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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.
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. 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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
Investigations - Legal proceedings
terms - conditions
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

2. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
quorum
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
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
public companies

3. 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
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Sarbanes-Oxley Act
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
Cash Register

4. Types of proceedings protected under SOX?
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
Investigations - Legal proceedings
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
duty of loyalty

5. 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
outside director
retaliates against a whistleblower
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
quorum

6. 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
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.
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
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

7. Employees wishing to bring a lawsuit claiming they were discriminated or retaliated against in violation of SOX's whistleblower protection must first do what?

8. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
board of directors
They are not protected
review
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed

9. 'The employee's claim of shareholder fraud does not have to be correct.'
They are not protected
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Investigations - Legal proceedings
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

10. SOC record keeping requirements
The employee can file a lawsuit in federal district court
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)
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
Sarbanes-Oxley Act

11. A system in which each shareholder votes the number of share he or she own on candidates for each of the positions open - also called noncumulative voting
straight voting
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
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
proxy

12. Elements of Internal Control
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
buy-and-sell agreement
cumulative voting
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication

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

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

15. Bank reconcilation
proxy
Any officer - contractor - subcontractor - agent - or employee of a company
Sarbanes-Oxley Act
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.

16. Personal liability provision
Sarbanes-Oxley Act
voting trust
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
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders

17. Bank statement
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
public companies
Investigations - Legal proceedings

18. The number of directors necessary to hold a board meeting or transact business of the board
quorum
cumulative voting
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
duty of care

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

20. Bank reconcilation steps
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
preemptive rights
administrative law judge - decision - order
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

21. 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

22. Bank accounts
30
Sarbanes-Oxley Act
negligence
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations

23. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
inside director
right of first refusal
The employee can file a lawsuit in federal district court
voting trust

24. A panel of decision makers who are elected by the 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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
board of directors
15

25. Example of whistle blowing activities that DOL has found to be covered under SOX.
review
right of first refusal
inside director
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud

26. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
supramajority voting requirement
public companies
30
review

27. 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
all employees who work for public companies as long as they qualify as a whistleblower
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)
buy-and-sell agreement

28. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
proxy
fiduciary duties
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
They can have their stocks delisted by the national securities exchange and associations

29. SOX creates __ for company representatives.
cumulative voting
fiduciary duties
personal liability
supramajority voting requirement

30. What is the stated purpose of SOX?
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
buy-and-sell 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
business judgment rule

31. 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
duty of care
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
right of first refusal
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations

32. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
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
voting trust
preemptive rights
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.

33. A system in which a shareholder can accumulate all of his or her votes and vote them all for one candidate or split them among several candidates
cumulative voting
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
terms - conditions
special shareholders' meetings

34. 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
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.
annual report
15

35. The company or person must present evidence within __ days after receiving notice of the complaint.
inside director
20
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
15

36. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
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
preemptive rights
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
record date

37. 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
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)
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
duty of obedience
Investigations - Legal proceedings

38. The employee must also service the notice on whom?
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
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.
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)
30

39. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the 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.
all employees who work for public companies as long as they qualify as a whistleblower
15
voting trust

40. 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
supramajority voting requirement
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)
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)

41. Even if the employee provides evidence of individual complaints - OSHA will not investigate under what condition?
derivative lawsuit
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
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
30

42. An agreement between two or more shareholders that stipulates how they will vote their shares
shareholder voting agreement
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
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
piercing the corporate veil

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

44. If a hearing is requested - it will be held before an __ who will issue a __ and __.
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
stock dividend
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
administrative law judge - decision - order

45. Voucher System
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.
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.

46. Special-purpose cash funds
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
interference with employment or livelihood of the informant
The person or company must present it's evidence within 20 days after it receives the complaint

47. Audit committee

48. SOX (or SARBOX)
Sarbanes-Oxley
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)
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.

49. 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?
board of directors
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
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 employee can file a lawsuit in federal district court

50. Public company
inside director
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.
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 company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.