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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. 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

2. 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
special shareholders' meetings
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
straight voting
A control for cash recevied throught the mail

3. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
special shareholders' meetings
shareholder voting agreement
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
record date

4. 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
voting trust
duty of loyalty
Sarbanes-Oxley
right of first refusal

5. What is the stated purpose of SOX?
proxy
quorum
Any officer - contractor - subcontractor - agent - or employee of a 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

6. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
annual shareholders' meeting
30
Allows a business to reconcile the cash transactions recorded
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

7. What employees are protected under 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
negligence
all employees who work for public companies as long as they qualify as a whistleblower
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

8. What procedures must the audit committee of a public company establish?
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
shareholder voting agreement
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
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

9. An agreement between two or more shareholders that stipulates how they will vote their shares
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
15
shareholder voting agreement
petition - Administrative Review Board - 10

10. 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
right of first refusal
outside director
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations

11. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
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
annual shareholders' meeting
preemptive rights
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

12. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
administrative law judge - decision - order
voting trust
negligence

13. Voucher System
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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
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
Cash Register

14. 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)
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
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.
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders

15. To be protected by sox an employee must do one of what activities?
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)
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
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
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct

16. Bank statement
Allows a business to reconcile the cash transactions recorded
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
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
proxy

17. Why did Congress pass SOX?
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
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
proxy

18. What are the conditions under which OSHA will investigate individual complaints?
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.
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
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
shareholder voting agreement

19. 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
20
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud

20. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
supramajority voting requirement
straight voting
The employee can file a lawsuit in federal district court
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct

21. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
negligence
60
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
annual shareholders' meeting

22. 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
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
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

23. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
Any officer - contractor - subcontractor - agent - or employee of a company
60

24. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
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)
Allows a business to reconcile the cash transactions recorded
duty of care
termination - demotion - suspension - threats - harassment

25. Sox important Organizations that you must know
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
duty of loyalty
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud

26. Usurping of corporate opportunity

27. 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
quorum
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
30
buy-and-sell agreement

28. SOX (or SARBOX)
annual shareholders' meeting
terms - conditions
petition - Administrative Review Board - 10
Sarbanes-Oxley

29. Public company
They are not protected
A control for cash recevied throught the mail
record date
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

30. 4 elements that must be proven to show usurping of corporate opportunity:

31. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
Investigations - Legal proceedings
duty of loyalty
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.

32. Voucher
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
preemptive rights
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

33. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
Any officer - contractor - subcontractor - agent - or employee of a company
20
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
derivative lawsuit

34. The criminal provision of SOX
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
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
annual report
special shareholders' meetings

35. Personal liability provision
petition - Administrative Review Board - 10
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
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
retaliates against a whistleblower

36. The company or person must present evidence within __ days after receiving notice of the complaint.
annual shareholders' meeting
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
administrative law judge - decision - order
20

37. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
termination - demotion - suspension - threats - harassment
The person or company must present it's evidence within 20 days after it receives the complaint
60
They can have their stocks delisted by the national securities exchange and associations

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

39. 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
A control for cash recevied throught the mail
administrative law judge - decision - order
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
terms - conditions

40. A panel of decision makers who are elected by the shareholders
all employees who work for public companies as long as they qualify as a whistleblower
board of directors
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
20

41. What is one of the most important controls to protect cash received in over-the-counter sales?
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 employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Cash Register

42. 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
They can have their stocks delisted by the national securities exchange and associations
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
Cash Register

43. Under what conditions may an employee claim protection 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
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
dividend
60

44. Bank reconcilation steps
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
The person or company must present it's evidence within 20 days after it receives the complaint
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
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

45. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
inside director
annual shareholders' meeting
retaliates against a whistleblower
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

46. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
fiduciary duties
15
special shareholders' meetings
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)

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

48. Company representative
proxy
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
dividend

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
piercing the corporate veil
fiduciary duties
Any officer - contractor - subcontractor - agent - or employee of a company
annual report

50. Types of proceedings protected under SOX?
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
Sarbanes-Oxley
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
Investigations - Legal proceedings