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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.
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. 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
Sarbanes-Oxley
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
straight voting
piercing the corporate veil

2. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
supramajority voting requirement
interference with employment or livelihood of the informant
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
terms - conditions

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

4. Who signs Report for internal contro?
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)
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.
special shareholders' meetings
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

5. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
right of first refusal
public companies
quorum
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

6. An agreement between two or more shareholders that stipulates how they will vote their shares
Sarbanes-Oxley
annual shareholders' meeting
shareholder voting agreement
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations

7. Personal liability provision
duty of obedience
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
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

8. 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
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
buy-and-sell agreement
business judgment rule
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. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
derivative lawsuit
They can have their stocks delisted by the national securities exchange and associations
personal liability
review

10. 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)
outside director
stock dividend
preemptive rights

11. What is one of the most important controls to protect cash received in over-the-counter sales?
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
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
Cash Register
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

12. Bank reconcilation
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.
right of first refusal
board of directors
petition - Administrative Review Board - 10

13. What provision is enforced by the SEC only?

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

15. 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
outside director
voting trust
annual shareholders' meeting

16. Audit committee

17. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
30
The employee can file a lawsuit in federal district court
annual shareholders' meeting

18. A member of a board of directors who is not an officer of the corporation
outside director
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
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
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations

19. Elements of Internal Control
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.
retaliates against a whistleblower
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication

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

21. Objectives of Internal Control
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
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
They can have their stocks delisted by the national securities exchange and associations
Investigations - Legal proceedings

22. Bank accounts
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
review
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
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

23. Why did Congress pass SOX?
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
30
retaliates against a whistleblower
cumulative voting

24. 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
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
petition - Administrative Review Board - 10
straight voting
duty of obedience

25. 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
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
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
public companies
petition - Administrative Review Board - 10

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

27. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
special shareholders' meetings
business judgment rule
60
They are not protected

28. 4 elements that must be proven to show usurping of corporate opportunity:

29. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
The employee can file a lawsuit in federal district court
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
business judgment rule
termination - demotion - suspension - threats - harassment

30. 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
quorum
A control for cash recevied throught the mail
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
duty of obedience

31. 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

32. What is required to qualify as a protected whistleblower
duty of loyalty
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.
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
special shareholders' meetings

33. Sox important Organizations that you must know
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
fiduciary duties
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

34. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
15
They can have their stocks delisted by the national securities exchange and associations
A control for cash recevied throught the mail

35. A distribution of profits of the corporation to shareholders
interference with employment or livelihood of the informant
dividend
derivative lawsuit
termination - demotion - suspension - threats - harassment

36. Types of proceedings protected under SOX?
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
Investigations - Legal proceedings
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.
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

37. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
record date
stock dividend
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
officer

38. SOC record keeping requirements
derivative lawsuit
record date
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
Investigations - Legal proceedings

39. 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
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
public companies
derivative lawsuit

40. Internal Complaint Procedures
Investigations - Legal proceedings
annual shareholders' meeting
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
special shareholders' meetings

41. Bank reconcilation steps
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
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
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

42. The company or person must present evidence within __ days after receiving notice of the complaint.
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
20
right of first refusal
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication

43. 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
termination - demotion - suspension - threats - harassment
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
Sarbanes-Oxley Act
Allows a business to reconcile the cash transactions recorded

44. The Board can either adopt the judge's decision as its own or __ the case itself
duty of care
record date
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
review

45. 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
public companies
They are not protected
15
quorum

46. 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
record date
proxy
duty of obedience
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

47. '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
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)
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations

48. What procedures must the audit committee of a public company establish?
30
20
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
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

49. To be protected by sox an employee must do one of what activities?
review
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
straight voting
30

50. SOX (or SARBOX)
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
Sarbanes-Oxley
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