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Sarbanes Oxley Act: SOX Corporate Governance

Subjects : certifications, sarbanes-oxley

Instructions:

Answer 50 questions in 15 minutes.
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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. 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)
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
cumulative voting
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

2. The number of directors necessary to hold a board meeting or transact business of the board
all employees who work for public companies as long as they qualify as a whistleblower
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
quorum
termination - demotion - suspension - threats - harassment

3. Personal liability provision
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
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)
piercing the corporate veil
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

4. Voucher System
public companies
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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
Sarbanes-Oxley

5. Bank reconcilation
Sarbanes-Oxley
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.
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
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

6. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
preemptive rights
Sarbanes-Oxley Act
annual shareholders' meeting
quorum

7. Public company
inside director
termination - demotion - suspension - threats - harassment
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
30

8. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
They are not protected
duty of care
preemptive rights
shareholder voting agreement

9. 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
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
terms - conditions
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
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

10. SOX creates __ for company representatives.
personal liability
Allows a business to reconcile the cash transactions recorded
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
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

11. Example of whistle blowing activities that DOL has found to be covered under SOX.
right of first refusal
supramajority voting requirement
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud

12. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
termination - demotion - suspension - threats - harassment
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 person or company must present it's evidence within 20 days after it receives the complaint
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.

13. A distribution of profits of the corporation to shareholders
dividend
outside director
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)

14. Objectives of Internal Control
derivative lawsuit
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
duty of obedience
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.

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

16. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
cumulative voting
public companies
stock dividend
Cash Register

17. SOC record keeping requirements
shareholder voting agreement
petition - Administrative Review Board - 10
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
Any officer - contractor - subcontractor - agent - or employee of a company

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

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19. Special-purpose cash funds
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)
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
outside director

20. What provision is enforced by the SEC only?

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21. Additional shares of stock distributed as a dividend
stock dividend
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
petition - Administrative Review Board - 10
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

22. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
officer
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)
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
proxy

23. 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
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)
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.

24. Bank statement
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.
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)
Allows a business to reconcile the cash transactions recorded
administrative law judge - decision - order

25. The penalties that may be imposed under SOX.
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
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
piercing the corporate veil
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

26. 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
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
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
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed

27. If a hearing is requested - it will be held before an __ who will issue a __ and __.
annual shareholders' meeting
derivative lawsuit
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
administrative law judge - decision - order

28. A member of the board of directors who is also an officer of the corporation
straight voting
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
outside director
inside director

29. 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
shareholder voting agreement
15
60

30. 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
15
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
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.

31. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
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
30
terms - conditions

32. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
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)
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
15
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

33. 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
The employee can file a lawsuit in federal district court
Sarbanes-Oxley
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
quorum

34. The Board can either adopt the judge's decision as its own or __ the case itself
review
Investigations - Legal proceedings
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 can have their stocks delisted by the national securities exchange and associations

35. 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
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
straight voting
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
right of first refusal

36. What procedures must the audit committee of a public company establish?
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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
Sarbanes-Oxley Act
all employees who work for public companies as long as they qualify as a whistleblower

37. An agreement between two or more shareholders that stipulates how they will vote their shares
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.
20
cumulative voting
shareholder voting agreement

38. SOX (or SARBOX)
Sarbanes-Oxley
The employee can file a lawsuit in federal district court
annual shareholders' meeting
The person or company must present it's evidence within 20 days after it receives the complaint

39. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
cumulative voting
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
business judgment rule
inside director

40. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
administrative law judge - decision - order
duty of care
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

41. Bank accounts
supramajority voting requirement
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)
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
The employee can file a lawsuit in federal district court

42. 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
public companies
petition - Administrative Review Board - 10
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
They can have their stocks delisted by the national securities exchange and associations

43. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
annual report
business judgment rule
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

44. Bank reconcilation steps
terms - conditions
petition - Administrative Review Board - 10
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.
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

45. Usurping of corporate opportunity

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46. 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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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
Allows a business to reconcile the cash transactions recorded
Cash Register
60
cumulative voting

48. The SEC regulations to not require companies to follow what?
piercing the corporate veil
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 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
duty of loyalty

49. Internal Complaint Procedures
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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 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
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

50. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
all employees who work for public companies as long as they qualify as a whistleblower
cumulative voting
quorum
negligence