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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. What employees are protected under SOX?
all employees who work for public companies as long as they qualify as a whistleblower
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
The person or company must present it's evidence within 20 days after it receives the complaint

2. SOX creates __ for company representatives.
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
personal liability
administrative law judge - decision - order
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.

3. Voucher
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
A control for cash recevied throught the mail
duty of care
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.

4. If a hearing is requested - it will be held before an __ who will issue a __ and __.
all employees who work for public companies as long as they qualify as a whistleblower
A control for cash recevied throught the mail
administrative law judge - decision - order
Investigations - Legal proceedings

5. Bank accounts
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
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
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.
preemptive rights

6. How does this Act define 'harm'?
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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
termination - demotion - suspension - threats - harassment
interference with employment or livelihood of the informant

7. 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
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)
Investigations - Legal proceedings
negligence

8. 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
terms - conditions
shareholder voting agreement
record date
buy-and-sell agreement

9. 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
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
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.
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

10. Personal liability provision
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)
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 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
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

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

12. The company or person must present evidence within __ days after receiving notice of the complaint.
They can have their stocks delisted by the national securities exchange and associations
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
20
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

13. Audit committee

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14. Sox important Organizations that you must know
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
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
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
special shareholders' meetings

15. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
right of first refusal
quorum
They can have their stocks delisted by the national securities exchange and associations
officer

16. Additional shares of stock distributed as a dividend
stock dividend
quorum
all employees who work for public companies as long as they qualify as a whistleblower
derivative lawsuit

17. A member of a board of directors who is not an officer of the corporation
outside director
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
duty of care
Sarbanes-Oxley

18. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
proxy
record date
right of first refusal
review

19. What is one of the most important controls to protect cash received in over-the-counter sales?
stock dividend
Cash Register
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

20. Public company
public companies
annual report
Sarbanes-Oxley
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

21. Under what conditions may an employee claim protection of SOX?
all employees who work for public companies as long as they qualify as a whistleblower
shareholder voting agreement
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
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

22. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
personal liability
retaliates against a whistleblower
Any officer - contractor - subcontractor - agent - or employee of a company
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG

23. 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
all employees who work for public companies as long as they qualify as a whistleblower
piercing the corporate veil
interference with employment or livelihood of the informant
stock dividend

24. 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
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
60
Any officer - contractor - subcontractor - agent - or employee of a company

25. To be protected by sox an employee must do one of what activities?
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
piercing the corporate veil
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

26. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
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
duty of care
15

27. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
public companies
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
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.
terms - conditions

28. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
The person or company must present it's evidence within 20 days after it receives the complaint
duty of care
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud

29. Why did Congress pass SOX?
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
board of directors
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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations

30. Voucher System
inside director
stock 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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.

31. 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
Sarbanes-Oxley Act
business judgment rule
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

32. The SEC regulations to not require companies to follow what?
Allows a business to reconcile the cash transactions recorded
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)
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.
supramajority voting requirement

33. Internal Complaint Procedures
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
all employees who work for public companies as long as they qualify as a whistleblower
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

34. 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
buy-and-sell agreement
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
straight voting
stock dividend

35. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
The person or company must present it's evidence within 20 days after it receives the complaint
supramajority voting requirement
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
60

36. The penalties that may be imposed under SOX.
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
board of directors
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)
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

37. 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)
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
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)
petition - Administrative Review Board - 10

38. The Board can either adopt the judge's decision as its own or __ the case itself
piercing the corporate veil
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
They are not protected
review

39. Bank reconcilation steps
dividend
special shareholders' meetings
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
Allows a business to reconcile the cash transactions recorded

40. Bank reconcilation
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
voting trust
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.
dividend

41. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
15
quorum
Sarbanes-Oxley
business judgment rule

42. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
termination - demotion - suspension - threats - harassment
30
Allows a business to reconcile the cash transactions recorded
inside director

43. 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
Investigations - Legal proceedings
cumulative voting
stock 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

44. An agreement between two or more shareholders that stipulates how they will vote their shares
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
The person or company must present it's evidence within 20 days after it receives the complaint
shareholder voting agreement

45. 4 elements that must be proven to show usurping of corporate opportunity:

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46. What is required to qualify as a protected whistleblower
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
duty of loyalty
interference with employment or livelihood of the informant

47. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
negligence
special shareholders' meetings
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
Any officer - contractor - subcontractor - agent - or employee of a company

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

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49. 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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50. The employee must also service the notice on whom?
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)
stock dividend
administrative law judge - decision - order
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)