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. 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?
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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)
duty of loyalty


2. 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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3. Types of proceedings protected under SOX?
Investigations - Legal proceedings
special shareholders' meetings
They are not protected
A control for cash recevied throught the mail


4. The SEC regulations to not require companies to follow what?
Sarbanes-Oxley
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
administrative law judge - decision - order
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)


5. To be protected by sox an employee must do one of what activities?
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
Sarbanes-Oxley Act
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
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


6. 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
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
Sarbanes-Oxley


7. Usurping of corporate opportunity

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8. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
petition - Administrative Review Board - 10
review
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all employees who work for public companies as long as they qualify as a whistleblower


9. Elements of Internal Control
voting trust
The employee can file a lawsuit in federal district court
retaliates against a whistleblower
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication


10. Bank reconcilation steps
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
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
fiduciary duties
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


11. Voucher System
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.
business judgment rule
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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.


12. SOX creates __ for company representatives.
public companies
quorum
proxy
personal liability


13. Bank accounts
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)
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
shareholder voting agreement
voting trust


14. Who signs Report for internal contro?
Investigations - Legal proceedings
duty of care
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)
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.


15. Additional shares of stock distributed as a dividend
stock dividend
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
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)


16. 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
Any officer - contractor - subcontractor - agent - or employee of a company
business judgment rule
termination - demotion - suspension - threats - harassment


17. Remittance Advice
fiduciary duties
A control for cash recevied throught the mail
preemptive rights
They can have their stocks delisted by the national securities exchange and associations


18. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
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
administrative law judge - decision - order
record date
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG


19. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
piercing the corporate veil
annual report
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


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
special shareholders' meetings
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)
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


21. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
They can have their stocks delisted by the national securities exchange and associations
preemptive rights
The person or company must present it's evidence within 20 days after it receives the complaint
annual report


22. Voucher
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
voting trust
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
supramajority voting requirement


23. Under what conditions may an employee claim protection of SOX?
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15
supramajority voting requirement
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


24. 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
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
proxy
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct


25. What new employee right was created by SOX?
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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
quorum
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


26. 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 officer - contractor - subcontractor - agent - or employee of a company
quorum
terms - conditions
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations


27. 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
supramajority voting requirement
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 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


28. Objectives of Internal Control
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
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 document that serves as proof of authority to pay cash or issue an electronic funds transfer.
right of first refusal


29. Why did Congress pass SOX?
right of first refusal
termination - demotion - suspension - threats - harassment
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.
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders


30. If a hearing is requested - it will be held before an __ who will issue a __ and __.
administrative law judge - decision - order
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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Cash Register


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

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32. Public company
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
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
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
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)


33. 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
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.
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.
public companies


34. Examples of complaints found not to be covered under SOX
review
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
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)
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders


35. A distribution of profits of the corporation to shareholders
right of first refusal
dividend
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
buy-and-sell agreement


36. Sox important Organizations that you must know
The person or company must present it's evidence within 20 days after it receives the complaint
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)
termination - demotion - suspension - threats - harassment
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG


37. How does this Act define 'harm'?
fiduciary duties
interference with employment or livelihood of the informant
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.
60


38. Sarbanes-Oxley Act of 2002
derivative lawsuit
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.
20


39. A member of a board of directors who is not an officer of the corporation
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
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outside director


40. A panel of decision makers who are elected by the shareholders
board of directors
stock dividend
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
The person or company must present it's evidence within 20 days after it receives the complaint


41. Bank statement
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.
straight voting
Allows a business to reconcile the cash transactions recorded
negligence


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
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
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
Cash Register
piercing the corporate veil


43. What is the stated purpose of SOX?
proxy
shareholder voting agreement
Sarbanes-Oxley
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


44. Company representative
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.
duty of care
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.


45. 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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46. What provision is enforced by the SEC only?

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47. Special-purpose cash funds
straight voting
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
They can have their stocks delisted by the national securities exchange and associations
negligence


48. The company or person must present evidence within __ days after receiving notice of the complaint.
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
20
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.
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


49. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
Sarbanes-Oxley Act
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
special shareholders' meetings


50. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
quorum
Allows a business to reconcile the cash transactions recorded
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.