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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. Even if the employee provides evidence of individual complaints - OSHA will not investigate under what condition?
inside director
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
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
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed

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

3. Additional shares of stock distributed as a dividend
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
business judgment rule
piercing the corporate veil
stock dividend

4. Voucher System
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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
quorum
personal liability

5. Example of whistle blowing activities that DOL has found to be covered under SOX.
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
Cash Register
cumulative voting
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

6. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring 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)
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derivative lawsuit
cumulative voting

7. Who signs Report for internal contro?
termination - demotion - suspension - threats - harassment
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.
annual report
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.

8. Personal liability provision
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
preemptive rights
terms - conditions
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

9. How does this Act define 'harm'?
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
interference with employment or livelihood of the informant
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.

10. Under what conditions may an employee claim protection of SOX?
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
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
voting trust
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

11. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
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duty of care
termination - demotion - suspension - threats - harassment
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.

12. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
The person or company must present it's evidence within 20 days after it receives the complaint
retaliates against a whistleblower
personal liability

13. 4 elements that must be proven to show usurping of corporate opportunity:

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14. 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
termination - demotion - suspension - threats - harassment
straight voting
interference with employment or livelihood of the informant
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations

15. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
15
fiduciary duties
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

16. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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officer

17. 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
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
annual report
outside director

18. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
special shareholders' meetings
duty of obedience
right of first refusal
duty of care

19. 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
public companies
special shareholders' meetings
duty of obedience
voting trust

20. Sox important Organizations that you must know
The employee can file a lawsuit in federal district court
record date
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
piercing the corporate veil

21. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
record date
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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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

22. What procedures must the audit committee of a public company establish?
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
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
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed

23. The company or person must present evidence within __ days after receiving notice of the complaint.
inside director
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duty of obedience
shareholder voting agreement

24. A member of a board of directors who is not an officer of the corporation
Any officer - contractor - subcontractor - agent - or employee of a company
outside director
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

25. Objectives of Internal Control
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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
fiduciary duties
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations

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

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27. The number of directors necessary to hold a board meeting or transact business of the board
Allows a business to reconcile the cash transactions recorded
quorum
dividend
officer

28. Company representative
Any officer - contractor - subcontractor - agent - or employee of a company
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
inside director
Allows a business to reconcile the cash transactions recorded

29. To be protected by sox an employee must do one of what activities?
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
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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.

30. Sarbanes-Oxley Act of 2002
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
administrative law judge - decision - order
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.
piercing the corporate veil

31. 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
voting trust
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
petition - Administrative Review Board - 10
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.

32. What are the conditions under which OSHA will investigate individual complaints?
administrative law judge - decision - order
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
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 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

33. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
board of directors
review
preemptive rights
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.

34. 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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
Sarbanes-Oxley Act

35. A member of the board of directors who is also an officer of the corporation
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
inside director
A control for cash recevied throught the mail
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.

36. What employees are protected under SOX?
outside director
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
all employees who work for public companies as long as they qualify as a whistleblower
stock dividend

37. 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
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.
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piercing the corporate veil
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.

38. 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
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
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)
buy-and-sell agreement

39. 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?
termination - demotion - suspension - threats - harassment
fiduciary duties
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The employee can file a lawsuit in federal district court

40. SOX deadlines

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41. An agreement between two or more shareholders that stipulates how they will vote their shares
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
preemptive rights
shareholder voting agreement
record date

42. SOC record keeping requirements
special shareholders' meetings
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
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
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.

43. Why did Congress pass SOX?
termination - demotion - suspension - threats - harassment
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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
shareholder voting agreement

44. What is required to qualify as a protected whistleblower
preemptive rights
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
annual shareholders' meeting

45. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
negligence
Sarbanes-Oxley Act
annual shareholders' meeting

46. What is one of the most important controls to protect cash received in over-the-counter sales?
proxy
Cash Register
voting trust
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication

47. Public company
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
right of first refusal
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. Bank reconcilation steps
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
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
record date
voting trust

49. Bank reconcilation
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)
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.
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
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.

50. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
special shareholders' meetings
Allows a business to reconcile the cash transactions recorded
public companies
outside director