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Sarbanes Oxley Act: SOX Corporate Governance

Subjects : certifications, sarbanes-oxley

Instructions:

Answer 50 questions in 15 minutes.
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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. What new employee right was created by SOX?
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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.
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

2. Under what conditions may an employee claim protection of SOX?
The employee can file a lawsuit in federal district court
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
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
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders

3. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
derivative lawsuit
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.
termination - demotion - suspension - threats - harassment
petition - Administrative Review Board - 10

4. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
terms - conditions
They can have their stocks delisted by the national securities exchange and associations
petition - Administrative Review Board - 10
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)

5. 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
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
piercing the corporate veil
A control for cash recevied throught the mail
record date

6. Usurping of corporate opportunity

7. What provision is enforced by the SEC only?

8. The Board can either adopt the judge's decision as its own or __ the case itself
review
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SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations

9. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
They are not protected
record date
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 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

10. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
fiduciary duties
quorum
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
duty of loyalty

11. Company representative
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.
special shareholders' meetings
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)
Any officer - contractor - subcontractor - agent - or employee of a company

12. What employees are protected under SOX?
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
dividend
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
all employees who work for public companies as long as they qualify as a whistleblower

13. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
quorum
duty of care
board of directors
They can have their stocks delisted by the national securities exchange and associations

14. Elements of Internal Control
duty of care
dividend
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
termination - demotion - suspension - threats - harassment

15. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
duty of obedience
supramajority voting requirement
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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

16. A panel of decision makers who are elected by the shareholders
board of directors
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
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shareholder voting agreement

17. The company or person must present evidence within __ days after receiving notice of the complaint.
Cash Register
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
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18. Special-purpose cash funds
termination - demotion - suspension - threats - harassment
record date
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

19. The number of directors necessary to hold a board meeting or transact business of the board
quorum
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.
buy-and-sell agreement

20. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
buy-and-sell agreement
Allows a business to reconcile the cash transactions recorded
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retaliates against a whistleblower

21. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
The employee can file a lawsuit in federal district court
annual report
Sarbanes-Oxley

22. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
all employees who work for public companies as long as they qualify as a whistleblower
officer
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.

23. What is required to qualify as a protected whistleblower
review
right of first refusal
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
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

24. 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
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
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
cumulative voting

25. 'The employee's claim of shareholder fraud does not have to be correct.'
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
Cash Register
review
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud

26. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
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
Investigations - Legal proceedings
business judgment rule
negligence

27. Bank reconcilation steps
cumulative voting
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
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
derivative lawsuit

28. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
stock dividend
officer
negligence

29. Sarbanes-Oxley Act of 2002
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
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
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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.

30. Even if the employee provides evidence of individual complaints - OSHA will not investigate under what condition?
annual shareholders' meeting
interference with employment or livelihood of the informant
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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations

31. 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
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
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

32. 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
review
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
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
petition - Administrative Review Board - 10

33. Internal Complaint Procedures
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
preemptive rights
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

34. Bank statement
Allows a business to reconcile the cash transactions recorded
Cash Register
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
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. The criminal provision of SOX
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.
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
duty of loyalty
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

36. Additional shares of stock distributed as a dividend
quorum
stock dividend
duty of loyalty
cumulative voting

37. Personal liability provision
duty of loyalty
They are not protected
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
business judgment rule

38. Types of proceedings protected under SOX?
Investigations - Legal proceedings
Sarbanes-Oxley
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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

39. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
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
termination - demotion - suspension - threats - harassment
A control for cash recevied throught the mail

40. Remittance Advice
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
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
derivative lawsuit
A control for cash recevied throught the mail

41. What procedures must the audit committee of a public company establish?
The employee can file a lawsuit in federal district court
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
administrative law judge - decision - order
annual report

42. 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
outside director
Sarbanes-Oxley Act
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
annual report

43. 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
They can have their stocks delisted by the national securities exchange and associations
voting trust
straight voting
interference with employment or livelihood of the informant

44. Bank accounts
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
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
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

45. 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

46. Bank reconcilation
proxy
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.
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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.

47. What are the conditions under which OSHA will investigate individual complaints?
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.
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
inside director
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

48. To be protected by sox an employee must do one of what activities?
record date
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
outside director

49. 4 elements that must be proven to show usurping of corporate opportunity:

50. Employees wishing to bring a lawsuit claiming they were discriminated or retaliated against in violation of SOX's whistleblower protection must first do what?