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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 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
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
cumulative voting
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.
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.

2. 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
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
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
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.
proxy

3. 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
shareholder voting agreement
straight voting
inside director

4. 'The employee's claim of shareholder fraud does not have to be correct.'
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 only needed to show that he or she had a reasonable belief that the conduct constituted fraud
termination - demotion - suspension - threats - harassment
inside director

5. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
business judgment rule
20
annual report
administrative law judge - decision - order

6. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
Investigations - Legal proceedings
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
special shareholders' meetings
negligence

7. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
20
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
preemptive rights

8. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
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
They can have their stocks delisted by the national securities exchange and associations
annual report
special shareholders' meetings

9. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
supramajority voting requirement
business judgment rule
termination - demotion - suspension - threats - harassment
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. 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
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
duty of loyalty
negligence
inside director

11. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
public companies
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
They are not protected
annual shareholders' meeting

12. What procedures must the audit committee of a public company establish?
Sarbanes-Oxley
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
all employees who work for public companies as long as they qualify as a whistleblower
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

13. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
preemptive rights
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
15
annual report

14. Even if the employee provides evidence of individual complaints - OSHA will not investigate under what condition?
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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 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)
stock dividend

15. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
stock dividend
Allows a business to reconcile the cash transactions recorded
15

16. 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

17. To be protected by sox an employee must do one of what activities?
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
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)
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
duty of loyalty

18. Bank reconcilation steps
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
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
special shareholders' meetings
record date

19. 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
Sarbanes-Oxley
15
right of first refusal
review

20. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
60
duty of care
A control for cash recevied throught the mail
The person or company must present it's evidence within 20 days after it receives the complaint

21. Voucher
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
fiduciary duties
buy-and-sell agreement

22. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
duty of loyalty
cumulative voting
special shareholders' meetings
fiduciary duties

23. Company representative
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)
Any officer - contractor - subcontractor - agent - or employee of a company
15
dividend

24. Usurping of corporate opportunity

25. 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
Cash Register
terms - conditions
petition - Administrative Review Board - 10
record date

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

27. Sarbanes-Oxley Act of 2002
right of first refusal
record date
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.
interference with employment or livelihood of the informant

28. 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
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)
petition - Administrative Review Board - 10
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)
terms - conditions

29. Remittance Advice
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
administrative law judge - decision - order
piercing the corporate veil
A control for cash recevied throught the mail

30. If a hearing is requested - it will be held before an __ who will issue a __ and __.
20
retaliates against a whistleblower
administrative law judge - decision - order
petition - Administrative Review Board - 10

31. A member of a board of directors who is not an officer of the corporation
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
outside director
Sarbanes-Oxley
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. 4 elements that must be proven to show usurping of corporate opportunity:

33. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
quorum
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
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
retaliates against a whistleblower

34. 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
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
personal liability
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

35. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
officer
voting trust
review
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.

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

37. Under what conditions may an employee claim protection of SOX?
quorum
buy-and-sell agreement
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
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations

38. Objectives of Internal Control
They can have their stocks delisted by the national securities exchange and associations
termination - demotion - suspension - threats - harassment
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.
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations

39. A distribution of profits of the corporation to 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
dividend
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

40. 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
Sarbanes-Oxley Act
quorum
annual shareholders' meeting
terms - conditions

41. Bank statement
Allows a business to reconcile the cash transactions recorded
fiduciary duties
special shareholders' meetings
termination - demotion - suspension - threats - harassment

42. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
record date
They can have their stocks delisted by the national securities exchange and associations
business judgment rule
officer

43. A member of the board of directors who is also an officer of the corporation
officer
quorum
inside director
annual shareholders' meeting

44. 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)
all employees who work for public companies as long as they qualify as a whistleblower
petition - Administrative Review Board - 10
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders

45. What employees are protected under SOX?
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 officer - contractor - subcontractor - agent - or employee of a company
The employee can file a lawsuit in federal district court
all employees who work for public companies as long as they qualify as a whistleblower

46. Sox important Organizations that you must know
duty of loyalty
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
60
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

47. Bank accounts
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
terms - conditions
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
outside director

48. Example of whistle blowing activities that DOL has found to be covered 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
Investigations - Legal proceedings
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
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud

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

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