Sarbanes Oxley Act: SOX Corporate Governance

Instructions:

• Answer 50 questions in 15 minutes.
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• 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. Objectives of Internal Control
officer
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
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 only needed to show that he or she had a reasonable belief that the conduct constituted fraud


2. 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
30
The person or company must present it's evidence within 20 days after it receives the complaint
cumulative voting


3. Sox important Organizations that you must know
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
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 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


4. Additional shares of stock distributed as a dividend
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)
Sarbanes-Oxley Act
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.
stock dividend


5. Sarbanes-Oxley Act of 2002
Any officer - contractor - subcontractor - agent - or employee of a company
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.
public companies
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


6. If a hearing is requested - it will be held before an __ who will issue a __ and __.
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)
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
The person or company must present it's evidence within 20 days after it receives the complaint
administrative law judge - decision - order


7. Public company
voting trust
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
public companies


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

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9. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
negligence
15
They are not protected
shareholder voting agreement


10. Internal Complaint Procedures
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.
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
public companies
review


11. The number of directors necessary to hold a board meeting or transact business of the board
quorum
30
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders


12. 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
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)
right of first refusal
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


13. 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
inside director
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
buy-and-sell agreement
personal liability


14. 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
terms - conditions
They are not protected
retaliates against a whistleblower
quorum


15. Bank reconcilation
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)
15
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 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


16. 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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17. What procedures must the audit committee of a public company establish?
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
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
board of directors
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


18. 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
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
Allows a business to reconcile the cash transactions recorded
duty of loyalty
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct


19. Under what conditions may an employee claim protection of SOX?
outside director
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
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


20. Even if the employee provides evidence of individual complaints - OSHA will not investigate under what condition?
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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
annual report
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.


21. 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?
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
60
The employee can file a lawsuit in federal district court


22. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
preemptive rights
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
all employees who work for public companies as long as they qualify as a whistleblower
record date


23. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
interference with employment or livelihood of the informant
record date
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.
30


24. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
supramajority voting requirement
duty of care
They can have their stocks delisted by the national securities exchange and associations


25. SOC record keeping requirements
business judgment rule
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
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


26. What is required to qualify as a protected whistleblower
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
annual shareholders' meeting
Sarbanes-Oxley
preemptive rights


27. Personal liability provision
cumulative voting
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)
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
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


28. Bank accounts
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
supramajority voting requirement
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


29. 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
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
Cash Register
Sarbanes-Oxley Act
cumulative voting


30. A member of the board of directors who is also an officer of the corporation
derivative lawsuit
60
inside director
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


31. What provision is enforced by the SEC only?

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32. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
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
derivative lawsuit
officer
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations


33. The SEC regulations to not require companies to follow what?
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
officer
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
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. Bank statement
buy-and-sell agreement
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
Allows a business to reconcile the cash transactions recorded
derivative lawsuit


35. What new employee right was created by SOX?
retaliates against a whistleblower
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
cumulative voting
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.


36. 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
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
Allows a business to reconcile the cash transactions recorded
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


37. 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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38. 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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39. Remittance Advice
board of directors
A control for cash recevied throught the mail
termination - demotion - suspension - threats - harassment
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


40. The company or person must present evidence within __ days after receiving notice of the complaint.
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
20
fiduciary duties
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


41. Special-purpose cash funds
They are not protected
Sarbanes-Oxley
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
60


42. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
termination - demotion - suspension - threats - harassment
supramajority voting requirement
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
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)


43. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
quorum
business judgment rule
supramajority voting requirement
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


44. What is one of the most important controls to protect cash received in over-the-counter sales?
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
Cash Register
15
special shareholders' meetings


45. The Board can either adopt the judge's decision as its own or __ the case itself
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
straight voting
review
all employees who work for public companies as long as they qualify as a whistleblower


46. 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
Sarbanes-Oxley Act
negligence
right of first refusal
petition - Administrative Review Board - 10


47. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
voting trust
proxy
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.
They can have their stocks delisted by the national securities exchange and associations


48. What employees are protected under SOX?
Allows a business to reconcile the cash transactions recorded
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.
review
all employees who work for public companies as long as they qualify as a whistleblower


49. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
proxy
public companies
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


50. SOX creates __ for company representatives.
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)
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.
personal liability
A control for cash recevied throught the mail