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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 lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
derivative lawsuit
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
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

2. '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
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
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

3. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
termination - demotion - suspension - threats - harassment
supramajority voting requirement
business judgment rule
They are not protected

4. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
supramajority voting requirement
20
public companies
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

5. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
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.
cumulative voting
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. Usurping of corporate opportunity

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7. Personal liability provision
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
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)
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
buy-and-sell agreement

8. The penalties that may be imposed under SOX.
Sarbanes-Oxley
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
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)

9. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
right of first refusal
public companies
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.
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

10. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
Any officer - contractor - subcontractor - agent - or employee of a company
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
annual report
annual shareholders' meeting

11. 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
Sarbanes-Oxley Act
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
derivative lawsuit
quorum

12. Even if the employee provides evidence of individual complaints - OSHA will not investigate under what condition?
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
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
special shareholders' meetings
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

13. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
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
cumulative voting
30
Cash Register

14. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
annual report
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
15
quorum

15. The employee must also service the notice on whom?
buy-and-sell agreement
Allows a business to reconcile the cash transactions recorded
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)
Investigations - Legal proceedings

16. Voucher
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 document that serves as proof of authority to pay cash or issue an electronic funds transfer.
Sarbanes-Oxley Act
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

17. Voucher System
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.
inside director
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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. 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
straight voting
15
petition - Administrative Review Board - 10
buy-and-sell agreement

19. What are the conditions under which OSHA will investigate individual complaints?
Any officer - contractor - subcontractor - agent - or employee of a company
Allows a business to reconcile the cash transactions recorded
60
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. Elements of Internal Control
stock dividend
quorum
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
They are not protected

21. 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
termination - demotion - suspension - threats - harassment
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
Investigations - Legal proceedings

22. 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
duty of loyalty
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
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)
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.

23. What is the stated purpose of SOX?
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
piercing the corporate veil
cumulative voting
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

24. What is one of the most important controls to protect cash received in over-the-counter sales?
outside director
buy-and-sell agreement
They can have their stocks delisted by the national securities exchange and associations
Cash Register

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

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26. Types of proceedings protected under SOX?
A control for cash recevied throught the mail
annual report
Investigations - Legal proceedings
Cash Register

27. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
60
review
record date
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

28. What procedures must the audit committee of a public company establish?
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
officer
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
administrative law judge - decision - order

29. What provision is enforced by the SEC only?

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30. 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
Sarbanes-Oxley
piercing the corporate veil
Investigations - Legal proceedings
board of directors

31. A member of the board of directors who is also an officer of the corporation
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
inside director
derivative lawsuit
negligence

32. Special-purpose cash funds
special shareholders' meetings
60
outside director
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed

33. 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.
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
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
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.

34. If a hearing is requested - it will be held before an __ who will issue a __ and __.
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
personal liability
inside director

35. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
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
cumulative voting
Sarbanes-Oxley

36. 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
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.
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
straight voting
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

37. 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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38. Bank accounts
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)
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 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

39. What employees are protected under SOX?
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
all employees who work for public companies as long as they qualify as a whistleblower
They are not protected
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

40. SOX creates __ for company representatives.
personal liability
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
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
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders

41. SOX (or SARBOX)
duty of care
all employees who work for public companies as long as they qualify as a whistleblower
Sarbanes-Oxley
annual report

42. Sarbanes-Oxley Act of 2002
Cash Register
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
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 officer - contractor - subcontractor - agent - or employee of a company

43. The Board can either adopt the judge's decision as its own or __ the case itself
inside director
review
petition - Administrative Review Board - 10
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud

44. The number of directors necessary to hold a board meeting or transact business of the board
20
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
They are not protected
quorum

45. 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
business judgment rule
Any officer - contractor - subcontractor - agent - or employee of a company
proxy
special shareholders' meetings

46. 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
dividend
all employees who work for public companies as long as they qualify as a whistleblower
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

47. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
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 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
preemptive rights
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud

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

49. The SEC regulations to not require companies to follow what?
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)
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.
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
Any officer - contractor - subcontractor - agent - or employee of a company

50. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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
They can have their stocks delisted by the national securities exchange and associations