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

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2. 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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
quorum
A control for cash recevied throught the mail
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.


3. 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
interference with employment or livelihood of the informant
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.


4. 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
cumulative voting
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
Allows a business to reconcile the cash transactions recorded


5. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
60
review
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


6. Remittance Advice
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
A control for cash recevied throught the mail
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
termination - demotion - suspension - threats - harassment


7. What is required to qualify as a protected whistleblower
cumulative voting
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)
Cash Register
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


8. Personal liability provision
special shareholders' meetings
cumulative voting
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
right of first refusal


9. The criminal provision of SOX
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
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
voting trust
all employees who work for public companies as long as they qualify as a whistleblower


10. 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
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 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
supramajority voting requirement


11. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
piercing the corporate veil
They are not protected
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding 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


12. Examples of complaints found not to be covered under SOX
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
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
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct


13. SOC record keeping requirements
dividend
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 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
quorum


14. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
derivative lawsuit
The employee can file a lawsuit in federal district court
Sarbanes-Oxley
business judgment rule


15. 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
Allows a business to reconcile the cash transactions recorded
terms - conditions
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG


16. 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
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
piercing the corporate veil
negligence
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed


17. 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
straight voting
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
terms - conditions


18. 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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19. 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?
outside director
The employee can file a lawsuit in federal district court
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
right of first refusal


20. The number of directors necessary to hold a board meeting or transact business of the board
shareholder voting agreement
quorum
Allows a business to reconcile the cash transactions recorded
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


21. The Board can either adopt the judge's decision as its own or __ the case itself
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
review
piercing the corporate veil
duty of loyalty


22. Special-purpose cash funds
outside director
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
15
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed


23. 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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24. 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
special shareholders' meetings
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)
Sarbanes-Oxley


25. 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
personal liability
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


26. Company representative
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 officer - contractor - subcontractor - agent - or employee of a company
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
voting trust


27. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
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
retaliates against a whistleblower
A control for cash recevied throught the mail


28. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
personal liability
dividend
voting trust
administrative law judge - decision - order


29. How does this Act define 'harm'?
interference with employment or livelihood of the informant
The employee can file a lawsuit in federal district court
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
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders


30. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
duty of care
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
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


31. Even if the employee provides evidence of individual complaints - OSHA will not investigate under what condition?
Investigations - Legal proceedings
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
record date
inside director


32. If a hearing is requested - it will be held before an __ who will issue a __ and __.
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
administrative law judge - decision - order
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)
derivative lawsuit


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


34. Types of proceedings protected under SOX?
termination - demotion - suspension - threats - harassment
A control for cash recevied throught the mail
Investigations - Legal proceedings
fiduciary duties


35. What are the conditions under which OSHA will investigate individual complaints?
business judgment rule
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
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
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)


36. 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
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
duty of loyalty
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)
Investigations - Legal proceedings


37. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
outside director
annual report
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding 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


38. 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)
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 person or company must present it's evidence within 20 days after it receives the complaint
derivative lawsuit


39. A panel of decision makers who are elected by the shareholders
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)
The person or company must present it's evidence within 20 days after it receives the complaint
board of directors
quorum


40. What employees are protected under SOX?
shareholder voting agreement
supramajority voting requirement
all employees who work for public companies as long as they qualify as a whistleblower
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations


41. A member of the board of directors who is also an officer of the corporation
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
inside director
30
business judgment rule


42. What new employee right was created by SOX?
They are not protected
review
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


43. Usurping of corporate opportunity

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44. What is the stated purpose of SOX?
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)
piercing the corporate veil
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
They can have their stocks delisted by the national securities exchange and associations


45. Bank reconcilation
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
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.
Cash Register
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


46. SOX creates __ for company representatives.
Cash Register
personal liability
terms - conditions
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.


47. Bank statement
Allows a business to reconcile the cash transactions recorded
negligence
They are not protected
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication


48. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
30
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
preemptive rights
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.


49. 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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50. An agreement between two or more shareholders that stipulates how they will vote their shares
annual shareholders' meeting
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.
shareholder voting agreement
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