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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. Who signs Report for internal contro?
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 person or company must present it's evidence within 20 days after it receives the complaint
Sarbanes-Oxley
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.

2. Objectives of Internal Control
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
piercing the corporate veil
duty of loyalty
supramajority voting requirement

3. SOX deadlines

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4. 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 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
30
straight voting

5. 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
Sarbanes-Oxley
duty of loyalty

6. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
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 person or company must present it's evidence within 20 days after it receives the complaint
fiduciary duties
inside director

7. Under what conditions may an employee claim protection of SOX?
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
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
right of first refusal

8. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
The person or company must present it's evidence within 20 days after it receives the complaint
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)
preemptive rights
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

9. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
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)
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
15
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

10. Remittance Advice
shareholder voting agreement
termination - demotion - suspension - threats - harassment
They can have their stocks delisted by the national securities exchange and associations
A control for cash recevied throught the mail

11. What is the stated purpose of SOX?
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.
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
They can have their stocks delisted by the national securities exchange and associations
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

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
straight voting
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.
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
piercing the corporate veil

13. A panel of decision makers who are elected by the shareholders
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
Investigations - Legal proceedings
proxy

14. 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
preemptive rights
duty of obedience
straight voting
annual report

15. The employee must also service the notice on whom?
shareholder voting agreement
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)
Any officer - contractor - subcontractor - agent - or employee of a company
review

16. The company or person must present evidence within __ days after receiving notice of the complaint.
Investigations - Legal proceedings
right of first refusal
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

17. How does this Act define 'harm'?
A control for cash recevied throught the mail
interference with employment or livelihood of the informant
20
preemptive rights

18. An agreement between two or more shareholders that stipulates how they will vote their shares
stock dividend
shareholder voting agreement
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.

19. 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
stock dividend
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
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

20. What procedures must the audit committee of a public company establish?
preemptive rights
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations

21. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
30
all employees who work for public companies as long as they qualify as a whistleblower
proxy
quorum

22. Additional shares of stock distributed as a dividend
A control for cash recevied throught the mail
quorum
stock dividend
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders

23. 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
interference with employment or livelihood of the informant
preemptive rights
fiduciary duties

24. 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
termination - demotion - suspension - threats - harassment
dividend
quorum
duty of obedience

25. What employees are protected under SOX?
Sarbanes-Oxley Act
termination - demotion - suspension - threats - harassment
all employees who work for public companies as long as they qualify as a whistleblower
60

26. A requirement that a greater than majority of shares constitutes a quorum of the vote of the 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
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
supramajority voting requirement
officer

27. A member of a board of directors who is not an officer of the corporation
Allows a business to reconcile the cash transactions recorded
quorum
They can have their stocks delisted by the national securities exchange and associations
outside director

28. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
administrative law judge - decision - order
personal liability
officer
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud

29. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
duty of loyalty
derivative lawsuit
30
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

30. What is one of the most important controls to protect cash received in over-the-counter sales?
Any officer - contractor - subcontractor - agent - or employee of a company
Cash Register
termination - demotion - suspension - threats - harassment
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

31. Special-purpose cash funds
The person or company must present it's evidence within 20 days after it receives the complaint
review
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations

32. Types of proceedings protected under SOX?
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
fiduciary duties
15
Investigations - Legal proceedings

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

34. A member of the board of directors who is also an officer of the corporation
inside director
They can have their stocks delisted by the national securities exchange and associations
negligence
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

35. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
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
60
record date
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

36. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
negligence
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
record date

37. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
termination - demotion - suspension - threats - harassment
They are not protected
public companies

38. Examples of complaints found not to be covered under SOX
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)
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.
annual report
Sarbanes-Oxley

39. Example of whistle blowing activities that DOL has found to be covered 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
retaliates against a whistleblower
administrative law judge - decision - order
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud

40. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
business judgment rule
negligence
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
interference with employment or livelihood of the informant

41. 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
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 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
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

42. The number of directors necessary to hold a board meeting or transact business of the board
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
review
quorum
buy-and-sell agreement

43. 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)
inside director
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
They are not protected

44. 4 elements that must be proven to show usurping of corporate opportunity:

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45. 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
personal liability
Sarbanes-Oxley Act
A control for cash recevied throught the mail
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

46. 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
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
supramajority voting requirement
terms - conditions
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

47. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
special shareholders' meetings
termination - demotion - suspension - threats - harassment
negligence
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.

48. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
termination - demotion - suspension - threats - harassment
shareholder voting agreement
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
inside director

49. 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
piercing the corporate veil
60
buy-and-sell agreement
duty of care

50. 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
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.
petition - Administrative Review Board - 10
15
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