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 steps
outside director
Any officer - contractor - subcontractor - agent - or employee of a company
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
They can have their stocks delisted by the national securities exchange and associations


2. What employees are protected under 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
termination - demotion - suspension - threats - harassment
all employees who work for public companies as long as they qualify as a whistleblower
annual report


3. Usurping of corporate opportunity

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4. 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
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.
special shareholders' meetings


5. Types of proceedings protected under SOX?
terms - conditions
cumulative voting
Investigations - Legal proceedings
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


6. Bank statement
Allows a business to reconcile the cash transactions recorded
inside 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
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG


7. Why did Congress pass 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
petition - Administrative Review Board - 10
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
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders


8. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
fiduciary duties
termination - demotion - suspension - threats - harassment
public companies
business judgment rule


9. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
preemptive rights
Sarbanes-Oxley
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)
petition - Administrative Review Board - 10


10. 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
annual shareholders' meeting
derivative lawsuit
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.


11. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
outside director
public companies
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.
interference with employment or livelihood of the informant


12. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
preemptive rights
business judgment rule
straight voting
stock dividend


13. What is one of the most important controls to protect cash received in over-the-counter sales?
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 Register
all employees who work for public companies as long as they qualify as a whistleblower
preemptive rights


14. Examples of complaints found not to be covered under SOX
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
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
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)


15. 'The employee's claim of shareholder fraud does not have to be correct.'
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
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
60
terms - conditions


16. SOX (or SARBOX)
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
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
outside director


17. The number of directors necessary to hold a board meeting or transact business of the board
all employees who work for public companies as long as they qualify as a whistleblower
quorum
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


18. 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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19. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
duty of loyalty
personal liability
negligence
quorum


20. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
quorum
They can have their stocks delisted by the national securities exchange and associations
dividend
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


21. Company representative
They can have their stocks delisted by the national securities exchange and associations
Any officer - contractor - subcontractor - agent - or employee of a company
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
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.


22. 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
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
The person or company must present it's evidence within 20 days after it receives the complaint
proxy
quorum


23. Example of whistle blowing activities that DOL has found to be covered under SOX.
A control for cash recevied throught the mail
duty of obedience
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
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


24. Under what conditions may an employee claim protection of SOX?
Cash Register
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.
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


25. Audit committee

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26. 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
Investigations - Legal proceedings
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
right of first refusal
shareholder voting agreement


27. 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?
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
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
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


28. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
cumulative voting
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
board of directors
record date


29. 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
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.
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
special shareholders' meetings


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


31. 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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32. The penalties that may be imposed under SOX.
fiduciary duties
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
retaliates against a whistleblower
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


33. Sox important Organizations that you must know
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
record date
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG


34. Personal liability provision
all employees who work for public companies as long as they qualify as a 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
Allows a business to reconcile the cash transactions recorded
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


35. Remittance Advice
annual shareholders' meeting
all employees who work for public companies as long as they qualify as a whistleblower
Cash Register
A control for cash recevied throught the mail


36. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
A control for cash recevied throught the mail
fiduciary duties
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 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


37. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
30
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
dividend
annual report


38. Public company
officer
petition - Administrative Review Board - 10
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
piercing the corporate veil


39. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
They are not protected
annual report
supramajority voting requirement
quorum


40. What provision is enforced by the SEC only?

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41. 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
annual report
buy-and-sell agreement
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
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


42. 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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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
negligence


43. What are the conditions under which OSHA will investigate individual complaints?
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
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.
record date
right of first refusal


44. Voucher
shareholder voting agreement
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
A control for cash recevied throught the mail
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.


45. A distribution of profits of the corporation to shareholders
dividend
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
quorum


46. Who signs Report for internal contro?
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
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.
duty of loyalty
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.


47. 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
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
30
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders


48. The employee must also service the notice on whom?
shareholder voting agreement
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)
Cash Register


49. Sarbanes-Oxley Act of 2002
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.
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
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.


50. Special-purpose cash funds
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
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
15