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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. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
Any officer - contractor - subcontractor - agent - or employee of a company
officer
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)
voting trust

2. Bank statement
shareholder voting agreement
Allows a business to reconcile the cash transactions recorded
officer
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct

3. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
A control for cash recevied throught the mail
60
buy-and-sell agreement
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)

4. 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
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
buy-and-sell agreement
duty of care

5. What new employee right was created by SOX?
inside 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)
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
business judgment rule

6. Bank reconcilation
The employee can file a lawsuit in federal district court
30
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
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.

7. A member of a board of directors who is not an officer of the corporation
terms - conditions
The person or company must present it's evidence within 20 days after it receives the complaint
outside director
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

8. Company representative
Any officer - contractor - subcontractor - agent - or employee of a company
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.
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

9. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
30
administrative law judge - decision - order
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Sarbanes-Oxley

10. Additional shares of stock distributed as a dividend
stock dividend
termination - demotion - suspension - threats - harassment
right of first refusal
annual report

11. Internal Complaint Procedures
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 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
quorum
business judgment rule

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

13. 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
administrative law judge - decision - order
record date
officer

14. 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
quorum
30
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
petition - Administrative Review Board - 10

15. 4 elements that must be proven to show usurping of corporate opportunity:

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16. Usurping of corporate opportunity

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17. 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
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.
record date
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
cumulative voting

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

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19. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
duty of obedience
negligence
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
interference with employment or livelihood of the informant

20. Remittance Advice
dividend
proxy
A control for cash recevied throught the mail
interference with employment or livelihood of the informant

21. Sarbanes-Oxley Act of 2002
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.
termination - demotion - suspension - threats - harassment
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
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

22. How does this Act define 'harm'?
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
interference with employment or livelihood of the informant

23. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
business judgment rule
derivative lawsuit
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
straight voting

24. Sox important Organizations that you must know
termination - demotion - suspension - threats - harassment
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
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
preemptive rights

25. 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 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 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
terms - conditions
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

26. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
duty of care
straight voting
all employees who work for public companies as long as they qualify as a whistleblower
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

27. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
retaliates against a whistleblower
shareholder voting agreement
special shareholders' meetings
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.

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

29. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
officer
right of first refusal
They are not protected
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.

30. 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
record date
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
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

31. If a hearing is requested - it will be held before an __ who will issue a __ and __.
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
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
administrative law judge - decision - order
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

32. Bank reconcilation steps
all employees who work for public companies as long as they qualify as a whistleblower
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
The person or company must present it's evidence within 20 days after it receives the complaint
15

33. An agreement between two or more shareholders that stipulates how they will vote their shares
duty of loyalty
board of directors
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
shareholder voting agreement

34. 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
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
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
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

35. The employee must also service the notice on whom?
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 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
duty of care

36. Bank accounts
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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
cumulative voting

37. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
voting trust
fiduciary duties
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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.

38. 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
A control for cash recevied throught the mail
special shareholders' meetings
annual shareholders' meeting

39. 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
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)
voting trust
Sarbanes-Oxley Act
20

40. The company or person must present evidence within __ days after receiving notice of the complaint.
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
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
20

41. SOX (or SARBOX)
termination - demotion - suspension - threats - harassment
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
buy-and-sell agreement
Sarbanes-Oxley

42. Why did Congress pass SOX?
quorum
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
straight voting
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG

43. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
Allows a business to reconcile the cash transactions recorded
termination - demotion - suspension - threats - harassment
negligence
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders

44. Elements of Internal Control
duty of care
cumulative 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
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication

45. The SEC regulations to not require companies to follow what?
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
record date
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
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)

46. Who signs Report for internal contro?
negligence
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.
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
duty of loyalty

47. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
business judgment rule
preemptive rights
30
20

48. The number of directors necessary to hold a board meeting or transact business of the board
interference with employment or livelihood of the informant
Allows a business to reconcile the cash transactions recorded
quorum
Sarbanes-Oxley Act

49. What is one of the most important controls to protect cash received in over-the-counter sales?
proxy
supramajority voting requirement
Cash Register
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud

50. Personal liability provision
public companies
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
Investigations - Legal proceedings
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