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. 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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2. Bank accounts
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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
retaliates against a whistleblower
terms - conditions


3. Sarbanes-Oxley Act of 2002
voting trust
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.
annual shareholders' meeting
buy-and-sell agreement


4. What employees are protected under SOX?
Investigations - Legal proceedings
proxy
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
all employees who work for public companies as long as they qualify as a whistleblower


5. 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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6. Special-purpose cash funds
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 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
supramajority voting requirement


7. Internal Complaint Procedures
special shareholders' meetings
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder 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
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed


8. Public company
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
duty of loyalty
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. Bank statement
30
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
Allows a business to reconcile the cash transactions recorded
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 are the conditions under which OSHA will investigate individual complaints?
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
board of directors
special shareholders' meetings
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


11. 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
Sarbanes-Oxley
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
cumulative voting
special shareholders' meetings


12. 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
piercing the corporate veil
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)
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


13. 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
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
Investigations - Legal proceedings


14. 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
straight voting
proxy
terms - conditions
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations


15. Personal liability provision
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
They are not protected
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
interference with employment or livelihood of the informant


16. Voucher System
The person or company must present it's evidence within 20 days after it receives the complaint
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
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


17. The Board can either adopt the judge's decision as its own or __ the case itself
review
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
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
15


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


19. 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
duty of obedience
20
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
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


20. Voucher
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
buy-and-sell agreement
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 loyalty


21. An agreement between two or more shareholders that stipulates how they will vote their shares
30
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.
shareholder voting agreement
straight voting


22. Types of proceedings protected under SOX?
supramajority voting requirement
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
Investigations - Legal proceedings
business judgment rule


23. The criminal provision of SOX
all employees who work for public companies as long as they qualify as a whistleblower
duty of loyalty
administrative law judge - decision - order
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


24. 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
fiduciary duties
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
all employees who work for public companies as long as they qualify as a whistleblower
terms - conditions


25. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
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
officer
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
inside director


26. Bank reconcilation
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.
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
derivative lawsuit
interference with employment or livelihood of the informant


27. 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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28. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
15
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 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
annual report


29. 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
Sarbanes-Oxley Act
annual report
record date
Allows a business to reconcile the cash transactions recorded


30. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
record date
fiduciary duties
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)


31. 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
quorum
retaliates against a whistleblower
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)
15


32. 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
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
15
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.


33. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
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
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)
public companies
cumulative voting


34. 4 elements that must be proven to show usurping of corporate opportunity:

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35. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
interference with employment or livelihood of the informant
They can have their stocks delisted by the national securities exchange and associations
retaliates against a whistleblower
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG


36. Audit committee

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37. Objectives of Internal Control
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
They can have their stocks delisted by the national securities exchange and associations
cumulative voting
special shareholders' meetings


38. What provision is enforced by the SEC only?

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39. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
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
buy-and-sell 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.
voting trust


40. 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.
preemptive rights
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
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


41. Why did Congress pass SOX?
right of first refusal
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
petition - Administrative Review Board - 10
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


42. 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
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
all employees who work for public companies as long as they qualify as a whistleblower
quorum


43. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
derivative lawsuit
Investigations - Legal proceedings
petition - Administrative Review Board - 10
supramajority voting requirement


44. Additional shares of stock distributed as a dividend
They are not protected
stock dividend
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
piercing the corporate veil


45. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
termination - demotion - suspension - threats - harassment
Sarbanes-Oxley
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
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders


46. '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
duty of loyalty
cumulative voting
public companies


47. What is required to qualify as a protected whistleblower
review
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
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
inside director


48. What is one of the most important controls to protect cash received in over-the-counter sales?
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
Cash Register
Sarbanes-Oxley
They can have their stocks delisted by the national securities exchange and associations


49. 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
termination - demotion - suspension - threats - harassment
preemptive rights
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
buy-and-sell agreement


50. If a hearing is requested - it will be held before an __ who will issue a __ and __.
voting trust
administrative law judge - decision - order
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
termination - demotion - suspension - threats - harassment