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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. A member of a board of directors who is not an officer of the corporation
quorum
proxy
Investigations - Legal proceedings
outside director

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

3. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
20
termination - demotion - suspension - threats - harassment
officer

4. Audit committee

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5. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
fiduciary duties
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
derivative lawsuit
buy-and-sell agreement

6. Objectives of Internal Control
Sarbanes-Oxley Act
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
The person or company must present it's evidence within 20 days after it receives the complaint
dividend

7. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
special shareholders' meetings
preemptive rights
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
officer

8. 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
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.
petition - Administrative Review Board - 10
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
termination - demotion - suspension - threats - harassment

9. The SEC regulations to not require companies to follow what?
The employee can file a lawsuit in federal district court
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
duty of care
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)

10. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
straight voting
negligence
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.
voting trust

11. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
business judgment rule
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)
Sarbanes-Oxley Act

12. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
duty of care
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.
They can have their stocks delisted by the national securities exchange and associations
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. What are the conditions under which OSHA will investigate individual complaints?
personal liability
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
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
negligence

14. Remittance Advice
A control for cash recevied throught the mail
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
all employees who work for public companies as long as they qualify as a whistleblower
outside director

15. 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
A control for cash recevied throught the mail
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
administrative law judge - decision - order
terms - conditions

16. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
15
A control for cash recevied throught the mail
They can have their stocks delisted by the national securities exchange and associations
Allows a business to reconcile the cash transactions recorded

17. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
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
fiduciary duties
They can have their stocks delisted by the national securities exchange and associations
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.

18. If a hearing is requested - it will be held before an __ who will issue a __ and __.
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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)
administrative law judge - decision - order

19. 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
special shareholders' meetings
Investigations - Legal proceedings
petition - Administrative Review Board - 10

20. Personal liability provision
annual shareholders' meeting
public companies
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
15

21. The employee must also service the notice on whom?
Sarbanes-Oxley Act
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
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.
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)

22. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
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
20
supramajority voting requirement
Cash Register

23. 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
fiduciary duties
straight voting
personal liability
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)

24. Bank reconcilation steps
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 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
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
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

25. Examples of complaints found not to be covered under SOX
terms - conditions
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.
quorum
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)

26. 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
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
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
duty of loyalty

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

28. The company or person must present evidence within __ days after receiving notice of the complaint.
special shareholders' meetings
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
officer
20

29. Bank accounts
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
A control for cash recevied throught the mail
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

30. 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
proxy
right of first refusal
interference with employment or livelihood of the informant
administrative law judge - decision - order

31. How does this Act define 'harm'?
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.
interference with employment or livelihood of the informant
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
public companies

32. 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
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
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.
The person or company must present it's evidence within 20 days after it receives the complaint

33. What is the stated purpose of 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
quorum
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)
public companies

34. Under what conditions may an employee claim protection of SOX?
The employee can file a lawsuit in federal district court
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
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)
15

35. 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
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
cumulative voting
inside director

36. The criminal provision of SOX
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.
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.
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
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.

37. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
terms - conditions
supramajority voting requirement
public companies

38. Special-purpose cash funds
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
annual report
inside director
business judgment rule

39. To be protected by sox an employee must do one of what activities?
review
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
The person or company must present it's evidence within 20 days after it receives the complaint
cumulative voting

40. Internal Complaint Procedures
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)
Allows a business to reconcile the cash transactions recorded
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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations

41. Voucher System
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
annual report
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.

42. SOX creates __ for company representatives.
buy-and-sell agreement
personal liability
dividend
straight voting

43. Bank statement
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.
stock dividend
Allows a business to reconcile the cash transactions recorded
Sarbanes-Oxley

44. What is one of the most important controls to protect cash received in over-the-counter sales?
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
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
Cash Register
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.

45. 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
all employees who work for public companies as long as they qualify as a whistleblower
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
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.
Sarbanes-Oxley Act

46. What provision is enforced by the SEC only?

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47. SOC record keeping requirements
duty of care
petition - Administrative Review Board - 10
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
officer

48. Example of whistle blowing activities that DOL has found to be covered under 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
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
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

49. 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
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
buy-and-sell agreement
interference with employment or livelihood of the informant
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

50. 'The employee's claim of shareholder fraud does not have to be correct.'
business judgment rule
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.
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
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud