of loyalty

3. 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
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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

4. What employees are protected under SOX?
Investigations - Legal proceedings
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
all employees who work for public companies as long as they qualify as a whistleblower
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

5. To be protected by sox an employee must do one of what activities?
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
dividend
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders

6. 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
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
all employees who work for public companies as long as they qualify as a whistleblower
business judgment rule

7. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
30
supramajority voting requirement
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.
board of directors

8. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
30
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
stock dividend
Any officer - contractor - subcontractor - agent - or employee of a company

9. Bank statement
Allows a business to reconcile the cash transactions recorded
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
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

10. A distribution of profits of the corporation to shareholders
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
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
dividend
administrative law judge - decision - order

11. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
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
They are not protected
quorum
fiduciary duties

12. 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
They are not protected
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
piercing the corporate veil

13. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
negligence
public companies
They are not protected
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

14. Remittance Advice
Allows a business to reconcile the cash transactions recorded
special shareholders' meetings
officer
A control for cash recevied throught the mail

15. The company or person must present evidence within __ days after receiving notice of the complaint.
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.
fiduciary duties
20

16. What is required to qualify as a protected whistleblower
review
quorum
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
piercing the corporate veil

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

18. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
piercing the corporate veil
duty of care
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
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG

19. How does this Act define 'harm'?
interference with employment or livelihood of the informant
quorum
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
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

20. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
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
retaliates against a whistleblower
board of directors
They are not protected

21. Additional shares of stock distributed as a 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
duty of care
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.
stock dividend

22. 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
annual report
Allows a business to reconcile the cash transactions recorded
stock dividend

23. 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

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24. What is one of the most important controls to protect cash received in over-the-counter sales?
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
preemptive rights
Cash Register
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed

25. Public company
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
officer
personal liability
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.

26. 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
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
piercing the corporate veil
public companies

27. Bank reconcilation steps
30
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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
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

28. SOX deadlines

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29. Usurping of corporate opportunity

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30. 'The employee's claim of shareholder fraud does not have to be correct.'
quorum
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 employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication

31. Sox important Organizations that you must know
duty of loyalty
30
officer
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG

32. 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
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
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
duty of loyalty

33. 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
board of directors
terms - conditions
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
duty of obedience

34. The criminal provision of SOX
Cash Register
shareholder voting agreement
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
30

35. Voucher
duty of care
shareholder voting agreement
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
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

36. 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
30
They can have their stocks delisted by the national securities exchange and associations
Allows a business to reconcile the cash transactions recorded

37. Sarbanes-Oxley Act of 2002
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.
Cash Register
right of first refusal
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

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

39. Bank accounts
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
terms - conditions
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
Cash Register

40. What are the conditions under which OSHA will investigate individual complaints?
quorum
piercing the corporate veil
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
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.

41. 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
duty of care
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
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)
buy-and-sell agreement

42. Company representative
Any officer - contractor - subcontractor - agent - or employee of a company
fiduciary duties
retaliates against a whistleblower
piercing the corporate veil

43. SOC record keeping requirements
proxy
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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
stock dividend

44. The penalties that may be imposed under SOX.
proxy
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 report
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)

45. A panel of decision makers who are elected by the shareholders
right of first refusal
derivative 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.
board of directors

46. 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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47. 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
inside director
outside director

48. 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
Sarbanes-Oxley Act
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
30
annual shareholders' meeting

49. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
15
The person or company must present it's evidence within 20 days after it receives the complaint
stock dividend
interference with employment or livelihood of the informant

50. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
voting trust
preemptive rights
record date
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.