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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 rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
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)
business judgment rule
retaliates against a whistleblower
inside director

2. SOX (or SARBOX)
interference with employment or livelihood of the informant
Sarbanes-Oxley
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
A control for cash recevied throught the mail

3. Additional shares of stock distributed as a dividend
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
stock dividend
personal liability
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

4. Example of whistle blowing activities that DOL has found to be covered under SOX.
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
personal liability
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
voting trust

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
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
The employee can file a lawsuit in federal district court
They are not protected
quorum

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

7. If a hearing is requested - it will be held before an __ who will issue a __ and __.
administrative law judge - decision - order
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
quorum
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud

8. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
15
Allows a business to reconcile the cash transactions recorded
quorum
30

9. 4 elements that must be proven to show usurping of corporate opportunity:

10. 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
proxy
15
petition - Administrative Review Board - 10
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG

11. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
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
They can have their stocks delisted by the national securities exchange and associations
preemptive rights
duty of loyalty

12. 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
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
personal liability
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

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

14. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
voting trust
retaliates against a whistleblower
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
cumulative voting

15. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
fiduciary duties
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
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

16. A distribution of profits of the corporation to shareholders
Sarbanes-Oxley Act
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
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
dividend

17. Special-purpose cash funds
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
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
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

18. Types of proceedings protected under SOX?
supramajority voting requirement
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
Investigations - Legal proceedings
20

19. What is one of the most important controls to protect cash received in over-the-counter sales?
record date
board of directors
Cash Register
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

20. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
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
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
quorum
They can have their stocks delisted by the national securities exchange and associations

21. 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.
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
30
business judgment rule

22. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
terms - conditions
piercing the corporate veil
right of first refusal
duty of care

23. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
annual report
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
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.

24. Sox important Organizations that you must know
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
quorum
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG

25. 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
right of first refusal
They are not protected
Sarbanes-Oxley Act
petition - Administrative Review Board - 10

26. The criminal provision of SOX
outside director
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
special shareholders' meetings
right of first refusal

27. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
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
Allows a business to reconcile the cash transactions recorded
supramajority voting requirement

28. Personal liability provision
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
Any officer - contractor - subcontractor - agent - or employee of a company
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
Allows a business to reconcile the cash transactions recorded

29. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
right of first refusal
shareholder voting agreement
30
personal liability

30. 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

31. A member of the board of directors who is also an officer of the corporation
inside director
negligence
30
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)

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

33. Public company
right of first refusal
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
15
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

34. What is required to qualify as a protected whistleblower
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
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
quorum
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

35. The Board can either adopt the judge's decision as its own or __ the case itself
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
duty of care
review
15

36. 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
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
buy-and-sell agreement
all employees who work for public companies as long as they qualify as a whistleblower
shareholder voting agreement

37. 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
terms - conditions
outside director
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

38. Company representative
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
Any officer - contractor - subcontractor - agent - or employee of a company
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed

39. What new employee right was created by SOX?
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 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
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.
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG

40. What procedures must the audit committee of a public company establish?
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 can file a lawsuit in federal district court
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
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud

41. What provision is enforced by the SEC only?

42. SOC record keeping requirements
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
quorum
30
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)

43. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
Investigations - Legal proceedings
piercing the corporate veil
They are not protected
outside director

44. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
board of directors
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
officer
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

45. 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
60
cumulative voting
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.
all employees who work for public companies as long as they qualify as a whistleblower

46. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
They are not protected
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
derivative lawsuit
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

47. What is the stated purpose of SOX?
special shareholders' meetings
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
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

48. Voucher System
record date
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
termination - demotion - suspension - threats - harassment
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG

49. Under what conditions may an employee claim protection of SOX?
petition - Administrative Review Board - 10
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
termination - demotion - suspension - threats - harassment

50. 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
15
duty of obedience
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
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