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
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.
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
derivative lawsuit
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.


2. 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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3. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
public companies
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
review


4. Usurping of corporate opportunity

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5. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
buy-and-sell agreement
The employee can file a lawsuit in federal district court
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
retaliates against a whistleblower


6. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
inside director
supramajority voting requirement
60


7. Additional shares of stock distributed as a dividend
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
stock dividend
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
personal liability


8. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
shareholder voting agreement
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
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


9. The company or person must present evidence within __ days after receiving notice of the complaint.
business judgment rule
20
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 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)


10. 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
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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.


11. Why did Congress pass SOX?
The person or company must present it's evidence within 20 days after it receives the complaint
annual report
voting trust
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders


12. SOX (or SARBOX)
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
public companies
Sarbanes-Oxley
dividend


13. Voucher
petition - Administrative Review Board - 10
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.


14. Internal Complaint Procedures
outside director
dividend
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
quorum


15. Examples of complaints found not to be covered under SOX
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
Allows a business to reconcile the cash transactions recorded
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)
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.


16. SOX creates __ for company representatives.
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
personal liability
duty of loyalty
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication


17. The number of directors necessary to hold a board meeting or transact business of the board
quorum
15
right of first refusal
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.


18. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
Allows a business to reconcile the cash transactions recorded
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
administrative law judge - decision - order
30


19. 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
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
voting trust
cumulative voting
60


20. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
administrative law judge - decision - order
interference with employment or livelihood of the informant
They can have their stocks delisted by the national securities exchange and associations
derivative lawsuit


21. 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
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
quorum


22. What provision is enforced by the SEC only?

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23. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
They are not protected
duty of care
Allows a business to reconcile the cash transactions recorded
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


24. 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
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)
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)
record date
Sarbanes-Oxley Act


25. 'The employee's claim of shareholder fraud does not have to be correct.'
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
terms - conditions
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.


26. What is one of the most important controls to protect cash received in over-the-counter sales?
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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
negligence
Cash Register


27. 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
termination - demotion - suspension - threats - harassment
petition - Administrative Review Board - 10
duty of obedience
annual report


28. Remittance Advice
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)
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
A control for cash recevied throught the mail
record date


29. If a hearing is requested - it will be held before an __ who will issue a __ and __.
straight voting
administrative law judge - decision - order
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
personal liability


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

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31. Bank statement
Allows a business to reconcile the cash transactions recorded
piercing the corporate veil
The employee only needed to show that he or she had a reasonable belief that the conduct constituted 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)


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


33. An agreement between two or more shareholders that stipulates how they will vote their shares
straight voting
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
petition - Administrative Review Board - 10
shareholder voting agreement


34. What is the stated purpose of 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
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
stock dividend
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


35. 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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36. 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
board of directors
duty of loyalty
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.
petition - Administrative Review Board - 10


37. A member of the board of directors who is also an officer of the corporation
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
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
inside director
Investigations - Legal proceedings


38. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the 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
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
derivative lawsuit
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG


39. 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
retaliates against a whistleblower
duty of obedience
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)
voting trust


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


41. A panel of decision makers who are elected by the shareholders
annual report
The employee can file a lawsuit in federal district court
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)
board of directors


42. What is required to qualify as a protected whistleblower
piercing the corporate veil
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
quorum
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


43. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
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
record date
shareholder voting agreement


44. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
dividend
Sarbanes-Oxley
60
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)


45. Special-purpose cash funds
The employee can file a lawsuit in federal district court
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
all employees who work for public companies as long as they qualify as a whistleblower


46. Under what conditions may an employee claim protection of 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
Sarbanes-Oxley Act
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud


47. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
15
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
officer


48. 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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49. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
termination - demotion - suspension - threats - harassment
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
derivative lawsuit
The employee can file a lawsuit in federal district court


50. The employee must also service the notice on whom?
public companies
record date
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)
all employees who work for public companies as long as they qualify as a whistleblower