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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. 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
administrative law judge - decision - order
They can have their stocks delisted by the national securities exchange and associations
Any officer - contractor - subcontractor - agent - or employee of a company

2. A distribution of profits of the corporation to shareholders
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
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
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.
dividend

3. SOX deadlines

4. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
duty of care
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 company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

5. The employee must also service the notice on whom?
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
Allows a business to reconcile the cash transactions recorded
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)
preemptive rights

6. The criminal provision of SOX
stock dividend
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
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.
buy-and-sell agreement

7. 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?
fiduciary duties
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 can file a lawsuit in federal district court
Any officer - contractor - subcontractor - agent - or employee of a company

8. Bank reconcilation
The employee can file a lawsuit in federal district court
duty of obedience
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
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.

9. An agreement between two or more shareholders that stipulates how they will vote their shares
right of first refusal
shareholder voting agreement
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
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

10. The company or person must present evidence within __ days after receiving notice of the complaint.
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
They are not protected
20
straight voting

11. The Board can either adopt the judge's decision as its own or __ the case itself
review
The employee can file a lawsuit in federal district court
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
dividend

12. 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
record date
straight voting
all employees who work for public companies as long as they qualify as a whistleblower
interference with employment or livelihood of the informant

13. SOX (or SARBOX)
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
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
Sarbanes-Oxley
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

14. A member of the board of directors who is also an officer of the corporation
inside director
business judgment rule
They are not protected
Any officer - contractor - subcontractor - agent - or employee of a company

15. 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
piercing the corporate veil
20
proxy
right of first refusal

16. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
annual report
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
fiduciary duties
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.

17. What procedures must the audit committee of a public company establish?
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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
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
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.

18. 4 elements that must be proven to show usurping of corporate opportunity:

19. 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
outside director
administrative law judge - decision - order
piercing the corporate veil

20. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
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.
They are not protected
right of first refusal
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG

21. Objectives of Internal Control
supramajority voting requirement
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
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
Allows a business to reconcile the cash transactions recorded

22. 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
stock dividend
A control for cash recevied throught the mail
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)

23. Bank statement
Allows a business to reconcile the cash transactions recorded
30
quorum
business judgment rule

24. Internal Complaint Procedures
quorum
20
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
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

25. Additional shares of stock distributed as a dividend
cumulative voting
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
stock dividend
officer

26. What are the conditions under which OSHA will investigate individual complaints?
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
annual shareholders' meeting
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

27. What is required to qualify as a protected whistleblower
business judgment rule
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
outside director
termination - demotion - suspension - threats - harassment

28. The number of directors necessary to hold a board meeting or transact business of the board
cumulative voting
annual shareholders' meeting
quorum
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud

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

30. How does this Act define 'harm'?
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)
interference with employment or livelihood of the informant
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
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

31. 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
piercing the corporate veil
Investigations - Legal proceedings
negligence
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

32. 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
buy-and-sell agreement
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
derivative lawsuit
shareholder voting agreement

33. Remittance Advice
derivative lawsuit
A control for cash recevied throught the mail
quorum
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

34. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
fiduciary duties
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
board of directors
business judgment rule

35. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
stock dividend
The employee can file a lawsuit in federal district court
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
derivative lawsuit

36. Example of whistle blowing activities that DOL has found to be covered under SOX.
They are not protected
supramajority voting requirement
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
quorum

37. Audit committee

38. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
record date
officer
retaliates against a whistleblower
shareholder voting agreement

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

40. 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.
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)
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
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

41. Usurping of corporate opportunity

42. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
negligence
right of first refusal
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.

43. 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

44. What employees are protected under SOX?
all employees who work for public companies as long as they qualify as a whistleblower
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)
voting trust
record date

45. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
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
buy-and-sell agreement
voting trust

46. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
terms - conditions
public companies
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
derivative lawsuit

47. 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
officer
Sarbanes-Oxley Act
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 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

48. Public company
Allows a business to reconcile the cash transactions recorded
retaliates against a whistleblower
business judgment rule
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

49. Voucher System
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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
retaliates against a whistleblower

50. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
30
annual report
Sarbanes-Oxley
duty of obedience