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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. 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
Sarbanes-Oxley
quorum
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
all employees who work for public companies as long as they qualify as a whistleblower

2. What new employee right was created by SOX?
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
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
cumulative voting
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders

3. Personal liability provision
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
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
inside director
termination - demotion - suspension - threats - harassment

4. 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
dividend
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication

5. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
terms - conditions
They can have their stocks delisted by the national securities exchange and associations
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

6. The SEC regulations to not require companies to follow what?
dividend
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.
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
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)

7. 'The employee's claim of shareholder fraud does not have to be correct.'
duty of obedience
preemptive rights
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
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

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

9. Examples of complaints found not to be covered under SOX
Investigations - Legal proceedings
stock dividend
outside director
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)

10. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
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.
They are not protected
business judgment rule
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

11. Types of proceedings protected under SOX?
all employees who work for public companies as long as they qualify as a whistleblower
Investigations - Legal proceedings
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 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

12. What is the stated purpose of 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
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
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
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)

13. Sarbanes-Oxley Act of 2002
quorum
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.
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

14. 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
30
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
terms - conditions

15. What procedures must the audit committee of a public company establish?
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
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
60

16. What provision is enforced by the SEC only?

17. 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
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
interference with employment or livelihood of the informant
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.

18. Remittance Advice
A control for cash recevied throught the mail
annual report
negligence
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.

19. What is one of the most important controls to protect cash received in over-the-counter sales?
Cash Register
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
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.
dividend

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
petition - Administrative Review Board - 10
A control for cash recevied throught the mail
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

21. Bank accounts
dividend
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
terms - conditions

22. 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
proxy
15
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
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

23. Under what conditions may an employee claim protection of SOX?
quorum
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
petition - Administrative Review Board - 10
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.

24. Voucher
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
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
piercing the corporate veil

25. 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
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
special shareholders' meetings
duty of loyalty
all employees who work for public companies as long as they qualify as a whistleblower

26. SOX (or SARBOX)
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
Sarbanes-Oxley
cumulative voting
negligence

27. 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
administrative law judge - decision - order
straight voting
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
15

28. 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?
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.
The employee can file a lawsuit in federal district court
negligence

29. SOC record keeping requirements
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
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
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 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

30. Sox important Organizations that you must know
voting trust
supramajority voting requirement
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
cumulative voting

31. Audit committee

32. What employees are protected under SOX?
all employees who work for public companies as long as they qualify as a whistleblower
fiduciary duties
duty of loyalty
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.

33. SOX deadlines

34. Even if the employee provides evidence of individual complaints - OSHA will not investigate under what condition?
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
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.
derivative lawsuit
A control for cash recevied throught the mail

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

36. 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
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.
review
duty of obedience
The employee can file a lawsuit in federal district court

37. Company representative
termination - demotion - suspension - threats - harassment
derivative lawsuit
Any officer - contractor - subcontractor - agent - or employee of a company
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed

38. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
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
administrative law judge - decision - order
Cash Register
duty of care

39. The number of directors necessary to hold a board meeting or transact business of the board
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
quorum
fiduciary duties
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

40. Who signs Report for internal contro?
termination - demotion - suspension - threats - harassment
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.
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
They are not protected

41. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
The person or company must present it's evidence within 20 days after it receives the complaint
derivative lawsuit
voting trust
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.

42. Example of whistle blowing activities that DOL has found to be covered under SOX.
stock dividend
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
Sarbanes-Oxley
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)

43. Special-purpose cash funds
duty of obedience
60
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
30

44. Objectives of Internal Control
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
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
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

45. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
outside director
record date
negligence
review

46. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
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
30
proxy
duty of loyalty

47. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
fiduciary duties
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
Allows a business to reconcile the cash transactions recorded
business judgment rule

48. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
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
public companies
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.
Investigations - Legal proceedings

49. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
The employee can file a lawsuit in federal district court
review
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
officer

50. 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