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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.
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. To be protected by sox an employee must do one of what activities?
terms - conditions
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
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
annual shareholders' meeting

2. Bank accounts
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
personal liability
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG

3. What new employee right was created by SOX?
quorum
buy-and-sell agreement
special shareholders' meetings
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

4. Voucher
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
retaliates against a whistleblower
Sarbanes-Oxley Act
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.

5. Special-purpose cash funds
60
administrative law judge - decision - order
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
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed

6. What provision is enforced by the SEC only?

7. SOX (or SARBOX)
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
annual report
Sarbanes-Oxley
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

8. 4 elements that must be proven to show usurping of corporate opportunity:

9. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
duty of loyalty
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
all employees who work for public companies as long as they qualify as a whistleblower
annual report

10. A panel of decision makers who are elected by the shareholders
derivative lawsuit
board of directors
They can have their stocks delisted by the national securities exchange and associations
inside director

11. The company or person must present evidence within __ days after receiving notice of the complaint.
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
20
straight voting
annual report

12. 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
preemptive rights
proxy
cumulative voting
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

13. 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
20
buy-and-sell agreement
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.
piercing the corporate veil

14. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
They are not protected
piercing the corporate veil
business judgment rule
public companies

15. Example of whistle blowing activities that DOL has found to be covered under SOX.
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
They are not protected
buy-and-sell agreement
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

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

17. Examples of complaints found not to be covered under SOX
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
fiduciary duties
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

18. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
They can have their stocks delisted by the national securities exchange and associations
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.
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
Sarbanes-Oxley Act

19. What employees are protected under SOX?
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
supramajority voting requirement
all employees who work for public companies as long as they qualify as a whistleblower

20. What procedures must the audit committee of a public company establish?
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
quorum
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
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

21. The Board can either adopt the judge's decision as its own or __ the case itself
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
duty of care
outside director
review

22. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
30
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
annual report
supramajority voting requirement

23. How does this Act define 'harm'?
interference with employment or livelihood of the informant
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
inside director
retaliates against a whistleblower

24. 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
They are not protected
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.
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
piercing the corporate veil

25. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
administrative law judge - decision - order
duty of care
dividend
preemptive rights

26. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
30
fiduciary duties
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

27. 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
20
proxy
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
quorum

28. The penalties that may be imposed under SOX.
20
buy-and-sell agreement
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

29. What is one of the most important controls to protect cash received in over-the-counter sales?
Cash Register
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
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 obedience

30. 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
shareholder voting agreement
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
quorum
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

31. Objectives of Internal Control
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
administrative law judge - decision - order
quorum
record date

32. 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
Allows a business to reconcile the cash transactions recorded
termination - demotion - suspension - threats - harassment
Sarbanes-Oxley Act
20

33. Bank statement
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
business judgment rule
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
Allows a business to reconcile the cash transactions recorded

34. A distribution of profits of the corporation to shareholders
dividend
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)
They are not protected
straight voting

35. Additional shares of stock distributed as a dividend
stock dividend
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
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
dividend

36. Remittance Advice
A control for cash recevied throught the mail
buy-and-sell agreement
negligence
outside director

37. 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
quorum
annual shareholders' meeting
15
right of first refusal

38. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
Investigations - Legal proceedings
termination - demotion - suspension - threats - harassment
duty of care
15

39. 'The employee's claim of shareholder fraud does not have to be correct.'
Cash Register
A control for cash recevied throught the mail
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.

40. Elements of Internal Control
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)
officer
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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

41. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
Cash Register
quorum
straight voting
15

42. A member of a board of directors who is not an officer of the corporation
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 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 company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
outside director

43. The criminal provision of 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
straight voting
public companies
The employee can file a lawsuit in federal district court

44. Types of proceedings protected under SOX?
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.
Investigations - Legal proceedings
piercing the corporate veil
all employees who work for public companies as long as they qualify as a whistleblower

45. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
derivative lawsuit
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
supramajority voting requirement
annual shareholders' meeting

46. 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
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
straight voting
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
terms - conditions

47. 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

48. SOX creates __ for company representatives.
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
personal liability
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

49. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
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
business judgment rule
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
shareholder voting agreement

50. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
terms - conditions
negligence
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
retaliates against a whistleblower