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

2. The SEC regulations to not require companies to follow what?
They are not protected
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
derivative lawsuit
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)

3. Voucher System
retaliates against a whistleblower
supramajority voting requirement
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

4. 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
20
duty of loyalty
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
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

5. SOX creates __ for company representatives.
termination - demotion - suspension - threats - harassment
Sarbanes-Oxley Act
Cash Register
personal liability

6. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
dividend
15
30
all employees who work for public companies as long as they qualify as a whistleblower

7. 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
30
duty of care
straight voting
Allows a business to reconcile the cash transactions recorded

8. Bank statement
Allows a business to reconcile the cash transactions recorded
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
30
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

9. Objectives of Internal Control
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
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
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
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.

10. What are the conditions under which OSHA will investigate individual complaints?
negligence
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
business judgment rule

11. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
buy-and-sell agreement
business judgment rule
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
petition - Administrative Review Board - 10

12. SOX deadlines

13. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
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
supramajority voting requirement
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
personal liability

14. 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
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Investigations - Legal proceedings
interference with employment or livelihood of the informant

15. Special-purpose cash funds
administrative law judge - decision - order
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
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.

16. SOC record keeping requirements
annual shareholders' meeting
quorum
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 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

17. What is one of the most important controls to protect cash received in over-the-counter sales?
Cash Register
terms - conditions
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
Sarbanes-Oxley

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

19. The employee must also service the notice on whom?
interference with employment or livelihood of the informant
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 obedience
dividend

20. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
annual shareholders' meeting
60

21. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
voting trust
personal liability
fiduciary duties
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)

22. A member of a board of directors who is not an officer of the corporation
outside director
Allows a business to reconcile the cash transactions recorded
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
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

23. 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
quorum
straight voting
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders

24. 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

25. Audit committee

26. 'The employee's claim of shareholder fraud does not have to be correct.'
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
The employee can file a lawsuit in federal district court
board of directors

27. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
duty of loyalty
special shareholders' meetings
derivative lawsuit

28. 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
preemptive rights
supramajority voting requirement
Cash Register

29. Voucher
30
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)
Sarbanes-Oxley Act

30. Why did Congress pass SOX?
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
60
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)
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

31. Personal liability provision
outside director
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
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.
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.

32. Sox important Organizations that you must know
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
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.
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG

33. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
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
record date
Cash Register

34. A panel of decision makers who are elected by the shareholders
interference with employment or livelihood of the informant
board of directors
inside director
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed

35. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
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
They can have their stocks delisted by the national securities exchange and associations
duty of loyalty
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

36. Employees wishing to bring a lawsuit claiming they were discriminated or retaliated against in violation of SOX's whistleblower protection must first do what?

37. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
They are not protected
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
personal liability

38. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
public companies
right of first refusal
Sarbanes-Oxley Act
officer

39. Elements of Internal Control
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)
shareholder voting agreement
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
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication

40. 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
officer
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
Any officer - contractor - subcontractor - agent - or employee of a company

41. Even if the employee provides evidence of individual complaints - OSHA will not investigate under what condition?
Any officer - contractor - subcontractor - agent - or employee of a company
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
right of first refusal
straight voting

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

43. 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?
stock dividend
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 employee can file a lawsuit in federal district court
derivative lawsuit

44. SOX (or SARBOX)
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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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
Sarbanes-Oxley

45. The Board can either adopt the judge's decision as its own or __ the case itself
review
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
annual report
preemptive rights

46. The company or person must present evidence within __ days after receiving notice of the complaint.
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)
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
20

47. Company representative
Any officer - contractor - subcontractor - agent - or employee of a company
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
right of first refusal
Sarbanes-Oxley Act

48. 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
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
duty of loyalty
board of directors

49. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
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.
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
duty of care

50. If a hearing is requested - it will be held before an __ who will issue a __ and __.
administrative law judge - decision - order
all employees who work for public companies as long as they qualify as a whistleblower
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.
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