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. 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
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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
straight voting
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


2. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
derivative lawsuit
Investigations - Legal proceedings
60
outside director


3. SOX (or SARBOX)
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
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
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


4. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
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 person or company must present it's evidence within 20 days after it receives the complaint
duty of care
fiduciary duties


5. What is the stated purpose of SOX?
retaliates against a whistleblower
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
Sarbanes-Oxley Act
derivative lawsuit


6. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
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
officer
buy-and-sell agreement


7. The company or person must present evidence within __ days after receiving notice of the complaint.
20
Investigations - Legal proceedings
duty of obedience
The employee can file a lawsuit in federal district court


8. 'The employee's claim of shareholder fraud does not have to be correct.'
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
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
outside director


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
20
personal liability
quorum
derivative lawsuit


10. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
Sarbanes-Oxley
termination - demotion - suspension - threats - harassment
stock dividend
They can have their stocks delisted by the national securities exchange and associations


11. SOX deadlines

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12. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
15
petition - Administrative Review Board - 10
Allows a business to reconcile the cash transactions recorded
30


13. 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
Cash Register
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


14. Who signs Report for internal contro?
special shareholders' meetings
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
derivative lawsuit
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.


15. How does this Act define 'harm'?
annual report
They are not protected
all employees who work for public companies as long as they qualify as a whistleblower
interference with employment or livelihood of the informant


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. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
voting trust
duty of care
Any officer - contractor - subcontractor - agent - or employee of a company
Sarbanes-Oxley


18. 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
preemptive rights
business judgment rule
retaliates against a whistleblower
proxy


19. Additional shares of stock distributed as a dividend
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
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
stock dividend
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)


20. The penalties that may be imposed under SOX.
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
buy-and-sell agreement
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)


21. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
They can have their stocks delisted by the national securities exchange and associations
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
annual report
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud


22. Elements of Internal Control
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
buy-and-sell agreement
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication


23. Bank reconcilation steps
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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
special shareholders' meetings
proxy


24. Usurping of corporate opportunity

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25. Why did Congress pass SOX?
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.
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
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


26. What new employee right was created by 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
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
fiduciary duties
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


27. 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
Cash Register
record date
piercing the corporate veil
Sarbanes-Oxley Act


28. 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
duty of obedience
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG


29. Audit committee

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30. A distribution of profits of the corporation to shareholders
dividend
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
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
all employees who work for public companies as long as they qualify as a whistleblower


31. Objectives of Internal Control
Allows a business to reconcile the cash transactions recorded
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
Cash Register
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


32. What is required to qualify as a protected whistleblower
supramajority voting requirement
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
Allows a business to reconcile the cash transactions recorded
petition - Administrative Review Board - 10


33. Examples of complaints found not to be covered under SOX
Cash Register
review
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
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)


34. 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
fiduciary duties
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)
20


35. What employees are protected under SOX?
all employees who work for public companies as long as they qualify as a whistleblower
record date
negligence
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)


36. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
They are not protected
dividend
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
buy-and-sell agreement


37. Bank accounts
stock dividend
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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
board of directors


38. Bank statement
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
Sarbanes-Oxley Act
20
Allows a business to reconcile the cash transactions recorded


39. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
15
personal liability
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)
buy-and-sell agreement


40. 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
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.
right of first refusal
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 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


41. SOX creates __ for company representatives.
A control for cash recevied throught the mail
personal liability
board of directors
They are not protected


42. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
Cash Register
duty of obedience
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
public companies


43. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
termination - demotion - suspension - threats - harassment
A control for cash recevied throught the mail
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.
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct


44. 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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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.
cumulative voting
straight voting


45. 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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46. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
inside director
record date
business judgment rule


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


48. 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 employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
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
duty of obedience


49. Company representative
quorum
Any officer - contractor - subcontractor - agent - or employee of a company
30
Sarbanes-Oxley


50. 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
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
They can have their stocks delisted by the national securities exchange and associations
derivative lawsuit
terms - conditions