Sarbanes Oxley Act: SOX Corporate Governance

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 are the conditions under which OSHA will investigate individual complaints?
piercing the corporate veil
Sarbanes-Oxley Act
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 officer - contractor - subcontractor - agent - or employee of a company


2. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
supramajority voting requirement
shareholder voting agreement
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
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)


3. Examples of complaints found not to be covered under SOX
cumulative voting
review
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)
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


4. What new employee right was created by SOX?
piercing the corporate veil
right of first refusal
outside 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


5. Special-purpose cash funds
inside director
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
15
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed


6. Company representative
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 officer - contractor - subcontractor - agent - or employee of a company
outside director
petition - Administrative Review Board - 10


7. A duty that directors and officers of a corporation have to act within the authority conferred upon them by state corporation codes - the articles of incorporation - the corporate bylaws - and the resolutions adopted by the board of directors
straight voting
duty of obedience
20
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud


8. Objectives of Internal Control
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
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.
right of first refusal
They are not protected


9. 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
60
15
quorum
cumulative voting


10. The Board can either adopt the judge's decision as its own or __ the case itself
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
interference with employment or livelihood of the informant
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct


11. If a hearing is requested - it will be held before an __ who will issue a __ and __.
public companies
voting trust
Any officer - contractor - subcontractor - agent - or employee of a company
administrative law judge - decision - order


12. Why did Congress pass SOX?
Sarbanes-Oxley
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
The employee can file a lawsuit in federal district court


13. Personal liability provision
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)
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
derivative lawsuit
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)


14. A member of a board of directors who is not an officer of the corporation
outside director
20
officer
They can have their stocks delisted by the national securities exchange and associations


15. The criminal provision of SOX
The person or company must present it's evidence within 20 days after it receives the complaint
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
buy-and-sell agreement
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


16. The penalties that may be imposed under SOX.
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.
20
quorum
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


17. A member of the board of directors who is also an officer of the corporation
quorum
inside director
voting trust
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.


18. 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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19. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
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)
fiduciary duties
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
special shareholders' meetings


20. SOX creates __ for company representatives.
A control for cash recevied throught the mail
They are not protected
personal liability
cumulative voting


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

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22. Voucher
special shareholders' meetings
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG


23. 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
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
piercing the corporate veil
straight voting
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


24. The number of directors necessary to hold a board meeting or transact business of the board
fiduciary duties
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
duty of care
quorum


25. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
retaliates against a whistleblower
proxy
interference with employment or livelihood of the informant
termination - demotion - suspension - threats - harassment


26. What provision is enforced by the SEC only?

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27. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
stock dividend
retaliates against a whistleblower
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
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


28. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
public companies
derivative lawsuit
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
dividend


29. 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
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
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. Bank reconcilation
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
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.
proxy
30


31. 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
stock dividend
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)
duty of loyalty
shareholder voting agreement


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


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


34. 'The employee's claim of shareholder fraud does not have to be correct.'
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
all employees who work for public companies as long as they qualify as a whistleblower
preemptive rights


35. SOX (or SARBOX)
Sarbanes-Oxley
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


36. How does this Act define 'harm'?
interference with employment or livelihood of the informant
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
outside director
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


37. Example of whistle blowing activities that DOL has found to be covered under SOX.
60
review
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
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.


38. What employees are protected under SOX?
Cash Register
all employees who work for public companies as long as they qualify as a whistleblower
30
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.


39. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
negligence
They are not protected
voting trust
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


40. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
termination - demotion - suspension - threats - harassment
preemptive rights
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
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.


41. SOX deadlines

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42. 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
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.
duty of care
proxy
annual report


43. 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
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
terms - conditions
Allows a business to reconcile the cash transactions recorded
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


44. The company or person must present evidence within __ days after receiving notice of the complaint.
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
20
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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)


45. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
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
derivative lawsuit
termination - demotion - suspension - threats - harassment


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


47. 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
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
cumulative voting
quorum


48. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
voting trust
Any officer - contractor - subcontractor - agent - or employee of a company
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
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


49. A panel of decision makers who are elected by the shareholders
15
board of directors
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
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


50. Audit committee

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