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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. A distribution of profits of the corporation to shareholders
negligence
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
annual report

2. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
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)
duty of loyalty
record date
preemptive rights

3. Remittance Advice
officer
A control for cash recevied throught the mail
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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. Internal Complaint Procedures
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 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)
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
termination - demotion - suspension - threats - harassment

5. The criminal provision of SOX
The person or company must present it's evidence within 20 days after it receives the complaint
quorum
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
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders

6. 4 elements that must be proven to show usurping of corporate opportunity:

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

8. What are the conditions under which OSHA will investigate individual complaints?
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

9. 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
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.
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
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
duty of obedience

10. Personal liability provision
15
administrative law judge - decision - order
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
duty of obedience

11. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
duty of loyalty
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
termination - demotion - suspension - threats - harassment
duty of care

12. Sarbanes-Oxley Act of 2002
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
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.
proxy
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations

13. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
business judgment rule
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
Sarbanes-Oxley
derivative lawsuit

14. Under what conditions may an employee claim protection of SOX?
administrative law judge - decision - order
right of first refusal
Cash Register
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

15. Types of proceedings protected under SOX?
review
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.
preemptive rights
Investigations - Legal proceedings

16. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
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)
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
review
They are not protected

17. An agreement between two or more shareholders that stipulates how they will vote their shares
shareholder voting agreement
officer
preemptive rights
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

18. Voucher System
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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.
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.
dividend

19. The penalties that may be imposed under SOX.
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
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
They can have their stocks delisted by the national securities exchange and associations

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

21. SOC record keeping requirements
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)
Allows a business to reconcile the cash transactions recorded
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
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

22. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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
They can have their stocks delisted by the national securities exchange and associations
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations

23. The company or person must present evidence within __ days after receiving notice of the complaint.
15
derivative lawsuit
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
20

24. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
special shareholders' meetings
voting trust
duty of loyalty
supramajority voting requirement

25. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
right of first refusal
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
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
officer

26. 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
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
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
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.

27. SOX deadlines

28. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
Allows a business to reconcile the cash transactions recorded
retaliates against a whistleblower
preemptive rights
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

29. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
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
record date
30

30. The Board can either adopt the judge's decision as its own or __ the case itself
review
Sarbanes-Oxley Act
annual shareholders' meeting
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.

31. 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

32. 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
duty of loyalty
administrative law judge - decision - order
Allows a business to reconcile the cash transactions recorded
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations

33. The SEC regulations to not require companies to follow what?
30
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
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)

34. Who signs Report for internal contro?
right of first refusal
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
Sarbanes-Oxley Act
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.

35. A member of the board of directors who is also an officer of the corporation
inside director
all employees who work for public companies as long as they qualify as a whistleblower
business judgment rule
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication

36. 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)
review
The employee can file a lawsuit in federal district court
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

37. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
quorum
termination - demotion - suspension - threats - harassment
30

38. 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
petition - Administrative Review Board - 10
Investigations - Legal proceedings
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations

39. 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
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
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
30
right of first refusal

40. The number of directors necessary to hold a board meeting or transact business of the board
The employee can file a lawsuit in federal district court
Any officer - contractor - subcontractor - agent - or employee of a company
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
quorum

41. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
Sarbanes-Oxley Act
60
termination - demotion - suspension - threats - harassment
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

42. Audit committee

43. 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
administrative law judge - decision - order
Allows a business to reconcile the cash transactions recorded
buy-and-sell agreement
60

44. 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
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
Investigations - Legal proceedings
Cash Register

45. 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.
negligence
A control for cash recevied throught the mail
Allows a business to reconcile the cash transactions recorded

46. Bank accounts
outside director
all employees who work for public companies as long as they qualify as a whistleblower
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
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.

47. 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
Sarbanes-Oxley
terms - conditions
They can have their stocks delisted by the national securities exchange and associations
cumulative voting

48. SOX (or SARBOX)
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
Allows a business to reconcile the cash transactions recorded
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
Sarbanes-Oxley

49. SOX creates __ for company representatives.
personal liability
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
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
annual shareholders' meeting

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