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. The Board can either adopt the judge's decision as its own or __ the case itself
review
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 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)
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations


2. 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
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)
special shareholders' meetings
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud


3. What new employee right was created by SOX?
outside director
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
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
Investigations - Legal proceedings


4. 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
Allows a business to reconcile the cash transactions recorded
piercing the corporate veil
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.


5. The penalties that may be imposed under SOX.
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
duty of care
60
Allows a business to reconcile the cash transactions recorded


6. 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
duty of loyalty
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
review


7. A member of a board of directors who is not an officer of the corporation
right of first refusal
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
Cash Register
outside director


8. Additional shares of stock distributed as a dividend
stock dividend
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
derivative lawsuit
30


9. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
dividend
supramajority voting requirement
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
20


10. Remittance Advice
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
A control for cash recevied throught the mail
personal liability
officer


11. 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
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.
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
buy-and-sell agreement


12. 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
quorum
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
all employees who work for public companies as long as they qualify as a whistleblower


13. The company or person must present evidence within __ days after receiving notice of the complaint.
20
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
voting trust
supramajority voting requirement


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


15. If a hearing is requested - it will be held before an __ who will issue a __ and __.
administrative law judge - decision - order
duty of care
terms - conditions
retaliates against a whistleblower


16. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
dividend
derivative lawsuit
stock dividend
annual report


17. Voucher System
shareholder voting agreement
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
administrative law judge - decision - order
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.


18. SOX creates __ for company representatives.
quorum
voting trust
personal liability
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


19. 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 obedience
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
Cash Register
supramajority voting requirement


20. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
The person or company must present it's evidence within 20 days after it receives the complaint
interference with employment or livelihood of the informant
officer
20


21. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
They are not protected
duty of care
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
retaliates against a whistleblower


22. Types of proceedings protected under SOX?
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
personal liability
30
Investigations - Legal proceedings


23. 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
personal liability
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.
quorum


24. 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?
all employees who work for public companies as long as they qualify as a whistleblower
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.
right of first refusal
The employee can file a lawsuit in federal district court


25. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
administrative law judge - decision - order
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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
termination - demotion - suspension - threats - harassment


26. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
straight voting
outside director
business judgment rule
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


27. Sox important Organizations that you must know
They can have their stocks delisted by the national securities exchange and associations
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
stock dividend
negligence


28. 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
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
Cash Register
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.


29. Bank reconcilation
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.
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
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed


30. What procedures must the audit committee of a public company establish?
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
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
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
review


31. The number of directors necessary to hold a board meeting or transact business of the board
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
Any officer - contractor - subcontractor - agent - or employee of a company
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed


32. A distribution of profits of the corporation to shareholders
voting trust
business judgment rule
dividend
Investigations - Legal proceedings


33. SOX (or SARBOX)
Sarbanes-Oxley
preemptive rights
A control for cash recevied throught the mail
annual report


34. Why did Congress pass SOX?
termination - demotion - suspension - threats - harassment
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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


35. Sarbanes-Oxley Act of 2002
inside director
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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 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)


36. Audit committee

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37. An agreement that requires a selling shareholder to offer his or her shares for sale to the other parties to the agreement before selling them to anyone else
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
Any officer - contractor - subcontractor - agent - or employee of a company
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
right of first refusal


38. Company representative
Any officer - contractor - subcontractor - agent - or employee of a company
personal liability
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 person or company must present it's evidence within 20 days after it receives the complaint


39. 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
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
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
all employees who work for public companies as long as they qualify as a whistleblower
duty of loyalty


40. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
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
They are not protected
outside director
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. 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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42. A member of the board of directors who is also an officer of the corporation
special shareholders' meetings
duty of obedience
inside director
duty of loyalty


43. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
fiduciary duties
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
Investigations - Legal proceedings
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


44. What is one of the most important controls to protect cash received in over-the-counter sales?
duty of obedience
all employees who work for public companies as long as they qualify as a whistleblower
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
Cash Register


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
quorum
proxy
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.
record date


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


47. 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
termination - demotion - suspension - threats - harassment
Sarbanes-Oxley Act
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
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


48. 4 elements that must be proven to show usurping of corporate opportunity:

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49. What provision is enforced by the SEC only?

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

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