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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 procedures must the audit committee of a public company establish?
shareholder voting agreement
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)
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
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed

2. What are the conditions under which OSHA will investigate individual complaints?
board of directors
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
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
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

3. Company representative
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
administrative law judge - decision - order
Sarbanes-Oxley

4. 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

5. What employees are protected under SOX?
all employees who work for public companies as long as they qualify as a whistleblower
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
They can have their stocks delisted by the national securities exchange and associations
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.

6. 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
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
right of first refusal
15
Sarbanes-Oxley Act

7. SOX creates __ for company representatives.
personal liability
Cash Register
preemptive rights
administrative law judge - decision - order

8. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
supramajority voting requirement
annual report
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
duty of obedience

9. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
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
record date
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
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

10. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
officer
derivative lawsuit
They can have their stocks delisted by the national securities exchange and associations
negligence

11. Sox important Organizations that you must know
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
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
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG

12. If a hearing is requested - it will be held before an __ who will issue a __ and __.
officer
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
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

13. A panel of decision makers who are elected by the shareholders
public companies
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
board of directors
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations

14. Bank accounts
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
proxy
all employees who work for public companies as long as they qualify as a whistleblower
annual shareholders' meeting

15. How does this Act define 'harm'?
preemptive rights
business judgment rule
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
interference with employment or livelihood of the informant

16. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
business judgment rule
20
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
public companies

17. The company or person must present evidence within __ days after receiving notice of the complaint.
20
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
buy-and-sell agreement
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.

18. 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
inside director
Cash Register
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

19. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
officer
board of directors
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
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud

20. What provision is enforced by the SEC only?

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

22. 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
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
buy-and-sell agreement
duty of loyalty
petition - Administrative Review Board - 10

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

24. 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
proxy
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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
petition - Administrative Review Board - 10

25. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
stock dividend
They are not protected
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. 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
The employee can file a lawsuit in federal district court
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
right of first refusal
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

27. What is one of the most important controls to protect cash received in over-the-counter sales?
interference with employment or livelihood of the informant
Any officer - contractor - subcontractor - agent - or employee of a company
Cash Register
fiduciary duties

28. 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
right of first refusal
proxy
personal liability

29. Bank reconcilation
preemptive rights
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
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.

30. Elements of Internal Control
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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
fiduciary duties
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders

31. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
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
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
preemptive rights

32. What is the stated purpose of SOX?
administrative law judge - decision - order
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
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
business judgment rule

33. A distribution of profits of the corporation to shareholders
The employee can file a lawsuit in federal district court
60
dividend
proxy

34. 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)
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
board of directors
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.

35. Example of whistle blowing activities that DOL has found to be covered under SOX.
special shareholders' meetings
stock dividend
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder 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

36. 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)
business judgment rule
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.

37. Even if the employee provides evidence of individual complaints - OSHA will not investigate under what condition?
annual report
piercing the corporate veil
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
fiduciary duties

38. Usurping of corporate opportunity

39. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
A control for cash recevied throught the mail
They can have their stocks delisted by the national securities exchange and associations
15
interference with employment or livelihood of the informant

40. 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
They are not protected
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
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

41. 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
all employees who work for public companies as long as they qualify as a whistleblower
cumulative voting
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

42. 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
special shareholders' meetings
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
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

43. Special-purpose cash funds
annual report
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
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
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed

44. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
proxy
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
duty of care
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

45. Why did Congress pass SOX?
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
negligence

46. Bank reconcilation steps
shareholder voting agreement
officer
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
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

47. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
retaliates against a whistleblower
administrative law judge - decision - order
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
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

48. 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
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
terms - conditions
dividend

49. Personal liability provision
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
Sarbanes-Oxley Act
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
duty of loyalty

50. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
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
special shareholders' meetings
public companies
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud