Sarbanes Oxley Act: SOX Corporate Governance

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. SOC record keeping requirements
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
interference with employment or livelihood of the informant
Sarbanes-Oxley
supramajority voting requirement


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


3. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
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
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preemptive rights


4. Objectives of Internal Control
right of first refusal
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
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations


5. 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

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6. 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
voting trust
buy-and-sell agreement
retaliates against a whistleblower
termination - demotion - suspension - threats - harassment


7. Audit committee

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8. Sarbanes-Oxley Act of 2002
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
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.
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
Allows a business to reconcile the cash transactions recorded
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
duty of care
record date


10. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
They can have their stocks delisted by the national securities exchange and associations
stock dividend
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.


11. Voucher System
straight voting
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
shareholder voting agreement
stock dividend


12. 4 elements that must be proven to show usurping of corporate opportunity:

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13. Public company
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
The person or company must present it's evidence within 20 days after it receives the complaint
A control for cash recevied throught the mail
Any officer - contractor - subcontractor - agent - or employee of a company


14. 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
fiduciary duties
outside director
straight voting


15. What is one of the most important controls to protect cash received in over-the-counter sales?
special shareholders' meetings
fiduciary duties
Cash Register
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


16. The penalties that may be imposed under SOX.
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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
interference with employment or livelihood of the informant
stock dividend


17. 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
Investigations - Legal proceedings
buy-and-sell agreement
proxy
personal liability


18. Bank accounts
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
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
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)
public companies


19. Special-purpose cash funds
proxy
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
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
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication


20. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
annual report
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
15
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)


21. SOX deadlines

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22. An agreement between two or more shareholders that stipulates how they will vote their shares
straight voting
shareholder voting agreement
annual report
The person or company must present it's evidence within 20 days after it receives the complaint


23. How does this Act define 'harm'?
right of first refusal
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
interference with employment or livelihood of the informant
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


24. Bank reconcilation
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
board of directors
quorum
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.


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

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26. What are the conditions under which OSHA will investigate individual complaints?
The employee can file a lawsuit in federal district court
60
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


27. 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
A control for cash recevied throught the mail
outside director
They can have their stocks delisted by the national securities exchange and associations
duty of loyalty


28. 'The employee's claim of shareholder fraud does not have to be correct.'
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
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
dividend


29. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
board of directors
proxy
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


30. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
administrative law judge - decision - order
30
20
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


31. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
special shareholders' meetings
business judgment rule
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.
buy-and-sell agreement


32. 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
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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
fiduciary duties
right of first refusal


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


34. Additional shares of stock distributed as a dividend
stock dividend
cumulative voting
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
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


35. What is required to qualify as a protected whistleblower
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
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
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
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


36. Bank reconcilation steps
duty of obedience
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 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


37. Internal Complaint Procedures
officer
annual report
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


38. The number of directors necessary to hold a board meeting or transact business of the board
quorum
30
duty of loyalty
officer


39. What employees are protected under 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
proxy
Investigations - Legal proceedings
all employees who work for public companies as long as they qualify as a whistleblower


40. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
Sarbanes-Oxley Act
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
quorum
negligence


41. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
termination - demotion - suspension - threats - harassment
inside director
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


42. Voucher
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
buy-and-sell agreement


43. 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
The employee can file a lawsuit in federal district court
cumulative voting
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
quorum


44. 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
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
terms - conditions
cumulative voting
Sarbanes-Oxley


45. Sox important Organizations that you must know
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
duty of care
quorum
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG


46. 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
20
duty of loyalty
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


47. Remittance Advice
administrative law judge - decision - order
right of first refusal
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


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


49. 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
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.
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
piercing the corporate veil
A control for cash recevied throught the mail


50. The employee must also service the notice on whom?
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)
derivative lawsuit
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication