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. Bank accounts
Any officer - contractor - subcontractor - agent - or employee of a company
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations


2. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
officer
all employees who work for public companies as long as they qualify as a whistleblower
Allows a business to reconcile the cash transactions recorded
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.


3. Company representative
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shareholder voting agreement
Any officer - contractor - subcontractor - agent - or employee of a company
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


4. 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
dividend
annual report
retaliates against a whistleblower


5. 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
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
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
terms - conditions
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.


6. 'The employee's claim of shareholder fraud does not have to be correct.'
duty of loyalty
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
annual shareholders' meeting
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud


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


8. 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
inside director
preemptive rights
buy-and-sell agreement


9. What are the conditions under which OSHA will investigate individual complaints?
piercing the corporate veil
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
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
60


10. What provision is enforced by the SEC only?

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11. Bank statement
supramajority voting requirement
petition - Administrative Review Board - 10
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
Allows a business to reconcile the cash transactions recorded


12. The employee must also service the notice on whom?
voting trust
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
right of first refusal


13. 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
duty of loyalty
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
straight voting


14. The criminal provision of SOX
right of first refusal
The person or company must present it's evidence within 20 days after it receives the complaint
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
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


15. An agreement between two or more shareholders that stipulates how they will vote their shares
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
termination - demotion - suspension - threats - harassment
shareholder voting agreement
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed


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

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17. Even if the employee provides evidence of individual complaints - OSHA will not investigate under what condition?
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
outside director
board of directors
Sarbanes-Oxley


18. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
A control for cash recevied throught the mail
stock dividend
The person or company must present it's evidence within 20 days after it receives the complaint
negligence


19. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
inside director
retaliates against a whistleblower
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
duty of obedience


20. Usurping of corporate opportunity

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21. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
officer
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
annual report


22. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
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.
public companies
They are not protected
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


23. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
Any officer - contractor - subcontractor - agent - or employee of a company
derivative lawsuit
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
buy-and-sell agreement


24. To be protected by sox an employee must do one of what activities?
Sarbanes-Oxley Act
right of first refusal
Any officer - contractor - subcontractor - agent - or employee of a company
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct


25. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
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
30
annual report
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


26. How does this Act define 'harm'?
The employee can file a lawsuit in federal district court
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
interference with employment or livelihood of the informant
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


27. 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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28. A member of the board of directors who is also an officer of the corporation
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
inside director
cumulative voting
personal liability


29. Examples of complaints found not to be covered under SOX
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)
quorum
derivative lawsuit
supramajority voting requirement


30. 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
quorum
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
piercing the corporate veil
The person or company must present it's evidence within 20 days after it receives the complaint


31. 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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32. 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
administrative law judge - decision - order
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
public companies


33. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
voting trust
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 officer - contractor - subcontractor - agent - or employee of a company
termination - demotion - suspension - threats - harassment


34. 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
Any officer - contractor - subcontractor - agent - or employee of a company
shareholder voting agreement
buy-and-sell agreement
personal liability


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


36. SOX (or SARBOX)
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
right of first refusal
Sarbanes-Oxley
administrative law judge - decision - order


37. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
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
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
business judgment rule


38. Internal Complaint Procedures
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
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
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.


39. SOX deadlines

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40. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
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.
supramajority voting requirement
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
The employee can file a lawsuit in federal district court


41. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
A control for cash recevied throught the mail
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
preemptive rights
15


42. Audit committee

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43. 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
officer
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
duty of obedience


44. 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
shareholder voting agreement
piercing the corporate veil
supramajority voting requirement
Sarbanes-Oxley


45. Voucher System
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
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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
20


46. If a hearing is requested - it will be held before an __ who will issue a __ and __.
straight voting
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)
20
administrative law judge - decision - order


47. Special-purpose cash funds
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
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
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Sarbanes-Oxley


48. Additional shares of stock distributed as a dividend
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
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
stock dividend


49. Example of whistle blowing activities that DOL has found to be covered under SOX.
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
Sarbanes-Oxley
personal liability
They are not protected


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
personal liability
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
officer