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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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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. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
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
duty of obedience
termination - demotion - suspension - threats - harassment
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders

2. 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)
voting trust
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
Investigations - Legal proceedings

3. A distribution of profits of the corporation to shareholders
Cash Register
straight voting
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
dividend

4. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
supramajority voting requirement
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)
review
board of directors

5. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
cumulative voting
derivative lawsuit
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
review

6. Sarbanes-Oxley Act of 2002
proxy
The employee can file a lawsuit in federal district court
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

7. 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
proxy
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
negligence

8. Bank statement
They are not protected
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.
Allows a business to reconcile the cash transactions recorded
proxy

9. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
outside director
voting trust
Investigations - Legal proceedings
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

10. Elements of Internal Control
special shareholders' meetings
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
buy-and-sell 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

11. What employees are protected under SOX?
all employees who work for public companies as long as they qualify as a whistleblower
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.
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
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders

12. Bank reconcilation steps
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 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 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
termination - demotion - suspension - threats - harassment

13. What new employee right was created by SOX?
buy-and-sell agreement
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
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
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed

14. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
annual report
interference with employment or livelihood of the informant
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud

15. 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
Sarbanes-Oxley Act
record date
inside director
review

16. 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
retaliates against a whistleblower
proxy
derivative lawsuit
review

17. Why did Congress pass SOX?
personal liability
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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
quorum

18. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
special shareholders' meetings
negligence
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
duty of loyalty

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

20. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
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)
preemptive rights
termination - demotion - suspension - threats - harassment
inside director

21. The Board can either adopt the judge's decision as its own or __ the case itself
review
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
piercing the corporate veil
They can have their stocks delisted by the national securities exchange and associations

22. 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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23. Internal Complaint Procedures
board of directors
all employees who work for public companies as long as they qualify as a whistleblower
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
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

24. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
30
They can have their stocks delisted by the national securities exchange and associations
retaliates against a whistleblower
voting trust

25. How does this Act define 'harm'?
Sarbanes-Oxley
interference with employment or livelihood of the informant
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
They can have their stocks delisted by the national securities exchange and associations

26. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
quorum
outside director
30
20

27. 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
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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
negligence
duty of loyalty

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

29. 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
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
petition - Administrative Review Board - 10
quorum
Sarbanes-Oxley

30. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
60
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.

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
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
straight voting
They can have their stocks delisted by the national securities exchange and associations
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

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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
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
fiduciary duties
right of first refusal

33. What is the stated purpose of SOX?
shareholder voting agreement
outside director
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 document that serves as proof of authority to pay cash or issue an electronic funds transfer.

34. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
fiduciary duties
annual report
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.
termination - demotion - suspension - threats - harassment

35. An agreement between two or more shareholders that stipulates how they will vote their shares
Sarbanes-Oxley Act
shareholder voting agreement
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.
inside director

36. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
officer
personal liability
negligence
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

37. Voucher System
retaliates against a whistleblower
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
business judgment rule
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.

38. 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
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
preemptive rights
duty of loyalty

39. Who signs Report for internal contro?
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
30
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.
board of directors

40. 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
15
They can have their stocks delisted by the national securities exchange and associations
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations

41. Example of whistle blowing activities that DOL has found to be covered under SOX.
piercing the corporate veil
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
petition - Administrative Review Board - 10
quorum

42. The criminal provision of SOX
terms - conditions
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
petition - Administrative Review Board - 10
duty of loyalty

43. If a hearing is requested - it will be held before an __ who will issue a __ and __.
duty of obedience
interference with employment or livelihood of the informant
buy-and-sell agreement
administrative law judge - decision - order

44. Examples of complaints found not to be covered under SOX
Any officer - contractor - subcontractor - agent - or employee of a company
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
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
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)

45. The company or person must present evidence within __ days after receiving notice of the complaint.
quorum
proxy
duty of loyalty
20

46. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
business judgment rule
record date
cumulative voting
duty of obedience

47. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
The person or company must present it's evidence within 20 days after it receives the complaint
15
stock dividend
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

48. SOX deadlines

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49. Objectives of Internal Control
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)
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
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

50. Types of proceedings protected 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
Sarbanes-Oxley
Investigations - Legal proceedings
special shareholders' meetings