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Sarbanes Oxley Act: SOX Corporate Governance

Subjects : certifications, sarbanes-oxley

Instructions:

Answer 50 questions in 15 minutes.
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Match each statement with the correct term.
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1. SOC record keeping requirements
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
stock dividend
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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.

2. Voucher System
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
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 person or company must present it's evidence within 20 days after it receives the complaint

3. The number of directors necessary to hold a board meeting or transact business of the board
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
annual report
quorum
Allows a business to reconcile the cash transactions recorded

4. Bank accounts
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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
inside director
duty of care

5. Special-purpose cash funds
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
interference with employment or livelihood of the informant
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

6. 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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7. Types of proceedings protected under SOX?
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 obedience
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)
Investigations - Legal proceedings

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

9. Personal liability provision
quorum
review
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

10. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
public companies
business judgment rule
preemptive rights

11. Who signs Report for internal contro?
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.
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.
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outside director

12. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
The person or company must present it's evidence within 20 days after it receives the complaint
They are not protected
business judgment rule
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

13. Bank statement
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
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
Allows a business to reconcile the cash transactions recorded
record date

14. A panel of decision makers who are elected by the shareholders
board of directors
Any officer - contractor - subcontractor - agent - or employee of a company
straight voting
Investigations - Legal proceedings

15. A distribution of profits of the corporation to shareholders
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
dividend
straight voting
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

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?
The employee can file a lawsuit in federal district court
shareholder voting agreement
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.
Sarbanes-Oxley

17. What is one of the most important controls to protect cash received in over-the-counter sales?
personal liability
fiduciary duties
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Cash Register

18. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
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)
quorum
60
Sarbanes-Oxley Act

19. Additional shares of stock distributed as a dividend
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
cumulative voting
review
stock dividend

20. 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
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
They can have their stocks delisted by the national securities exchange and associations
duty of obedience
Any officer - contractor - subcontractor - agent - or employee of a company

21. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
They are not protected
duty of loyalty
retaliates against a whistleblower
30

22. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
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
voting trust
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)
Allows a business to reconcile the cash transactions recorded

23. 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
petition - Administrative Review Board - 10
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
inside director

24. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
Sarbanes-Oxley
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
shareholder voting agreement

25. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
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
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
A control for cash recevied throught the mail
They can have their stocks delisted by the national securities exchange and associations

26. What new employee right was created by SOX?
quorum
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 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)
interference with employment or livelihood of the informant

27. 4 elements that must be proven to show usurping of corporate opportunity:

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28. 'The employee's claim of shareholder fraud does not have to be correct.'
A control for cash recevied throught the mail
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Investigations - Legal proceedings
outside director

29. Bank reconcilation steps
interference with employment or livelihood of the informant
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
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.

30. What are the conditions under which OSHA will investigate individual complaints?
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
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 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
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

31. 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
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
straight voting
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
quorum

32. 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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33. 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
20
interference with employment or livelihood of the informant
terms - conditions
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

34. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
Allows a business to reconcile the cash transactions recorded
negligence
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed

35. 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
The employee can file a lawsuit in federal district court
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
business judgment rule
right of first refusal

36. 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
record date
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
piercing the corporate veil

37. What procedures must the audit committee of a public company establish?
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
annual report
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
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

38. Why did Congress pass SOX?
supramajority voting requirement
termination - demotion - suspension - threats - harassment
annual report
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders

39. Example of whistle blowing activities that DOL has found to be covered under SOX.
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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 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

40. 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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41. The employee must also service the notice on whom?
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)
duty of obedience
interference with employment or livelihood of the informant
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. An agreement between two or more shareholders that stipulates how they will vote their shares
interference with employment or livelihood of the informant
shareholder voting agreement
30
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

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

44. The Board can either adopt the judge's decision as its own or __ the case itself
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
Cash Register
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
review

45. Internal Complaint Procedures
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
duty of obedience
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
preemptive rights

46. A member of the board of directors who is also an officer of the corporation
A control for cash recevied throught the mail
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
inside director
officer

47. 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
A control for cash recevied throught the mail
Sarbanes-Oxley
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. 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
The person or company must present it's evidence within 20 days after it receives the complaint
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

49. The penalties that may be imposed under SOX.
review
annual shareholders' meeting
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
cumulative voting

50. Elements of Internal Control
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
right of first refusal
Cash Register
officer

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Sarbanes Oxley Act: SOX Corporate Governance

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