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. Bank reconcilation
Any officer - contractor - subcontractor - agent - or employee of a company
annual shareholders' meeting
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.
administrative law judge - decision - order


2. To be protected by sox an employee must do one of what activities?
fiduciary duties
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
duty of loyalty


3. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
quorum
public companies
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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


4. A distribution of profits of the corporation to shareholders
Any officer - contractor - subcontractor - agent - or employee of a company
public companies
dividend
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


5. Voucher
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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
negligence
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.


6. SOX deadlines

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7. What is one of the most important controls to protect cash received in over-the-counter sales?
Any officer - contractor - subcontractor - agent - or employee of a company
Cash Register
20
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)


8. Why did Congress pass SOX?
petition - Administrative Review Board - 10
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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
termination - demotion - suspension - threats - harassment


9. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
negligence
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
inside director
fiduciary duties


10. Special-purpose cash funds
interference with employment or livelihood of the informant
They are not protected
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
stock dividend


11. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
annual report
retaliates against a whistleblower
duty of care


12. The number of directors necessary to hold a board meeting or transact business of the board
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
quorum
interference with employment or livelihood of the informant
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


13. Internal Complaint Procedures
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)
interference with employment or livelihood of the informant
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
review


14. Remittance Advice
Sarbanes-Oxley Act
A control for cash recevied throught the mail
They can have their stocks delisted by the national securities exchange and associations
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


15. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
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
straight 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
preemptive rights


16. What procedures must the audit committee of a public company establish?
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
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
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


17. How does this Act define 'harm'?
right of first refusal
interference with employment or livelihood of the informant
inside director
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


18. Sox important Organizations that you must know
Sarbanes-Oxley
right of first refusal
20
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG


19. The SEC regulations to not require companies to follow what?
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)
right of first refusal
annual shareholders' meeting
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders


20. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
negligence
Cash Register
personal liability
business judgment rule


21. A member of the board of directors who is also an officer of the corporation
all employees who work for public companies as long as they qualify as a whistleblower
derivative lawsuit
interference with employment or livelihood of the informant
inside director


22. An agreement between two or more shareholders that stipulates how they will vote their shares
30
stock dividend
shareholder voting agreement
inside director


23. 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
cumulative voting
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
special shareholders' meetings
straight voting


24. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
officer
annual shareholders' meeting
shareholder voting agreement
They are not protected


25. Example of whistle blowing activities that DOL has found to be covered under SOX.
Any officer - contractor - subcontractor - agent - or employee of a company
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
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
proxy


26. The company or person must present evidence within __ days after receiving notice of the complaint.
Sarbanes-Oxley
20
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


27. Sarbanes-Oxley Act of 2002
terms - conditions
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.
shareholder voting agreement
administrative law judge - decision - order


28. Usurping of corporate opportunity

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29. 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
interference with employment or livelihood of the informant
dividend
all employees who work for public companies as long as they qualify as a whistleblower
right of first refusal


30. Company representative
Any officer - contractor - subcontractor - agent - or employee of a company
officer
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.
derivative lawsuit


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


32. Audit committee

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33. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
60
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
proxy


34. 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
retaliates against a whistleblower
Cash Register
supramajority voting requirement
Sarbanes-Oxley Act


35. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
retaliates against 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
supramajority voting requirement
termination - demotion - suspension - threats - harassment


36. What employees are protected under SOX?
all employees who work for public companies as long as they qualify as a whistleblower
Allows a business to reconcile the cash transactions recorded
interference with employment or livelihood of the informant
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


37. What is the stated purpose 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
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
fiduciary duties
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed


38. 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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39. 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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40. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the 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
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
15


41. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
duty of loyalty
terms - conditions
They are not protected


42. 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
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.
annual report
officer


43. The employee must also service the notice on whom?
30
public companies
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
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)


44. What are the conditions under which OSHA will investigate individual complaints?
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
business judgment rule
quorum
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


45. 4 elements that must be proven to show usurping of corporate opportunity:

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46. The penalties that may be imposed under 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
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
duty of obedience
quorum


47. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
review
They can have their stocks delisted by the national securities exchange and associations
voting trust
Investigations - Legal proceedings


48. The Board can either adopt the judge's decision as its own or __ the case itself
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
review
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
straight voting


49. 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
piercing the corporate veil
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)
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)
voting trust


50. 'The employee's claim of shareholder fraud does not have to be correct.'
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
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
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG