Sarbanes Oxley Act: SOX Corporate Governance

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 Board can either adopt the judge's decision as its own or __ the case itself
review
officer
Allows a business to reconcile the cash transactions recorded
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. What provision is enforced by the SEC only?

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3. Audit committee

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4. What is the stated purpose of SOX?
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
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
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
fiduciary duties


5. A member of the board of directors who is also an officer of the corporation
termination - demotion - suspension - threats - harassment
inside director
negligence
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct


6. Example of whistle blowing activities that DOL has found to be covered under SOX.
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)
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
termination - demotion - suspension - threats - harassment


7. To be protected by sox an employee must do one of what activities?
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)
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
retaliates against a whistleblower
administrative law judge - decision - order


8. Voucher System
They can have their stocks delisted by the national securities exchange and associations
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
Sarbanes-Oxley
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.


9. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
They are not protected
terms - conditions
supramajority voting requirement
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


10. Company representative
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
Any officer - contractor - subcontractor - agent - or employee of a company
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
public companies


11. Bank reconcilation
terms - conditions
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.
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
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct


12. The company or person must present evidence within __ days after receiving notice of the complaint.
20
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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


13. Sarbanes-Oxley Act of 2002
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
negligence
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 document that serves as proof of authority to pay cash or issue an electronic funds transfer.


14. 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
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)
public companies
Sarbanes-Oxley Act
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


15. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
Cash Register
voting trust
duty of care
quorum


16. What is required to qualify as a protected 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
administrative law judge - decision - order
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 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


17. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
public companies
annual report
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


18. 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
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
cumulative voting


19. 'The employee's claim of shareholder fraud does not have to be correct.'
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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
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 only needed to show that he or she had a reasonable belief that the conduct constituted fraud


20. 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
The employee can file a lawsuit in federal district court
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
petition - Administrative Review Board - 10


21. Objectives of Internal Control
annual shareholders' meeting
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
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
Sarbanes-Oxley Act


22. 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?
The employee can file a lawsuit in federal district court
piercing the corporate veil
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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


23. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
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
duty of care
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
public companies


24. 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

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25. 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
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
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.
buy-and-sell agreement
voting trust


26. The criminal provision of SOX
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
fiduciary duties
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


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

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28. Personal liability provision
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
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
personal liability
board of directors


29. 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
termination - demotion - suspension - threats - harassment
right of first refusal
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)


30. What procedures must the audit committee of a public company establish?
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
15
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
business judgment rule


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

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32. SOC record keeping requirements
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
petition - Administrative Review Board - 10
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
business judgment rule


33. A distribution of profits of the corporation to shareholders
dividend
proxy
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.
public companies


34. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
quorum
negligence
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
They can have their stocks delisted by the national securities exchange and associations


35. SOX (or SARBOX)
buy-and-sell agreement
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
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.


36. Why did Congress pass SOX?
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.
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
duty of care
record date


37. Special-purpose cash funds
inside director
Allows a business to reconcile the cash transactions recorded
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
Sarbanes-Oxley


38. 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)
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
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
retaliates against a whistleblower


39. What are the conditions under which OSHA will investigate individual complaints?
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
record date
cumulative 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


40. The employee must also service the notice on whom?
Sarbanes-Oxley
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
straight voting
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)


41. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
derivative lawsuit
The employee can file a lawsuit in federal district court
inside director
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


42. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
20
inside director
15


43. Even if the employee provides evidence of individual complaints - OSHA will not investigate under what condition?
termination - demotion - suspension - threats - harassment
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
personal liability
annual shareholders' meeting


44. Bank reconcilation steps
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.
fiduciary duties
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
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders


45. Under what conditions may an employee claim protection of 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
board of directors
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)
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders


46. The number of directors necessary to hold a board meeting or transact business of the board
Any officer - contractor - subcontractor - agent - or employee of a company
quorum
duty of obedience
fiduciary duties


47. Remittance Advice
A control for cash recevied throught the mail
officer
proxy
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


48. The penalties that may be imposed under SOX.
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
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.
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.
cumulative voting


49. 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.
cumulative voting
supramajority voting requirement
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud


50. 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
officer
quorum
petition - Administrative Review Board - 10
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud