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. Usurping of corporate opportunity

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2. How does this Act define 'harm'?
public companies
review
quorum
interference with employment or livelihood of the informant


3. Additional shares of stock distributed as a 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.
interference with employment or livelihood of the informant
negligence
stock dividend


4. 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
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 obedience


5. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
proxy
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.
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
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6. Bank reconcilation
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
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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.


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
Sarbanes-Oxley Act
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)
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.
Any officer - contractor - subcontractor - agent - or employee of a company


8. Types of proceedings protected under SOX?
right of first refusal
Investigations - Legal proceedings
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
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders


9. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
negligence
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
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


10. 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
proxy
special shareholders' meetings
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed


11. The SEC regulations to not require companies to follow what?
administrative law judge - decision - order
buy-and-sell agreement
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)
20


12. Audit committee

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13. A member of a board of directors who is not an officer of the corporation
retaliates against a whistleblower
outside director
cumulative voting
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


14. 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
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
quorum
duty of loyalty
public companies


15. What employees are protected under SOX?
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.
all employees who work for public companies as long as they qualify as a whistleblower
stock dividend
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud


16. A member of the board of directors who is also an officer of the corporation
Allows a business to reconcile the cash transactions recorded
derivative lawsuit
inside director
review


17. Remittance Advice
A control for cash recevied throught the mail
duty of loyalty
business judgment rule
all employees who work for public companies as long as they qualify as a whistleblower


18. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
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.
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
board of directors
record date


19. Company representative
cumulative voting
Any officer - contractor - subcontractor - agent - or employee of a company
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
public companies


20. What new employee right was created by SOX?
piercing the corporate veil
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
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
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


21. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
60
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
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)
duty of care


22. Example of whistle blowing activities that DOL has found to be covered under SOX.
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
retaliates against a whistleblower
public companies
Cash Register


23. A panel of decision makers who are elected by the shareholders
60
board of directors
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
special shareholders' meetings


24. SOX creates __ for company representatives.
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
personal liability
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.
all employees who work for public companies as long as they qualify as a whistleblower


25. The number of directors necessary to hold a board meeting or transact business of the board
quorum
stock dividend
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG


26. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
buy-and-sell agreement
business judgment rule
termination - demotion - suspension - threats - harassment
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud


27. 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
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
business judgment rule


28. What procedures must the audit committee of a public company establish?
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
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
business judgment rule
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.


29. 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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30. The company or person must present evidence within __ days after receiving notice of 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
proxy
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


31. The criminal provision of SOX
shareholder voting agreement
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
right of first refusal
They are not protected


32. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
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
annual report
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
30


33. 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
negligence
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
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
piercing the corporate veil


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


35. Objectives of Internal Control
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
right of first refusal
supramajority voting requirement
review


36. 4 elements that must be proven to show usurping of corporate opportunity:

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37. A distribution of profits of the corporation to shareholders
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
dividend
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 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


38. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
duty of care


39. What are the conditions under which OSHA will investigate individual complaints?
Cash Register
15
They are not protected
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


40. To be protected by sox an employee must do one of what activities?
The person or company must present it's evidence within 20 days after it receives the complaint
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct


41. 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?
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.
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 can file a lawsuit in federal district court
annual shareholders' meeting


42. Why did Congress pass SOX?
stock dividend
A control for cash recevied throught the mail
duty of loyalty
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders


43. 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)
duty of loyalty
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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.


44. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
Sarbanes-Oxley Act
duty of care
Allows a business to reconcile the cash transactions recorded
preemptive rights


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

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46. SOX deadlines

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47. What is the stated purpose of 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
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.
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.
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. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
Cash Register
termination - demotion - suspension - threats - harassment
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
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


49. Bank statement
stock dividend
Cash Register
right of first refusal
Allows a business to reconcile the cash transactions recorded


50. Even if the employee provides evidence of individual complaints - OSHA will not investigate under what condition?
annual shareholders' meeting
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
60
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