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Sarbanes Oxley Act: SOX Corporate Governance

Subjects : certifications, sarbanes-oxley

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. Special-purpose cash funds
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 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
cumulative voting
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed

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

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

4. The Board can either adopt the judge's decision as its own or __ the case itself
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
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
review
15

5. The SEC regulations to not require companies to follow what?
proxy
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
duty of loyalty
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)

6. Additional shares of stock distributed as a dividend
terms - conditions
They can have their stocks delisted by the national securities exchange and associations
stock dividend
duty of obedience

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
buy-and-sell agreement
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
proxy
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

8. 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
quorum
stock 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.
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

9. SOC record keeping requirements
public companies
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
stock dividend
review

10. Elements of Internal Control
Cash Register
proxy
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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)

11. 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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12. Bank statement
Sarbanes-Oxley Act
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
business judgment rule
Allows a business to reconcile the cash transactions recorded

13. 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
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
cumulative voting
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)
officer

14. 4 elements that must be proven to show usurping of corporate opportunity:

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15. 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
Sarbanes-Oxley Act
petition - Administrative Review Board - 10
fiduciary duties

16. Bank reconcilation steps
Sarbanes-Oxley Act
cumulative voting
Sarbanes-Oxley
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

17. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
terms - conditions
right of first refusal
straight voting
officer

18. 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
all employees who work for public companies as long as they qualify as a whistleblower
Investigations - Legal proceedings
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.

19. What procedures must the audit committee of a public company establish?
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
personal liability
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
board of directors

20. Internal Complaint Procedures
A control for cash recevied throught the mail
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
Any officer - contractor - subcontractor - agent - or employee of a company
They can have their stocks delisted by the national securities exchange and associations

21. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
business judgment rule
Sarbanes-Oxley
right of first refusal
quorum

22. Remittance Advice
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
A control for cash recevied throught the mail
record date
terms - conditions

23. SOX creates __ for company representatives.
personal liability
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.
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
preemptive rights

24. 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
right of first refusal
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Any officer - contractor - subcontractor - agent - or employee of a company

25. Even if the employee provides evidence of individual complaints - OSHA will not investigate under what condition?
Allows a business to reconcile the cash transactions recorded
termination - demotion - suspension - threats - harassment
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
business judgment rule

26. If a hearing is requested - it will be held before an __ who will issue a __ and __.
proxy
straight voting
administrative law judge - decision - order
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

27. Bank accounts
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
duty of loyalty
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
special shareholders' meetings

28. SOX (or SARBOX)
Cash Register
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 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
Sarbanes-Oxley

29. 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
straight voting
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
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
proxy

30. Example of whistle blowing activities that DOL has found to be covered under SOX.
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
They are not protected
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud

31. 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)
Any officer - contractor - subcontractor - agent - or employee of a company
They can have their stocks delisted by the national securities exchange and associations
cumulative voting

32. Voucher
administrative law judge - decision - order
Cash Register
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
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

33. What employees are protected under SOX?
public companies
30
all employees who work for public companies as long as they qualify as a whistleblower
dividend

34. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
termination - demotion - suspension - threats - harassment
duty of care
negligence

35. 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
petition - Administrative Review Board - 10
business judgment rule
straight voting
dividend

36. Objectives of Internal Control
review
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
15
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

37. 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
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
15
Sarbanes-Oxley Act

38. 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?
right of first refusal
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
shareholder voting agreement
The employee can file a lawsuit in federal district court

39. Personal liability provision
interference with employment or livelihood of the informant
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
terms - conditions
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.

40. Why did Congress pass SOX?
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
personal liability
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.

41. The company or person must present evidence within __ days after receiving notice of the complaint.
The employee can file a lawsuit in federal district court
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
supramajority voting requirement

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
Sarbanes-Oxley
stock dividend
The person or company must present it's evidence within 20 days after it receives the complaint
piercing the corporate veil

43. Usurping of corporate opportunity

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44. Public company
right of first refusal
annual shareholders' meeting
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
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.

45. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
60
They are not protected
The employee can file a lawsuit in federal district court
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.

46. What provision is enforced by the SEC only?

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47. A member of the board of directors who is also an officer of the corporation
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
administrative law judge - decision - order
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
inside director

48. Voucher System
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
cumulative voting
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
review

49. To be protected by sox an employee must do one of what activities?
Cash Register
officer
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG

50. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
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
They can have their stocks delisted by the national securities exchange and associations
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
inside director