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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 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
inside director
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
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud

2. A panel of decision makers who are elected by the shareholders
They are not protected
quorum
stock dividend
board of directors

3. Under what conditions may an employee claim protection of SOX?
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
business judgment rule
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
The employee can file a lawsuit in federal district court

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

5. 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
duty of loyalty
Allows a business to reconcile the cash transactions recorded
outside director
petition - Administrative Review Board - 10

6. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
voting trust
negligence
A control for cash recevied throught the mail
preemptive rights

7. Public company
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
The employee can file a lawsuit in federal district court
Sarbanes-Oxley Act

8. The criminal provision 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
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
quorum

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

10. 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
They are not protected
duty of care
business judgment rule

11. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
annual report
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.
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
public companies

12. Sox important Organizations that you must know
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
annual shareholders' meeting
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
inside director

13. If a hearing is requested - it will be held before an __ who will issue a __ and __.
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
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
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

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
interference with employment or livelihood of the informant
cumulative voting
petition - Administrative Review Board - 10
all employees who work for public companies as long as they qualify as a whistleblower

15. The number of directors necessary to hold a board meeting or transact business of the board
straight voting
quorum
piercing the corporate veil
right of first refusal

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

17. Objectives of Internal Control
record date
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
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
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

18. Employees wishing to bring a lawsuit claiming they were discriminated or retaliated against in violation of SOX's whistleblower protection must first do what?

19. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
administrative law judge - decision - order
30
20
60

20. An agreement between two or more shareholders that stipulates how they will vote their 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
shareholder voting agreement
They are not protected
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

21. The penalties that may be imposed under 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.
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
Investigations - Legal proceedings
quorum

22. Audit committee

23. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
inside director
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
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
They can have their stocks delisted by the national securities exchange and associations

24. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
annual report
supramajority voting requirement
fiduciary duties
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.

25. If OSHA does not issue a final decision on the employee's complaint within 180 days after the complaint is filed - the employee can do what?
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 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 can file a lawsuit in federal district court
piercing the corporate veil

26. 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 care
duty of loyalty
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)
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

27. 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.
cumulative voting
negligence
20

28. 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)
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
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

29. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
15
derivative lawsuit
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
interference with employment or livelihood of the informant

30. SOX deadlines

31. Bank reconcilation steps
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
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
inside director
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)

32. 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
proxy
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
petition - Administrative Review Board - 10
Investigations - Legal proceedings

33. Examples of complaints found not to be covered under SOX
Allows a business to reconcile the cash transactions recorded
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)
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

34. How does this Act define 'harm'?
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
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
retaliates against a whistleblower
interference with employment or livelihood of the informant

35. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
15
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
derivative lawsuit
duty of care

36. To be protected by sox an employee must do one of what activities?
stock dividend
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
20
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

37. Voucher System
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
The person or company must present it's evidence within 20 days after it receives the complaint
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
20

38. 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
Cash Register
derivative lawsuit
outside director

39. What new employee right was created by SOX?
special shareholders' meetings
supramajority voting requirement
straight voting
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

40. A meeting of the shareholders of a corporation that must be held by the corporation to elect directors and to vote on other matters

41. SOX creates __ for company representatives.
quorum
Sarbanes-Oxley Act
proxy
personal liability

42. 4 elements that must be proven to show usurping of corporate opportunity:

43. Why did Congress pass 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
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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
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

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
Sarbanes-Oxley Act
The employee can file a lawsuit in federal district court
termination - demotion - suspension - threats - harassment
inside director

45. Bank reconcilation
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
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.
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.
personal liability

46. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
business judgment rule
buy-and-sell agreement
retaliates against a 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

47. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
stock dividend
termination - demotion - suspension - threats - harassment
review
board of directors

48. SOX (or SARBOX)
Sarbanes-Oxley
negligence
derivative lawsuit
review

49. A member of a board of directors who is not an officer of the corporation
30
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
review
outside director

50. What employees are protected under 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.
review
all employees who work for public companies as long as they qualify as a whistleblower
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