Test your basic knowledge |

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. The number of directors necessary to hold a board meeting or transact business of the board
quorum
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
annual report
special shareholders' meetings

2. Objectives of Internal Control
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
voting trust
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
business judgment rule

3. 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
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
right of first refusal
duty of obedience
all employees who work for public companies as long as they qualify as a whistleblower

4. A member of a board of directors who is not an officer of the corporation
outside director
Any officer - contractor - subcontractor - agent - or employee of a company
15
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.

5. 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
right of first refusal
termination - demotion - suspension - threats - harassment
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.
proxy

6. 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
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)
supramajority voting requirement
inside director

7. A panel of decision makers who are elected by the shareholders
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
board of directors
duty of loyalty
30

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

9. If a hearing is requested - it will be held before an __ who will issue a __ and __.
proxy
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
Sarbanes-Oxley
administrative law judge - decision - order

10. 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

11. SOX creates __ for company representatives.
quorum
personal liability
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)
annual shareholders' meeting

12. Personal liability provision
officer
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
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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

13. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
voting trust
duty of care
Sarbanes-Oxley Act
officer

14. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
supramajority voting requirement
quorum
annual report

15. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
annual report
quorum
supramajority voting requirement
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

16. 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?
Cash Register
public companies
The person or company must present it's evidence within 20 days after it receives the complaint
The employee can file a lawsuit in federal district court

17. 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
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.
duty of loyalty
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

18. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
public companies
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
inside director
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

19. Audit committee

20. The SEC regulations to not require companies to follow what?
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
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 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)
stock dividend

21. Under what conditions may an employee claim protection of SOX?
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
voting trust
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
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

22. 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
derivative lawsuit
straight voting
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
quorum

23. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
annual report
15
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
20

24. The penalties that may be imposed under SOX.
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
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
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
business judgment rule

25. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
duty of care
terms - conditions
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)
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.

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

27. 'The employee's claim of shareholder fraud does not have to be correct.'
annual report
A control for cash recevied throught the mail
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
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud

28. An agreement between two or more shareholders that stipulates how they will vote their shares
shareholder voting agreement
all employees who work for public companies as long as they qualify as a whistleblower
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
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.

29. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
cumulative voting
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)
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
negligence

30. 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
derivative lawsuit
record date
personal liability
piercing the corporate veil

31. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
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
preemptive rights
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)
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

32. Examples of complaints found not to be covered under SOX
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
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)
30
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud

33. How does this Act define 'harm'?
negligence
interference with employment or livelihood of the informant
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
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.

34. The criminal provision of SOX
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
terms - conditions
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
review

35. Why did Congress pass SOX?
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.
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
business judgment rule
Sarbanes-Oxley

36. Elements of Internal Control
stock dividend
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
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
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication

37. Voucher System
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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
right of first refusal
voting trust

38. Special-purpose cash funds
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
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 Act
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

39. To be protected by sox an employee must do one of what activities?
personal liability
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
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
straight voting

40. Bank accounts
stock dividend
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
The person or company must present it's evidence within 20 days after it receives the complaint
dividend

41. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
board of directors
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
They are not protected
duty of loyalty

42. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
Allows a business to reconcile the cash transactions recorded
A control for cash recevied throught the mail
record date
outside director

43. 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
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.
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.
terms - conditions

44. 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 employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Sarbanes-Oxley Act
20
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

45. Usurping of corporate opportunity

46. A member of the board of directors who is also an officer of the corporation
They can have their stocks delisted by the national securities exchange and associations
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
inside director
straight voting

47. Bank reconcilation steps
annual report
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
inside director
petition - Administrative Review Board - 10

48. What is required to qualify as a protected whistleblower
duty of obedience
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
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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

49. What procedures must the audit committee of a public company establish?
duty of obedience
officer
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
Cash Register

50. Remittance Advice
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)
A control for cash recevied throught the mail
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
Investigations - Legal proceedings