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. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
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
60
A control for cash recevied throught the mail


2. What employees are protected under SOX?
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
30
proxy
all employees who work for public companies as long as they qualify as a whistleblower


3. Remittance Advice
public companies
A control for cash recevied throught the mail
special shareholders' meetings
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


4. Bank statement
annual shareholders' meeting
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
termination - demotion - suspension - threats - harassment


5. Types of proceedings protected under SOX?
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.
quorum
public companies


6. Voucher System
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
dividend
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
annual shareholders' meeting


7. 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
duty of obedience
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Sarbanes-Oxley Act
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


8. 4 elements that must be proven to show usurping of corporate opportunity:

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9. 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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10. A distribution of profits of the corporation to shareholders
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
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
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


11. Personal liability provision
60
annual report
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


12. Objectives of Internal Control
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.
voting trust
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
terms - conditions


13. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
fiduciary duties
preemptive rights
annual shareholders' meeting
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


14. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the 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.
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
public companies
derivative lawsuit


15. 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.
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
record date
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed


16. What are the conditions under which OSHA will investigate individual complaints?
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 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 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
special shareholders' meetings


17. Examples of complaints found not to be covered under SOX
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
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)
shareholder voting agreement
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.


18. Special-purpose cash funds
60
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)
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


19. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
The person or company must present it's evidence within 20 days after it receives the complaint
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
business judgment rule
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


20. The number of directors necessary to hold a board meeting or transact business of the board
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.
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
quorum


21. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
stock dividend
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
petition - Administrative Review Board - 10
negligence


22. Audit committee

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23. Why did Congress pass SOX?
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
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)
annual report
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders


24. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
Sarbanes-Oxley
They can have their stocks delisted by the national securities exchange and associations
Allows a business to reconcile the cash transactions recorded
30


25. 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
dividend
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
proxy
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


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
review
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
right of first refusal
personal liability


27. 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
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
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
duty of care


28. Company representative
Any officer - contractor - subcontractor - agent - or employee of a company
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
60
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud


29. Elements of Internal Control
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
Any officer - contractor - subcontractor - agent - or employee of a company
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)
outside director


30. 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
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
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
dividend


31. An agreement between two or more shareholders that stipulates how they will vote their shares
shareholder voting agreement
duty of care
business judgment rule
30


32. 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?
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
personal liability
The employee can file a lawsuit in federal district court
15


33. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
supramajority voting requirement
retaliates against a whistleblower
officer
stock dividend


34. Voucher
preemptive rights
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
interference with employment or livelihood of the informant
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.


35. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
interference with employment or livelihood of the informant
shareholder voting agreement
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
duty of care


36. 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
preemptive rights
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG


37. 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
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct


38. How does this Act define 'harm'?
60
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.
public companies
interference with employment or livelihood of the informant


39. What is required to qualify as a protected whistleblower
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
quorum
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


40. SOC record keeping requirements
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
duty of obedience
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud


41. 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
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
board of directors
duty of loyalty
They are not protected


42. 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
quorum
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
supramajority voting requirement
piercing the corporate veil


43. What new employee right was created by SOX?
negligence
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
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.


44. What provision is enforced by the SEC only?

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45. What procedures must the audit committee of a public company establish?
retaliates against a whistleblower
buy-and-sell agreement
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
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


46. To be protected by sox an employee must do one of what activities?
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
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)
The employee can file a lawsuit in federal district court


47. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
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
voting trust
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


48. Usurping of corporate opportunity

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49. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing 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
20
15
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders


50. Bank reconcilation
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.
supramajority voting requirement
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.