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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. 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
stock dividend
retaliates against a whistleblower
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

2. A member of the board of directors who is also an officer of the corporation
inside director
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
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.
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

3. Sox important Organizations that you must know
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 officer - contractor - subcontractor - agent - or employee of a company
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
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG

4. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
stock dividend
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
supramajority voting requirement
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

5. A distribution of profits of the corporation to shareholders
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
fiduciary duties
dividend
Any officer - contractor - subcontractor - agent - or employee of a company

6. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
board of directors
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 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
negligence

7. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
special shareholders' meetings
negligence
officer
fiduciary duties

8. What new employee right was created by SOX?
all employees who work for public companies as long as they qualify as a whistleblower
inside director
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
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. To be protected by sox an employee must do one of what activities?
business judgment rule
right of first refusal
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations

10. Who signs Report for internal contro?
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
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
They are not protected

11. 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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12. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
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
annual report
retaliates against a whistleblower
duty of care

13. Audit committee

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

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15. Bank reconcilation steps
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
interference with employment or livelihood of the informant
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
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations

16. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
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
Sarbanes-Oxley
record date
voting trust

17. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
duty of care
15
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

18. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
piercing the corporate veil
A control for cash recevied throught the mail
annual shareholders' meeting
They can have their stocks delisted by the national securities exchange and associations

19. The employee must also service the notice on whom?
public companies
The employee can file a lawsuit in federal district court
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)
outside director

20. 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
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
quorum
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.

21. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
officer
administrative law judge - decision - order
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
retaliates against a whistleblower

22. 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
preemptive rights
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 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
petition - Administrative Review Board - 10

23. 'The employee's claim of shareholder fraud does not have to be correct.'
60
They can have their stocks delisted by the national securities exchange and associations
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
business judgment rule

24. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
15
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.
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
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders

25. 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
They can have their stocks delisted by the national securities exchange and associations
board of directors
right of first refusal
business judgment rule

26. The SEC regulations to not require companies to follow what?
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
petition - Administrative Review Board - 10
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)
review

27. SOC record keeping requirements
review
retaliates against a whistleblower
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
They are not protected

28. 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
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
supramajority voting requirement
personal liability
quorum

29. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
duty of obedience
public companies
quorum
personal liability

30. SOX creates __ for company representatives.
business judgment rule
20
annual report
personal liability

31. Remittance Advice
A control for cash recevied throught the mail
buy-and-sell agreement
Allows a business to reconcile the cash transactions recorded
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

32. Bank accounts
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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
duty of loyalty
They are not protected

33. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
The employee can file a lawsuit in federal district court
60
review

34. What are the conditions under which OSHA will investigate individual complaints?
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
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
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
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

35. What provision is enforced by the SEC only?

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36. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
termination - demotion - suspension - threats - harassment
quorum
officer
shareholder voting agreement

37. Why did Congress pass SOX?
piercing the corporate veil
duty of loyalty
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

38. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
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
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding 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
business judgment rule

39. What is required to qualify as a protected whistleblower
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
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
right of first refusal

40. If a hearing is requested - it will be held before an __ who will issue a __ and __.
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
administrative law judge - decision - order
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
Allows a business to reconcile the cash transactions recorded

41. Example of whistle blowing activities that DOL has found to be covered under SOX.
record date
straight voting
Sarbanes-Oxley Act
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud

42. Voucher System
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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
supramajority voting requirement
termination - demotion - suspension - threats - harassment

43. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
interference with employment or livelihood of the informant
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
voting trust
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)

44. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
60
They are not protected
annual shareholders' meeting
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud

45. 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
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
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
cumulative voting
shareholder voting agreement

46. 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
Sarbanes-Oxley Act
terms - conditions
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
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

47. Special-purpose cash funds
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
Sarbanes-Oxley
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed

48. An agreement between two or more shareholders that stipulates how they will vote their shares
terms - conditions
fiduciary duties
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
shareholder voting agreement

49. The criminal provision of SOX
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
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
personal liability
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

50. 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
personal liability
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
piercing the corporate veil