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 employee's claim of shareholder fraud does not have to be correct.'
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
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
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations


2. 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)
supramajority voting requirement
15
personal liability


3. 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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4. What is one of the most important controls to protect cash received in over-the-counter sales?
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annual report
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
Cash Register


5. 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
They are not protected
duty of obedience
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
preemptive rights


6. Public company
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
outside director
petition - Administrative Review Board - 10


7. 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
voting trust
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
buy-and-sell agreement


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
20
terms - conditions
buy-and-sell agreement
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


9. An agreement between two or more shareholders that stipulates how they will vote their shares
15
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
shareholder voting agreement
review


10. SOC record keeping requirements
cumulative voting
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
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


11. Elements of Internal Control
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
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
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
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication


12. Bank reconcilation steps
Any officer - contractor - subcontractor - agent - or employee of a company
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
all employees who work for public companies as long as they qualify as a whistleblower
derivative lawsuit


13. The criminal provision of SOX
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 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
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
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.


14. 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
cumulative voting
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
terms - conditions
petition - Administrative Review Board - 10


15. Audit committee

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16. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
proxy
retaliates against 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
15


17. What is the stated purpose of SOX?
voting trust
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
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
The person or company must present it's evidence within 20 days after it receives the complaint


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

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19. A panel of decision makers who are elected by the shareholders
Cash Register
fiduciary duties
board of directors
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


20. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
Allows a business to reconcile the cash transactions recorded
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
derivative lawsuit
public companies


21. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
They can have their stocks delisted by the national securities exchange and associations
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
business judgment rule
retaliates against a whistleblower


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


23. A member of the board of directors who is also an officer of the corporation
shareholder voting agreement
inside director
Any officer - contractor - subcontractor - agent - or employee of a company
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)


24. A distribution of profits of the corporation to shareholders
A control for cash recevied throught the mail
dividend
special shareholders' meetings
outside director


25. Remittance Advice
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
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
A control for cash recevied throught the mail
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.


26. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
negligence
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
supramajority voting requirement
quorum


27. 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.
personal liability
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication


28. 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
60
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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


29. What provision is enforced by the SEC only?

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30. Personal liability provision
negligence
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.
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
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct


31. Usurping of corporate opportunity

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


33. 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
Investigations - Legal proceedings
public companies
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.


34. The employee must also service the notice on whom?
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
business judgment rule
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
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)


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


36. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
retaliates against a whistleblower
preemptive rights
buy-and-sell agreement


37. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
voting trust
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
dividend
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.


38. Bank statement
Allows a business to reconcile the cash transactions recorded
board of directors
60
preemptive rights


39. Voucher System
supramajority voting requirement
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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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


40. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
buy-and-sell agreement
30
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)
personal liability


41. 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
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
outside director
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations


42. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
termination - demotion - suspension - threats - harassment
officer
board of directors


43. Additional shares of stock distributed as a dividend
straight voting
stock dividend
Any officer - contractor - subcontractor - agent - or employee of a company
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


44. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
retaliates against a whistleblower
derivative lawsuit
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud


45. SOX (or SARBOX)
petition - Administrative Review Board - 10
review
officer
Sarbanes-Oxley


46. 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?
The employee can file a lawsuit in federal district court
Allows a business to reconcile the cash transactions recorded
terms - conditions
duty of loyalty


47. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
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
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
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
business judgment rule


48. The company or person must present evidence within __ days after receiving notice of the complaint.
piercing the corporate veil
cumulative voting
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
20


49. Sox important Organizations that you must know
officer
voting trust
retaliates against a whistleblower
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG


50. What employees are protected under SOX?
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
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
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
all employees who work for public companies as long as they qualify as a whistleblower