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
administrative law judge - decision - order
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
review
outside director


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

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3. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
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
They can have their stocks delisted by the national securities exchange and associations
cumulative voting


4. 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
The person or company must present it's evidence within 20 days after it receives the complaint
terms - conditions
Investigations - Legal proceedings


5. Additional shares of stock distributed as a dividend
The person or company must present it's evidence within 20 days after it receives the complaint
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
stock dividend
annual report


6. Objectives of Internal Control
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
piercing the corporate veil
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
termination - demotion - suspension - threats - harassment


7. An agreement between two or more shareholders that stipulates how they will vote their shares
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
shareholder voting agreement
record date
straight voting


8. 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
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
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
board of directors


9. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
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
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
retaliates against a whistleblower
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


10. Sarbanes-Oxley Act of 2002
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.
outside director
duty of care
quorum


11. Voucher System
Sarbanes-Oxley Act
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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)
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations


12. SOX deadlines

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13. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
Sarbanes-Oxley
20
record date
Investigations - Legal proceedings


14. Why did Congress pass SOX?
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
terms - conditions
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


15. 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
personal liability
duty of obedience
fiduciary duties
15


16. Audit committee

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17. Bank accounts
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
60
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
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)


18. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
termination - demotion - suspension - threats - harassment
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
personal liability
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)


19. Voucher
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
15
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations


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


21. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
Allows a business to reconcile the cash transactions recorded
15
annual shareholders' meeting
right of first refusal


22. How does this Act define 'harm'?
voting trust
20
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
interference with employment or livelihood of the informant


23. Bank reconcilation steps
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)
public companies
right of first refusal
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


24. 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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25. 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?
personal liability
The employee can file a lawsuit in federal district court
piercing the corporate veil
Sarbanes-Oxley Act


26. Remittance Advice
piercing the corporate veil
A control for cash recevied throught the mail
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations


27. 'The employee's claim of shareholder fraud does not have to be correct.'
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
Allows a business to reconcile the cash transactions recorded
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
30


28. Bank reconcilation
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
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.
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
inside director


29. 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
quorum
petition - Administrative Review Board - 10
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
right of first refusal


30. Who signs Report for internal contro?
Investigations - Legal proceedings
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 employee can file a lawsuit in federal district court
annual shareholders' meeting


31. Types of proceedings protected under SOX?
The person or company must present it's evidence within 20 days after it receives the complaint
buy-and-sell agreement
all employees who work for public companies as long as they qualify as a whistleblower
Investigations - Legal proceedings


32. A member of the board of directors who is also an officer of the corporation
inside director
outside director
termination - demotion - suspension - threats - harassment
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


33. 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
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
proxy
Sarbanes-Oxley Act


34. 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
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
cumulative voting
officer
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


35. 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
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
Sarbanes-Oxley Act
personal liability
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


36. 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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37. 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
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
cumulative voting
quorum
preemptive rights


38. To be protected by sox an employee must do one of what activities?
They can have their stocks delisted by the national securities exchange and associations
negligence
Investigations - Legal proceedings
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct


39. Public company
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
quorum
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
supramajority voting requirement


40. Elements of Internal Control
petition - Administrative Review Board - 10
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
voting trust
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication


41. 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
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud


42. Special-purpose cash funds
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
personal liability
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations


43. The criminal provision of SOX
The employee can file a lawsuit in federal district court
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
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
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.


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

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45. What is the stated purpose of SOX?
straight voting
all employees who work for public companies as long as they qualify as a whistleblower
terms - conditions
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


46. A panel of decision makers who are elected by the shareholders
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
public companies
board of directors
right of first refusal


47. The employee must also service the notice on whom?
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
buy-and-sell 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)
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


48. What provision is enforced by the SEC only?

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49. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
fiduciary duties
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
Allows a business to reconcile the cash transactions recorded
officer


50. Sox important Organizations that you must know
terms - conditions
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
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
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct