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 investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
60
quorum
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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


2. The penalties that may be imposed under SOX.
all employees who work for public companies as long as they qualify as a whistleblower
terms - conditions
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
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)


3. What procedures must the audit committee of a public company establish?
derivative lawsuit
special shareholders' meetings
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
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


4. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
administrative law judge - decision - order
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
30


5. Sox important Organizations that you must know
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
30
Sarbanes-Oxley
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG


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


7. 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)
special shareholders' meetings
quorum
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud


8. The Board can either adopt the judge's decision as its own or __ the case itself
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
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
review


9. If a hearing is requested - it will be held before an __ who will issue a __ and __.
fiduciary duties
administrative law judge - decision - order
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
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.


10. How does this Act define 'harm'?
interference with employment or livelihood of the informant
board of directors
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)
negligence


11. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
straight voting
voting trust
shareholder voting agreement
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


12. Under what conditions may an employee claim protection of 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
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
quorum


13. 4 elements that must be proven to show usurping of corporate opportunity:

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14. 'The employee's claim of shareholder fraud does not have to be correct.'
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 document that serves as proof of authority to pay cash or issue an electronic funds transfer.
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
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud


15. What is required to qualify as a protected whistleblower
They are not protected
all employees who work for public companies as long as they qualify as a 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
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. 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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17. A panel of decision makers who are elected by the shareholders
buy-and-sell agreement
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
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)


18. 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
officer
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
review
Sarbanes-Oxley Act


19. SOC record keeping requirements
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
dividend
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 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


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

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21. Why did Congress pass SOX?
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)
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
all employees who work for public companies as long as they qualify as a whistleblower
business judgment rule


22. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
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)
special shareholders' meetings
15
petition - Administrative Review Board - 10


23. Bank accounts
preemptive rights
shareholder voting agreement
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
duty of obedience


24. SOX (or SARBOX)
Sarbanes-Oxley
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
petition - Administrative Review Board - 10
The employee can file a lawsuit in federal district court


25. The criminal provision of SOX
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
outside director
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.


26. A member of a board of directors who is not an officer of the corporation
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
quorum
outside director
20


27. 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
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
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.
preemptive rights


28. The SEC regulations to not require companies to follow what?
review
quorum
piercing the corporate veil
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)


29. Even if the employee provides evidence of individual complaints - OSHA will not investigate under what condition?
Sarbanes-Oxley Act
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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
15


30. A distribution of profits of the corporation to shareholders
administrative law judge - decision - order
dividend
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


31. 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
cumulative voting
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations


32. 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
The person or company must present it's evidence within 20 days after it receives the complaint
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.
negligence


33. 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
Sarbanes-Oxley
petition - Administrative Review Board - 10
duty of obedience
derivative lawsuit


34. Elements of Internal Control
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
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
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


35. 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
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
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
duty of obedience


36. Additional shares of stock distributed as a dividend
business judgment rule
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.
proxy
stock dividend


37. Personal liability provision
15
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 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
Any officer - contractor - subcontractor - agent - or employee of a company


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


39. Special-purpose cash funds
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.
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)
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed


40. Remittance Advice
A control for cash recevied throught the mail
petition - Administrative Review Board - 10
duty of care
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


41. Objectives of Internal Control
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
shareholder voting agreement
60
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)


42. Example of whistle blowing activities that DOL has found 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
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
voting trust


43. SOX creates __ for company representatives.
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
Any officer - contractor - subcontractor - agent - or employee of a company
personal liability
straight voting


44. 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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45. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
They are not protected
straight voting
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
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


46. An agreement between two or more shareholders that stipulates how they will vote their shares
shareholder voting agreement
derivative lawsuit
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.
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


47. 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
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
dividend
duty of care


48. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
officer
dividend
shareholder voting agreement


49. SOX deadlines

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50. 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
Sarbanes-Oxley Act
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)
terms - conditions
A control for cash recevied throught the mail