Test your basic knowledge |

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. 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
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
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

2. Who signs Report for internal contro?
quorum
Sarbanes-Oxley Act
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.
outside director

3. 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
The person or company must present it's evidence within 20 days after it receives the complaint
60
retaliates against a whistleblower

4. Additional shares of stock distributed as a dividend
duty of care
supramajority voting requirement
stock dividend
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud

5. 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
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
cumulative voting
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
review

6. How does this Act define 'harm'?
20
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
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.
interference with employment or livelihood of the informant

7. SOX deadlines

8. The Board can either adopt the judge's decision as its own or __ the case itself
review
inside director
personal liability
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

9. 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
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
shareholder voting agreement
inside director

10. 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)
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
supramajority voting requirement
Any officer - contractor - subcontractor - agent - or employee of a company

11. SOX (or SARBOX)
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
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
annual shareholders' meeting
Sarbanes-Oxley

12. Usurping of corporate opportunity

13. The employee must also service the notice on whom?
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.
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
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 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)

14. Objectives of Internal Control
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
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 control for cash recevied throught the mail
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations

15. 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
voting trust
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
duty of obedience

16. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
A control for cash recevied throught the mail
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
voting trust

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

18. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
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.
15
termination - demotion - suspension - threats - harassment
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)

19. 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
cumulative voting
voting trust
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

20. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
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
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
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
30

21. Audit committee

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

23. The criminal provision of SOX
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
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
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

24. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
right of first refusal
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)
record date
retaliates against a whistleblower

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

26. Internal Complaint Procedures
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
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
retaliates against a whistleblower
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed

27. What provision is enforced by the SEC only?

28. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
15
supramajority voting requirement
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
preemptive rights

29. Bank reconcilation steps
A control for cash recevied throught the mail
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
cumulative voting
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. Bank reconcilation
officer
board of directors
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.
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.

31. Even if the employee provides evidence of individual complaints - OSHA will not investigate under what condition?
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
proxy
negligence
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

32. 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
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
They can have their stocks delisted by the national securities exchange and associations
straight voting

33. A panel of decision makers who are elected by the shareholders
15
special shareholders' meetings
board of directors
piercing the corporate veil

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
A control for cash recevied throught the mail
straight voting
20
record date

35. 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
The employee can file a lawsuit in federal district court
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 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

36. Elements of Internal Control
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
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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)
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)

37. Public company
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
stock dividend
quorum
special shareholders' meetings

38. 'The employee's claim of shareholder fraud does not have to be correct.'
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
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 employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud

39. 4 elements that must be proven to show usurping of corporate opportunity:

40. Bank statement
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
officer
Allows a business to reconcile the cash transactions recorded
20

41. 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
cumulative voting
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
termination - demotion - suspension - threats - harassment
terms - conditions

42. Company representative
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
Any officer - contractor - subcontractor - agent - or employee of a company
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

43. SOX creates __ for company representatives.
60
personal liability
termination - demotion - suspension - threats - harassment
retaliates against a whistleblower

44. What is one of the most important controls to protect cash received in over-the-counter sales?
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 officer - contractor - subcontractor - agent - or employee of a company
They are not protected
Cash Register

45. Examples of complaints found not to be covered under SOX
administrative law judge - decision - order
piercing the corporate veil
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)
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

46. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
supramajority voting requirement
They are not protected
negligence
straight voting

47. 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

48. If a hearing is requested - it will be held before an __ who will issue a __ and __.
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
administrative law judge - decision - order
right of first refusal
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.

49. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
annual report
business judgment rule
Any officer - contractor - subcontractor - agent - or employee of a company
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud

50. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
stock dividend
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
duty of care
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