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 accounts
personal liability
The employee can file a lawsuit in federal district court
business judgment rule
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations


2. Special-purpose cash funds
straight voting
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
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed


3. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
quorum
public companies
fiduciary duties
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations


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

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5. SOX deadlines

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6. A member of the board of directors who is also an officer of the corporation
dividend
inside director
stock dividend
proxy


7. 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
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
cumulative voting
quorum
petition - Administrative Review Board - 10


8. The Board can either adopt the judge's decision as its own or __ the case itself
right of first refusal
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
review
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.


9. 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
buy-and-sell agreement
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)
shareholder voting agreement


10. Bank reconcilation steps
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
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
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
duty of loyalty


11. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
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
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
60


12. What is required to qualify as a protected whistleblower
annual report
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
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication


13. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
The employee can file a lawsuit in federal district court
business judgment rule
dividend
30


14. An agreement between two or more shareholders that stipulates how they will vote their shares
terms - conditions
shareholder voting agreement
annual shareholders' meeting
Any officer - contractor - subcontractor - agent - or employee of a company


15. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
voting trust
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
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
termination - demotion - suspension - threats - harassment


16. Usurping of corporate opportunity

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17. A distribution of profits of the corporation to shareholders
dividend
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
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)


18. 'The employee's claim of shareholder fraud does not have to be correct.'
negligence
cumulative voting
60
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud


19. SOX (or SARBOX)
Sarbanes-Oxley
review
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.


20. Company representative
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
Any officer - contractor - subcontractor - agent - or employee of a company
duty of care
annual report


21. Internal Complaint Procedures
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 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
30
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


22. The employee must also service the notice on whom?
buy-and-sell agreement
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 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)
review


23. 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)
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
quorum


24. 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
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
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
quorum
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


25. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
retaliates against a whistleblower
dividend
inside director
Sarbanes-Oxley Act


26. 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?
right of first refusal
The employee can file a lawsuit in federal district court
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
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


27. 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
record date
Allows a business to reconcile the cash transactions recorded
straight voting
all employees who work for public companies as long as they qualify as a whistleblower


28. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
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
special shareholders' meetings
20
They are not protected


29. 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
voting trust
personal liability
annual report
buy-and-sell agreement


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


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. 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
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
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
duty of loyalty
A control for cash recevied throught the mail


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


34. What is the stated purpose of SOX?
shareholder voting agreement
annual 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
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


35. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
15
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.
officer
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.


36. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
record date
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
all employees who work for public companies as long as they qualify as a whistleblower
Sarbanes-Oxley


37. Example of whistle blowing activities that DOL has found to be covered under SOX.
Cash Register
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
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


38. 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
Allows a business to reconcile the cash transactions recorded
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


39. 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
The employee can file a lawsuit in federal district court
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
record date


40. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
voting trust
Allows a business to reconcile the cash transactions recorded
derivative lawsuit


41. What provision is enforced by the SEC only?

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42. Bank statement
Any officer - contractor - subcontractor - agent - or employee of a company
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
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
Allows a business to reconcile the cash transactions recorded


43. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
record date
duty of care
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.
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


44. 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.
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
personal liability
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed


45. The penalties that may be imposed under SOX.
Allows a business to reconcile the cash transactions recorded
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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
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


46. 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
Sarbanes-Oxley
supramajority voting requirement
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed


47. Bank reconcilation
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
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
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.


48. 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
piercing the corporate veil
inside director
dividend
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud


49. A panel of decision makers who are elected by the 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.
They are not protected
board of directors
quorum


50. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
negligence
public companies
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
fiduciary duties