Test your basic knowledge |

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. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
60
public companies
cumulative voting
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud

2. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
The employee can file a lawsuit in federal district court
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)
annual report
preemptive rights

3. Example of whistle blowing activities that DOL has found to be covered under SOX.
annual shareholders' meeting
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
duty of obedience
fiduciary duties

4. How does this Act define 'harm'?
cumulative voting
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
They are not protected

5. 4 elements that must be proven to show usurping of corporate opportunity:

6. 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
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
quorum
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
Sarbanes-Oxley

7. 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
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
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
terms - conditions

8. Sarbanes-Oxley Act of 2002
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 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)
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
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

9. 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
right of first refusal
shareholder voting agreement
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
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

10. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
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
special shareholders' meetings
outside director
They are not protected

11. The number of directors necessary to hold a board meeting or transact business of the board
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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)
business judgment rule

12. What new employee right was created by SOX?
They can have their stocks delisted by the national securities exchange and associations
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
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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

13. 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
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
termination - demotion - suspension - threats - harassment
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.
duty of obedience

14. 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
piercing the corporate veil
review
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
retaliates against a whistleblower

15. SOX (or SARBOX)
quorum
The employee can file a lawsuit in federal district court
Sarbanes-Oxley
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders

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

17. Remittance Advice
20
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.
A control for cash recevied throught the mail
petition - Administrative Review Board - 10

18. The Board can either adopt the judge's decision as its own or __ the case itself
review
quorum
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

19. What procedures must the audit committee of a public company establish?
Investigations - Legal proceedings
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
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.

20. The employee must also service the notice on whom?
duty of care
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
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)

21. What is one of the most important controls to protect cash received in over-the-counter sales?
Cash Register
inside director
outside director
board of directors

22. 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
voting trust
cumulative voting
special shareholders' meetings

23. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
quorum
business judgment rule
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.
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication

24. Internal Complaint Procedures
board of directors
straight voting
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
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)

25. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
Allows a business to reconcile the cash transactions recorded
supramajority voting requirement
They can have their stocks delisted by the national securities exchange and associations
public companies

26. 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 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)
inside director
Sarbanes-Oxley Act
piercing the corporate veil

27. The criminal provision of SOX
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
duty of obedience
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 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

28. Voucher
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
derivative lawsuit
The person or company must present it's evidence within 20 days after it receives the complaint
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations

29. Audit committee

30. The company or person must present evidence within __ days after receiving notice of the complaint.
shareholder voting agreement
20
fiduciary duties
business judgment rule

31. An agreement between two or more shareholders that stipulates how they will vote their shares
15
shareholder voting 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.
retaliates against a whistleblower

32. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
stock dividend
They can have their stocks delisted by the national securities exchange and associations
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
Sarbanes-Oxley

33. Even if the employee provides evidence of individual complaints - OSHA will not investigate under what condition?
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)
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
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
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG

34. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
shareholder voting agreement
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
board of directors
annual report

35. A distribution of profits of the corporation to shareholders
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
dividend
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

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

37. 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
proxy
straight voting
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 only needed to show that he or she had a reasonable belief that the conduct constituted fraud

38. Types of proceedings protected under SOX?
interference with employment or livelihood of the informant
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
Investigations - Legal proceedings
The employee can file a lawsuit in federal district court

39. Voucher System
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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.
negligence
proxy

40. The SEC regulations to not require companies to follow what?
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)
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
Sarbanes-Oxley
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

41. 'The employee's claim of shareholder fraud does not have to be correct.'
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
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
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
inside director

42. A member of the board of directors who is also an officer of the corporation
inside director
derivative lawsuit
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
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

43. Personal liability provision
right of first refusal
quorum
all employees who work for public companies as long as they qualify as a whistleblower
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

44. What are the conditions under which OSHA will investigate individual complaints?
The person or company must present it's evidence within 20 days after it receives the complaint
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
preemptive rights
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

45. Bank reconcilation
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
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
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.

46. 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
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
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
cumulative voting

47. 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
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
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

48. To be protected by sox an employee must do one of what activities?
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.
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
straight voting

49. The employee is required to do what relative to protected whistleblowers?

50. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
duty of care
board of directors
duty of loyalty
They are not protected