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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. What procedures must the audit committee of a public company establish?
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
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
shareholder voting agreement

2. The penalties that may be imposed under SOX.
officer
dividend
annual report
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

3. A meeting of the shareholders of a corporation that must be held by the corporation to elect directors and to vote on other matters

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

5. Who signs Report for internal contro?
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.
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
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

6. 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
outside director
voting trust
board of directors
Sarbanes-Oxley Act

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

8. 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
termination - demotion - suspension - threats - harassment
buy-and-sell agreement
Allows a business to reconcile the cash transactions recorded
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

9. If a hearing is requested - it will be held before an __ who will issue a __ and __.
officer
administrative law judge - decision - order
stock dividend
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

10. Personal liability provision
They can have their stocks delisted by the national securities exchange and associations
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
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
Sarbanes-Oxley Act

11. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
preemptive rights
right of first refusal
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)
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations

12. 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
quorum
They can have their stocks delisted by the national securities exchange and associations
all employees who work for public companies as long as they qualify as a whistleblower
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.

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

14. Why did Congress pass SOX?
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
quorum
annual shareholders' meeting
A control for cash recevied throught the mail

15. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
Cash Register
The person or company must present it's evidence within 20 days after it receives the complaint
termination - demotion - suspension - threats - harassment
preemptive rights

16. A member of a board of directors who is not an officer of the corporation
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
officer
Allows a business to reconcile the cash transactions recorded
outside director

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

18. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
right of first refusal
supramajority voting requirement
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
board of directors

19. 4 elements that must be proven to show usurping of corporate opportunity:

20. Bank statement
Allows a business to reconcile the cash transactions recorded
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.
piercing the corporate veil
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

21. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its 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
30
terms - conditions
fiduciary duties

22. 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
special shareholders' meetings
stock dividend
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.

23. 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
Cash Register
proxy
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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24. Internal Complaint Procedures
dividend
derivative lawsuit
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
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

25. How does this Act define 'harm'?
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
Sarbanes-Oxley
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

26. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
voting trust
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
Any officer - contractor - subcontractor - agent - or employee of a company
Allows a business to reconcile the cash transactions recorded

27. The criminal provision of SOX
Cash Register
petition - Administrative Review Board - 10
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
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud

28. What is one of the most important controls to protect cash received in over-the-counter sales?
record date
special shareholders' meetings
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.
Cash Register

29. A member of the board of directors who is also 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
inside director
voting trust
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

30. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
shareholder voting agreement
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
quorum
record date

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
The person or company must present it's evidence within 20 days after it receives the complaint
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
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

32. The SEC regulations to not require companies to follow what?
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)
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations

33. What is the stated purpose of SOX?
dividend
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
termination - demotion - suspension - threats - harassment
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

34. Voucher
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
quorum
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
officer

35. Audit committee

36. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
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proxy
review
annual report

37. Bank reconcilation
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
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.
A control for cash recevied throught the mail
right of first refusal

38. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
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)
dividend
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
officer

39. Public company
duty of loyalty
Sarbanes-Oxley
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
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)

40. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
annual report
retaliates against a whistleblower
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
They can have their stocks delisted by the national securities exchange and associations

41. Remittance Advice
A control for cash recevied throught the mail
annual report
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 only needed to show that he or she had a reasonable belief that the conduct constituted fraud

42. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
board of directors
Investigations - Legal proceedings
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
15

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

44. The Board can either adopt the judge's decision as its own or __ the case itself
right of first refusal
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
review
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

45. Elements 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
Allows a business to reconcile the cash transactions recorded
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication

46. What provision is enforced by the SEC only?

47. To be protected by sox an employee must do one of what activities?
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Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
special shareholders' meetings
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

48. Special-purpose cash funds
Sarbanes-Oxley
fiduciary duties
retaliates against a whistleblower
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed

49. Types of proceedings protected under SOX?
Investigations - Legal proceedings
board of directors
Sarbanes-Oxley
public companies

50. Sarbanes-Oxley Act of 2002
annual shareholders' meeting
officer
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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.