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 duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
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.
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
voting trust
duty of care


2. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
outside director
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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.


3. A member of the board of directors who is also an officer of the corporation
review
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
inside director


4. The SEC regulations to not require companies to follow what?
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
The person or company must present it's evidence within 20 days after it receives the complaint
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)


5. A distribution of profits of the corporation to shareholders
dividend
administrative law judge - decision - order
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
They can have their stocks delisted by the national securities exchange and associations


6. What is the stated purpose of SOX?
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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
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
dividend


7. An agreement between two or more shareholders that stipulates how they will vote their shares
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
fiduciary duties
quorum
shareholder voting agreement


8. 'The employee's claim of shareholder fraud does not have to be correct.'
duty of care
Sarbanes-Oxley
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud


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

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10. Sarbanes-Oxley Act of 2002
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
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
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


11. A panel of decision makers who are elected by the shareholders
duty of care
board of directors
officer
review


12. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
quorum
fiduciary duties
preemptive rights
shareholder voting agreement


13. 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 only needed to show that he or she had a reasonable belief that the conduct constituted fraud
special shareholders' meetings
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
terms - conditions


14. 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 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)
buy-and-sell agreement
The employee can file a lawsuit in federal district court


15. 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.
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
Sarbanes-Oxley Act
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders


16. Sox important Organizations that you must know
negligence
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
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG


17. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
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
60
derivative lawsuit
quorum


18. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
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.
Cash Register
termination - demotion - suspension - threats - harassment


19. 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
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)
cumulative voting
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
personal liability


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
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
petition - Administrative Review Board - 10
Allows a business to reconcile the cash transactions recorded
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication


21. Audit committee

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22. The Board can either adopt the judge's decision as its own or __ the case itself
review
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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
piercing the corporate veil


23. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding 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
administrative law judge - decision - order
60


24. 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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25. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
piercing the corporate veil
business judgment rule
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
quorum


26. What is one of the most important controls to protect cash received in over-the-counter sales?
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
right of first refusal
Cash Register
personal liability


27. 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
petition - Administrative Review Board - 10
terms - conditions
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


28. 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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29. If a hearing is requested - it will be held before an __ who will issue a __ and __.
interference with employment or livelihood of the informant
board of directors
duty of care
administrative law judge - decision - order


30. SOX deadlines

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31. To be protected by sox an employee must do one of what activities?
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
duty of care
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
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


32. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
cumulative voting
preemptive rights
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
record date


33. Bank reconcilation steps
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
20
shareholder voting 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


34. 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
business judgment rule
interference with employment or livelihood of the informant
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
buy-and-sell agreement


35. What is required to qualify as a protected whistleblower
interference with employment or livelihood of the informant
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
A control for cash recevied throught the mail
cumulative voting


36. Voucher System
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
The person or company must present it's evidence within 20 days after it receives the complaint
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders


37. The criminal provision of SOX
piercing the corporate veil
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 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
15


38. 4 elements that must be proven to show usurping of corporate opportunity:

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39. Under what conditions may an employee claim protection of SOX?
terms - conditions
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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
officer


40. 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
fiduciary duties
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


41. Who signs Report for internal contro?
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 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
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.
dividend


42. What employees are protected under SOX?
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
They can have their stocks delisted by the national securities exchange and associations
all employees who work for public companies as long as they qualify as a whistleblower


43. Additional shares of stock distributed as a dividend
stock dividend
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.
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
60


44. Bank statement
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
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
special shareholders' meetings
Allows a business to reconcile the cash transactions recorded


45. Types of proceedings protected under SOX?
retaliates against a whistleblower
annual report
Investigations - Legal proceedings
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


46. 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)
The employee can file a lawsuit in federal district court
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations


47. The penalties that may be imposed under SOX.
They are not protected
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
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


48. Special-purpose cash funds
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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
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


49. 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
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)
quorum
piercing the corporate veil


50. 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
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
officer
duty of loyalty
They are not protected