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Sarbanes Oxley Act: SOX Corporate Governance

Subjects : certifications, sarbanes-oxley

Instructions:

Answer 50 questions in 15 minutes.
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Match each statement with the correct term.
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1. What new employee right was created by 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
review
retaliates against a whistleblower
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)

2. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
review
60
right of first refusal
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.

3. Personal liability provision
record date
Any officer - contractor - subcontractor - agent - or employee of a company
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
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

4. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
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
quorum
quorum
termination - demotion - suspension - threats - harassment

5. Under what conditions may an employee claim protection of SOX?
preemptive rights
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
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
public companies

6. What is required to qualify as a protected whistleblower
proxy
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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
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

7. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
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
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
annual shareholders' meeting
derivative lawsuit

8. The Board can either adopt the judge's decision as its own or __ the case itself
petition - Administrative Review Board - 10
dividend
review
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

9. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
interference with employment or livelihood of the informant
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
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

10. Examples of complaints found not to be covered under SOX
quorum
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)
right of first refusal

11. 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
retaliates against a whistleblower
all employees who work for public companies as long as they qualify as a whistleblower
buy-and-sell agreement
public companies

12. Internal Complaint Procedures
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
right of first refusal
Sarbanes-Oxley Act
preemptive rights

13. Sarbanes-Oxley Act of 2002
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
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
officer
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.

14. Audit committee

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15. Who signs Report for internal contro?
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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
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.
annual report

16. 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
piercing the corporate veil
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
duty of loyalty
board of directors

17. The number of directors necessary to hold a board meeting or transact business of the board
annual shareholders' meeting
quorum
record date
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

18. What is the stated purpose of SOX?
They are not protected
annual report
outside director
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

19. Elements of Internal Control
proxy
buy-and-sell agreement
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.
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication

20. 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
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
retaliates against a whistleblower
proxy
The person or company must present it's evidence within 20 days after it receives the complaint

21. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
duty of obedience
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
supramajority voting requirement
The employee can file a lawsuit in federal district court

22. 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
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
stock dividend
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders

23. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
fiduciary duties
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.
Any officer - contractor - subcontractor - agent - or employee of a company
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

24. Objectives of Internal Control
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
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.
voting trust
record date

25. How does this Act define 'harm'?
record date
officer
interference with employment or livelihood of the informant
Sarbanes-Oxley

26. If a hearing is requested - it will be held before an __ who will issue a __ and __.
administrative law judge - decision - order
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
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
A control for cash recevied throught the mail

27. Bank statement
stock dividend
Allows a business to reconcile the cash transactions recorded
They can have their stocks delisted by the national securities exchange and associations
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.

28. SOX deadlines

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29. What employees are protected under SOX?
straight voting
all employees who work for public companies as long as they qualify as a whistleblower
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
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

30. The criminal provision of SOX
30
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
The employee can file a lawsuit in federal district court
right of first refusal

31. A panel of decision makers who are elected by the shareholders
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.
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
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
board of directors

32. 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
Sarbanes-Oxley Act
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
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.
dividend

33. 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
terms - conditions
duty of loyalty
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

34. Voucher
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
duty of care
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
A control for cash recevied throught the mail

35. What procedures must the audit committee of a public company establish?
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
Cash Register
annual report
officer

36. Voucher System
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)
fiduciary duties
duty of loyalty
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.

37. 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
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
duty of obedience
shareholder voting agreement
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud

38. 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
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 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)
straight voting
preemptive rights

39. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
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.
record date
personal liability
straight voting

40. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
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
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
30

41. Bank reconcilation
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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.
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
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

42. Types of proceedings protected under SOX?
Investigations - Legal proceedings
The employee can file a lawsuit in federal district court
piercing the corporate veil
dividend

43. 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
special shareholders' meetings
piercing the corporate veil
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
The employee can file a lawsuit in federal district court

44. 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?
board of directors
The employee can file a lawsuit in federal district court
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)
duty of loyalty

45. What provision is enforced by the SEC only?

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46. The SEC regulations to not require companies to follow what?
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
15
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)
all employees who work for public companies as long as they qualify as a whistleblower

47. A member of a board of directors who is not an officer of the corporation
They can have their stocks delisted by the national securities exchange and associations
right of first refusal
quorum
outside director

48. The company or person must present evidence within __ days after receiving notice of the complaint.
derivative lawsuit
board of directors
preemptive rights
20

49. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
dividend
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)
derivative lawsuit
business judgment rule

50. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
voting trust
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
They are not protected
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

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Sarbanes Oxley Act: SOX Corporate Governance

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