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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. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
duty of care
petition - Administrative Review Board - 10
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

2. Personal liability provision
60
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding 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
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

3. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
business judgment rule
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
Allows a business to reconcile the cash transactions recorded
preemptive rights

4. The company or person must present evidence within __ days after receiving notice of the complaint.
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
20
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.

5. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
annual report
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
30
all employees who work for public companies as long as they qualify as a whistleblower

6. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
terms - conditions
officer
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
inside director

7. The employee must also service the notice on whom?
personal liability
annual shareholders' meeting
15
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)

8. Under what conditions may an employee claim protection of SOX?
The employee can file a lawsuit in federal district court
fiduciary duties
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
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.

9. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
voting trust
Sarbanes-Oxley
Investigations - Legal proceedings
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

10. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
straight voting
15
record date
quorum

11. What procedures must the audit committee of a public company establish?
piercing the corporate veil
special shareholders' meetings
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

12. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
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
officer
duty of obedience
business judgment rule

13. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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
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
supramajority voting requirement

14. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
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
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
derivative lawsuit

15. 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
retaliates against a whistleblower
right of first refusal
Sarbanes-Oxley Act
Investigations - Legal proceedings

16. Bank reconcilation
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
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.
administrative law judge - decision - order
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.

17. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
They are not protected
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
record date
duty of loyalty

18. Why did Congress pass SOX?
duty of obedience
Allows a business to reconcile the cash transactions recorded
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders

19. SOX (or SARBOX)
60
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.
Sarbanes-Oxley
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. A panel of decision makers who are elected by the shareholders
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
personal liability
right of first refusal
board of directors

21. Elements of Internal Control
The employee can file a lawsuit in federal district court
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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
business judgment rule

22. Bank accounts
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
They can have their stocks delisted by the national securities exchange and associations
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations

23. Sarbanes-Oxley Act of 2002
petition - Administrative Review Board - 10
30
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
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.

24. Audit committee

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25. A member of the board of directors who is also an officer of the corporation
inside director
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
officer
A control for cash recevied throught the mail

26. What new employee right was created by SOX?
Any officer - contractor - subcontractor - agent - or employee of a company
terms - conditions
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 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

27. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
Any officer - contractor - subcontractor - agent - or employee of a company
public companies
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
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

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

29. Voucher
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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
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
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.

30. Who signs Report for internal contro?
duty of care
Any officer - contractor - subcontractor - agent - or employee of a company
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
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. 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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32. 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)
duty of obedience
buy-and-sell agreement
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

33. What employees are protected under SOX?
all employees who work for public companies as long as they qualify as a whistleblower
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
piercing the corporate veil
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

34. 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
Any officer - contractor - subcontractor - agent - or employee of a company
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
personal liability
piercing the corporate veil

35. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
negligence
duty of loyalty
right of first refusal
buy-and-sell agreement

36. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
termination - demotion - suspension - threats - harassment
retaliates against a whistleblower
Investigations - Legal proceedings
The person or company must present it's evidence within 20 days after it receives the complaint

37. 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
officer
voting trust
Investigations - Legal proceedings
quorum

38. Voucher System
special shareholders' meetings
fiduciary duties
negligence
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.

39. Bank reconcilation steps
Allows a business to reconcile the cash transactions recorded
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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
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

40. SOX deadlines

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41. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
fiduciary duties
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
straight voting
petition - Administrative Review Board - 10

42. The criminal provision of SOX
officer
derivative lawsuit
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
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.

43. 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
administrative law judge - decision - order
public companies
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct

44. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
15
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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
They can have their stocks delisted by the national securities exchange and associations

45. 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
60
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
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

46. The number of directors necessary to hold a board meeting or transact business of the board
Any officer - contractor - subcontractor - agent - or employee of a company
quorum
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

47. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
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
A control for cash recevied throught the mail
derivative lawsuit
termination - demotion - suspension - threats - harassment

48. How does this Act define 'harm'?
all employees who work for public companies as long as they qualify as a whistleblower
petition - Administrative Review Board - 10
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
interference with employment or livelihood of the informant

49. What is one of the most important controls to protect cash received in over-the-counter sales?
negligence
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
Cash Register
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.

50. What provision is enforced by the SEC only?

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