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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. 'The employee's claim of shareholder fraud does not have to be correct.'
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
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 only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations

2. Who signs Report for internal contro?
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.
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

3. Bank reconcilation steps
all employees who work for public companies as long as they qualify as a whistleblower
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
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
voting trust

4. Why did Congress pass SOX?
A control for cash recevied throught the mail
board of directors
piercing the corporate veil
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders

5. Voucher
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.
public companies
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.

6. Voucher 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
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
Allows a business to reconcile the cash transactions recorded
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.

7. What are the conditions under which OSHA will investigate individual complaints?
termination - demotion - suspension - threats - harassment
straight voting
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

8. 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
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
inside director
all employees who work for public companies as long as they qualify as a whistleblower

9. Even if the employee provides evidence of individual complaints - OSHA will not investigate under what condition?
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
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
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 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)

10. 4 elements that must be proven to show usurping of corporate opportunity:

11. 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
annual report
duty of care
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)
straight voting

12. SOX creates __ for company representatives.
right of first refusal
dividend
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.
personal liability

13. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
review
derivative lawsuit
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.
termination - demotion - suspension - threats - harassment

14. Public company
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 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.
Any officer - contractor - subcontractor - agent - or employee of a company

15. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
duty of loyalty
derivative lawsuit
public companies
dividend

16. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
Sarbanes-Oxley Act
special shareholders' meetings
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personal liability

17. Personal liability provision
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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
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)
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.

18. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
supramajority voting requirement
dividend
administrative law judge - decision - order
interference with employment or livelihood of the informant

19. Special-purpose cash funds
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
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. SOX deadlines

21. What new employee right was created by SOX?
They are not protected
quorum
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

22. Usurping of corporate opportunity

23. Company representative
straight voting
Any officer - contractor - subcontractor - agent - or employee of a company
quorum
A control for cash recevied throught the mail

24. The company or person must present evidence within __ days after receiving notice of the complaint.
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
duty of care
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preemptive rights

25. Bank accounts
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
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
duty of care
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations

26. Bank reconcilation
supramajority voting requirement
Investigations - Legal proceedings
officer
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.

27. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
outside director
The person or company must present it's evidence within 20 days after it receives the complaint
quorum
duty of care

28. Example of whistle blowing activities that DOL has found to be covered under SOX.
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
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.
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
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

29. Under what conditions may an employee claim protection of SOX?
A control for cash recevied throught the mail
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
They can have their stocks delisted by the national securities exchange and associations
annual report

30. 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
piercing the corporate veil
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.
terms - conditions
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

31. The employee must also service the notice on whom?
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
stock dividend
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
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. Sox important Organizations that you must know
business judgment rule
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
supramajority voting requirement
termination - demotion - suspension - threats - harassment

33. A member of a board of directors who is not an officer of the corporation
Allows a business to reconcile the cash transactions recorded
officer
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
outside director

34. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
Investigations - Legal proceedings
retaliates against a whistleblower
public companies
Any officer - contractor - subcontractor - agent - or employee of a company

35. Audit committee

36. 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
business judgment rule
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
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

37. SOC record keeping requirements
special shareholders' meetings
preemptive rights
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
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.

38. Elements of Internal Control
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
Any officer - contractor - subcontractor - agent - or employee of a company
They can have their stocks delisted by the national securities exchange and associations
fiduciary duties

39. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
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
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.
right of first refusal
officer

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

41. To be protected by sox an employee must do one of what activities?
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
termination - demotion - suspension - threats - harassment
Cash Register
duty of care

42. What provision is enforced by the SEC only?

43. The penalties that may be imposed under SOX.
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
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.
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

44. SOX (or SARBOX)
Sarbanes-Oxley
annual shareholders' meeting
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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45. 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
buy-and-sell agreement
personal liability
The person or company must present it's evidence within 20 days after it receives the complaint

46. An agreement between two or more shareholders that stipulates how they will vote their shares
buy-and-sell agreement
shareholder voting agreement
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

47. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
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
negligence
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
board of directors

48. The criminal provision of SOX
public companies
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
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
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed

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

50. Internal Complaint Procedures
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
dividend
Investigations - Legal proceedings
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