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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. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
60
annual report
quorum
cumulative voting

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

3. 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
Cash Register
record date
shareholder voting agreement
duty of obedience

4. What provision is enforced by the SEC only?

5. Voucher
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
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
buy-and-sell agreement
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.

6. How does this Act define 'harm'?
duty of loyalty
buy-and-sell agreement
shareholder voting agreement
interference with employment or livelihood of the informant

7. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
negligence
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.
termination - demotion - suspension - threats - harassment

8. 4 elements that must be proven to show usurping of corporate opportunity:

9. 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
business judgment rule
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
They can have their stocks delisted by the national securities exchange and associations

10. The company or person must present evidence within __ days after receiving notice of the complaint.
Investigations - Legal proceedings
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
Allows a business to reconcile the cash transactions recorded

11. 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
personal liability
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
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

12. SOX deadlines

13. 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.
Sarbanes-Oxley Act
duty of obedience
quorum

14. Example of whistle blowing activities that DOL has found to be covered under SOX.
20
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
15
inside director

15. Examples of complaints found not to be covered under SOX
review
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)
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
public companies

16. The criminal provision of SOX
The employee can file a lawsuit in federal district court
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
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed

17. Sox important Organizations that you must know
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
business judgment rule
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
Allows a business to reconcile the cash transactions recorded

18. Sarbanes-Oxley Act of 2002
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
supramajority voting requirement
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.
quorum

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

20. To be protected by sox an employee must do one of what activities?
voting trust
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
termination - demotion - suspension - threats - harassment
business judgment rule

21. Additional shares of stock distributed as a dividend
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.
They can have their stocks delisted by the national securities exchange and associations
stock dividend

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
Sarbanes-Oxley
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
outside director

23. Bank statement
Allows a business to reconcile the cash transactions recorded
Any officer - contractor - subcontractor - agent - or employee of a company
cumulative voting
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.

24. Audit committee

25. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
duty of obedience
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
duty of care
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

26. 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
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.
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
preemptive rights

27. Bank reconcilation
terms - conditions
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.
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.
outside director

28. If a hearing is requested - it will be held before an __ who will issue a __ and __.
quorum
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
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
administrative law judge - decision - order

29. Types of proceedings protected 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
Investigations - Legal proceedings
Sarbanes-Oxley Act
retaliates against a whistleblower

30. 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
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
preemptive rights
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)
terms - conditions

31. What is one of the most important controls to protect cash received in over-the-counter sales?
interference with employment or livelihood of the informant
officer
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
Cash Register

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

33. Bank accounts
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.
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
30
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

34. 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
negligence
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
straight voting
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed

35. '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
Cash Register
20
business judgment rule

36. SOX (or SARBOX)
officer
administrative law judge - decision - order
business judgment rule
Sarbanes-Oxley

37. What employees are protected under SOX?
annual shareholders' meeting
business judgment rule
all employees who work for public companies as long as they qualify as a whistleblower
personal liability

38. 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?
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
administrative law judge - decision - order
derivative lawsuit
The employee can file a lawsuit in federal district court

39. Elements of Internal Control
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
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
right of first refusal
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication

40. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
public companies
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
voting trust
terms - conditions

41. What new employee right was created by SOX?
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
30
dividend
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. 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
business judgment rule
15
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
Sarbanes-Oxley Act

43. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
dividend
They are not protected
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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

44. 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
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
Sarbanes-Oxley Act
duty of loyalty
special shareholders' meetings

45. A distribution of profits of the corporation to shareholders
outside director
dividend
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
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 duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
The person or company must present it's evidence within 20 days after it receives the complaint
quorum
terms - conditions
fiduciary duties

47. 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
Any officer - contractor - subcontractor - agent - or employee of a company
proxy
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)
They can have their stocks delisted by the national securities exchange and associations

48. Company representative
proxy
Any officer - contractor - subcontractor - agent - or employee of a company
inside director
buy-and-sell agreement

49. What are the conditions under which OSHA will investigate individual complaints?
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
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
annual shareholders' meeting
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

50. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
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
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
business judgment rule
review