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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. The Board can either adopt the judge's decision as its own or __ the case itself
review
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
duty of loyalty

2. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
termination - demotion - suspension - threats - harassment
special shareholders' meetings
fiduciary duties
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

3. 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
quorum
annual report
retaliates against a whistleblower
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication

4. A member of the board of directors who is also an officer of the corporation
buy-and-sell agreement
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
business judgment rule
inside director

5. 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?
The employee can file a lawsuit in federal district court
piercing the corporate veil
termination - demotion - suspension - threats - harassment
dividend

6. Voucher System
60
Allows a business to reconcile the cash transactions recorded
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
stock dividend

7. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
Allows a business to reconcile the cash transactions recorded
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
proxy
voting trust

8. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
administrative law judge - decision - order
derivative lawsuit
shareholder voting agreement
interference with employment or livelihood of the informant

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

10. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
supramajority voting requirement
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
petition - Administrative Review Board - 10
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.

11. What provision is enforced by the SEC only?

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12. Internal Complaint Procedures
15
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
duty of care

13. A distribution of profits of the corporation to shareholders
duty of loyalty
inside director
terms - conditions
dividend

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
right of first refusal
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)
supramajority voting requirement
terms - conditions

15. Remittance Advice
cumulative voting
A control for cash recevied throught the mail
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 company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

16. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
dividend
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
termination - demotion - suspension - threats - harassment
15

17. Audit committee

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18. Usurping of corporate opportunity

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19. 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)
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)
annual report
Cash Register

20. 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
straight voting
Sarbanes-Oxley Act
preemptive rights
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

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

22. Even if the employee provides evidence of individual complaints - OSHA will not investigate under what condition?
Cash Register
The person or company must present it's evidence within 20 days after it receives the complaint
administrative law judge - decision - order
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

23. 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
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
all employees who work for public companies as long as they qualify as a whistleblower
They are not protected

24. A member of a board of directors who is not an officer of the corporation
administrative law judge - decision - order
public companies
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
outside director

25. To be protected by sox an employee must do one of what activities?
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.
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
outside director
duty of loyalty

26. If a hearing is requested - it will be held before an __ who will issue a __ and __.
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
derivative lawsuit
Sarbanes-Oxley Act
administrative law judge - decision - order

27. 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
right of first refusal
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 obedience
cumulative voting

28. 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
right of first refusal
piercing the corporate veil
The person or company must present it's evidence within 20 days after it receives the complaint
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

29. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
annual report
voting trust
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
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

30. Examples of complaints found not to be covered under SOX
proxy
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)
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

31. Bank reconcilation steps
board of directors
duty of obedience
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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations

32. Bank reconcilation
They can have their stocks delisted by the national securities exchange and associations
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.
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)
review

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

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34. What employees are protected under SOX?
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
Sarbanes-Oxley
30
all employees who work for public companies as long as they qualify as a whistleblower

35. Elements of Internal Control
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
personal liability
review
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication

36. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
60
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
Any officer - contractor - subcontractor - agent - or employee of a company
They are not protected

37. What is the stated purpose of SOX?
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
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
The person or company must present it's evidence within 20 days after it receives the complaint
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.

38. What is required to qualify as a protected whistleblower
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
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
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 person or company must present it's evidence within 20 days after it receives the complaint

39. Sox important Organizations that you must know
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
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
retaliates against a whistleblower
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

40. SOX creates __ for company representatives.
20
piercing the corporate veil
personal liability
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

41. 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
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
straight voting
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 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

42. 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
record date
terms - conditions
duty of obedience
annual report

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
cumulative voting
duty of obedience
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.
Cash Register

44. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
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
officer
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
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

45. 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
public companies
supramajority voting requirement
Sarbanes-Oxley

46. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
The employee can file a lawsuit in federal district court
record date
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
They are not protected

47. 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
60
buy-and-sell agreement
straight voting
administrative law judge - decision - order

48. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
duty of care
A control for cash recevied throught the mail
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

49. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
public companies
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
They can have their stocks delisted by the national securities exchange and associations

50. Types of proceedings protected under SOX?
Investigations - Legal proceedings
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
interference with employment or livelihood of the informant
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