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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. Voucher System
The person or company must present it's evidence within 20 days after it receives the complaint
board of directors
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication

2. 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
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
quorum
Investigations - Legal proceedings
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

3. 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
Allows a business to reconcile the cash transactions recorded
all employees who work for public companies as long as they qualify as a whistleblower
duty of loyalty
20

4. What provision is enforced by the SEC only?

5. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
They are not protected
30
terms - conditions
duty of care

6. Bank reconcilation steps
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
15
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
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

7. 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?
A control for cash recevied throught the mail
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 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

8. 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
dividend
duty of loyalty

9. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
Investigations - Legal proceedings
annual report
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

10. Usurping of corporate opportunity

11. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
20
officer
piercing the corporate veil
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.

12. What employees are protected under SOX?
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
all employees who work for public companies as long as they qualify as a whistleblower
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
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

13. 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
public companies
record date
right of first refusal
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

14. Personal liability provision
Sarbanes-Oxley Act
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
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
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. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
They can have their stocks delisted by the national securities exchange and associations
60
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
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

16. Examples of complaints found not to be covered under SOX
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
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
Allows a business to reconcile the cash transactions recorded

17. Types of proceedings protected under SOX?
Investigations - Legal proceedings
review
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
retaliates against a whistleblower

18. Why did Congress pass SOX?
Investigations - Legal proceedings
retaliates against 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
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders

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

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

21. The Board can either adopt the judge's decision as its own or __ the case itself
administrative law judge - decision - order
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
terms - conditions
review

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

23. If a hearing is requested - it will be held before an __ who will issue a __ and __.
A control for cash recevied throught the mail
administrative law judge - decision - order
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
record date

24. 'The employee's claim of shareholder fraud does not have to be correct.'
negligence
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
buy-and-sell agreement
15

25. 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
dividend
The person or company must present it's evidence within 20 days after it receives the complaint
Cash Register
Sarbanes-Oxley Act

26. SOX deadlines

27. What is the stated purpose of SOX?
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
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
petition - Administrative Review Board - 10
outside director

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
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
terms - conditions
annual report
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

29. Who signs Report for internal contro?
Cash Register
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.
special shareholders' meetings

30. Special-purpose cash funds
Sarbanes-Oxley
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.
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
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed

31. How does this Act define 'harm'?
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding 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
interference with employment or livelihood of the informant
15

32. Voucher
interference with employment or livelihood of the informant
inside director
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
annual shareholders' meeting

33. Bank accounts
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
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
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)
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

34. A member of a board of directors who is not an officer of the corporation
retaliates against a whistleblower
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
outside director
business judgment rule

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

36. The criminal provision of SOX
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
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
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
straight voting

37. SOC record keeping requirements
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.
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
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

38. 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
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
petition - Administrative Review Board - 10
all employees who work for public companies as long as they qualify as a whistleblower
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

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

40. 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
duty of loyalty
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
straight voting
buy-and-sell agreement

41. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
public companies
negligence
record date
Sarbanes-Oxley Act

42. SOX (or SARBOX)
Sarbanes-Oxley
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.
cumulative voting
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

43. 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

44. To be protected by sox an employee must do one of what activities?
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
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 employee can file a lawsuit in federal district court
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct

45. What procedures must the audit committee of a public company establish?
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
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)
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
quorum

46. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
fiduciary duties
Allows a business to reconcile the cash transactions recorded
annual shareholders' meeting
stock dividend

47. SOX creates __ for company representatives.
personal liability
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.
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)

48. Sox important Organizations that you must know
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
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

49. 4 elements that must be proven to show usurping of corporate opportunity:

50. What is one of the most important controls to protect cash received in over-the-counter sales?
Cash Register
annual shareholders' meeting
60
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