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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.
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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. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
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
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.
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)

2. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
review
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.
fiduciary duties
duty of obedience

3. Usurping of corporate opportunity

4. 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
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The employee can file a lawsuit in federal district court

5. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
preemptive rights
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
inside director
The person or company must present it's evidence within 20 days after it receives the complaint

6. Bank reconcilation steps
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
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
dividend

7. The criminal provision of SOX
termination - demotion - suspension - threats - harassment
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 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
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

8. A member of the board of directors who is also an officer of the corporation
special shareholders' meetings
inside director
personal liability
board of directors

9. What is the stated purpose of SOX?
business judgment rule
voting trust
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
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

10. A member of a board of directors who is not an officer of the corporation
outside director
board of directors
voting trust
interference with employment or livelihood of the informant

11. A distribution of profits of the corporation to shareholders
Sarbanes-Oxley
dividend
cumulative voting
quorum

12. To be protected by sox an employee must do one of what activities?
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
Sarbanes-Oxley Act
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.

13. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
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
They can have their stocks delisted by the national securities exchange and associations
shareholder voting agreement

14. What procedures must the audit committee of a public company establish?
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.
inside director
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
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

15. The number of directors necessary to hold a board meeting or transact business of the board
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
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A control for cash recevied throught the mail
quorum

16. A meeting of the shareholders of a corporation that must be held by the corporation to elect directors and to vote on other matters

17. Sox important Organizations that you must know
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
negligence
cumulative voting

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
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
personal liability
terms - conditions
proxy

19. What are the conditions under which OSHA will investigate individual complaints?
business judgment rule
They can have their stocks delisted by the national securities exchange and associations
public companies
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

20. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
annual report
quorum
They can have their stocks delisted by the national securities exchange and associations
petition - Administrative Review Board - 10

21. Remittance Advice
interference with employment or livelihood of the informant
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
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
A control for cash recevied throught the mail

22. Audit committee

23. Voucher System
dividend
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
board of directors

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?
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
The employee can file a lawsuit in federal district court
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 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

25. 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
Sarbanes-Oxley
quorum
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)
shareholder voting agreement

26. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
business judgment rule
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)
dividend
supramajority voting requirement

27. Personal liability provision
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
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
special shareholders' meetings
derivative lawsuit

28. 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
all employees who work for public companies as long as they qualify as a whistleblower
negligence
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
terms - conditions

29. Special-purpose cash funds
piercing the corporate veil
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
buy-and-sell agreement
all employees who work for public companies as long as they qualify as a whistleblower

30. 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
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preemptive rights
buy-and-sell agreement
shareholder voting agreement

31. An agreement between two or more shareholders that stipulates how they will vote their shares
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
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.
interference with employment or livelihood of the informant
shareholder voting agreement

32. Even if the employee provides evidence of individual complaints - OSHA will not investigate under what condition?
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
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
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

33. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
They are not protected
straight voting
They can have their stocks delisted by the national securities exchange and associations
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

34. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
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.
derivative lawsuit
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

35. Who signs Report for internal contro?
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.
public companies
piercing the corporate veil
Any officer - contractor - subcontractor - agent - or employee of a company

36. 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

37. 4 elements that must be proven to show usurping of corporate opportunity:

38. 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
annual report
duty of loyalty
cumulative voting
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders

39. Bank accounts
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations

40. 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
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
board of directors
The employee can file a lawsuit in federal district court

41. How does this Act define 'harm'?
Sarbanes-Oxley
all employees who work for public companies as long as they qualify as a whistleblower
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
interference with employment or livelihood of the informant

42. 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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
straight voting
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
petition - Administrative Review Board - 10

43. SOX creates __ for company representatives.
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
personal liability
duty of loyalty

44. 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
supramajority voting requirement
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
review
petition - Administrative Review Board - 10

45. SOX deadlines

46. Types of proceedings protected under SOX?
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
proxy
fiduciary duties
Investigations - Legal proceedings

47. If a hearing is requested - it will be held before an __ who will issue a __ and __.
administrative law judge - decision - order
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
quorum
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

48. Why did Congress pass 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)
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
They are not protected

49. Company representative
all employees who work for public companies as long as they qualify as a 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
Any officer - contractor - subcontractor - agent - or employee of a company
administrative law judge - decision - order

50. SOX (or SARBOX)
Sarbanes-Oxley
personal liability
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cumulative voting