Sarbanes Oxley Act: SOX Corporate Governance

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. A meeting of the shareholders of a corporation that must be held by the corporation to elect directors and to vote on other matters

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2. A requirement that a greater than majority of shares constitutes a quorum of the vote of 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.
termination - demotion - suspension - threats - harassment
supramajority voting requirement
business judgment rule


3. The penalties that may be imposed under SOX.
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.
fiduciary duties
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
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.


4. 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
Investigations - Legal proceedings
They are not protected
quorum
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


5. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
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
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
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


6. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
stock dividend
straight 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
officer


7. What new employee right was created by SOX?
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.
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
derivative lawsuit
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed


8. The Board can either adopt the judge's decision as its own or __ the case itself
special shareholders' meetings
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
review
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


9. The company or person must present evidence within __ days after receiving notice of the complaint.
30
record date
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.
20


10. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
all employees who work for public companies as long as they qualify as a whistleblower
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.
They can have their stocks delisted by the national securities exchange and associations
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders


11. Special-purpose cash funds
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.
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
review
derivative lawsuit


12. What procedures must the audit committee of a public company establish?
outside director
buy-and-sell agreement
administrative law judge - decision - order
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


13. Sarbanes-Oxley Act of 2002
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.
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
A control for cash recevied throught the mail
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


14. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
A control for cash recevied throught the mail
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
duty of care
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


15. 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
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
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
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders


16. SOX creates __ for company representatives.
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
personal liability
shareholder voting agreement
derivative lawsuit


17. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
preemptive rights
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
record date


18. 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

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19. An agreement between two or more shareholders that stipulates how they will vote their shares
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
shareholder voting agreement
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.
proxy


20. 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
preemptive rights
Any officer - contractor - subcontractor - agent - or employee of a company
30
cumulative voting


21. 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
terms - conditions
board of directors
review


22. 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
retaliates against a whistleblower
terms - conditions
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
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)


23. Elements of Internal Control
proxy
retaliates against a whistleblower
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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


24. What provision is enforced by the SEC only?

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25. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
annual report
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.
cumulative voting
terms - conditions


26. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
30
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
Allows a business to reconcile the cash transactions recorded
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct


27. 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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
They are not protected


28. If a hearing is requested - it will be held before an __ who will issue a __ and __.
annual shareholders' meeting
petition - Administrative Review Board - 10
administrative law judge - decision - order
supramajority voting requirement


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

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30. Voucher
retaliates against a whistleblower
The employee can file a lawsuit in federal district court
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 document that serves as proof of authority to pay cash or issue an electronic funds transfer.


31. SOX (or SARBOX)
Sarbanes-Oxley
Sarbanes-Oxley Act
They are not protected
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


32. Voucher System
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
petition - Administrative Review Board - 10
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
60


33. What employees are protected under SOX?
all employees who work for public companies as long as they qualify as a whistleblower
supramajority voting requirement
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
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)


34. What is required to qualify as a protected whistleblower
annual report
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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
30


35. Company representative
Any officer - contractor - subcontractor - agent - or employee of a company
special shareholders' meetings
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
negligence


36. The employee must also service the notice on whom?
Sarbanes-Oxley
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
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)
terms - conditions


37. 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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
shareholder voting agreement
duty of loyalty
record date


38. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
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)
voting trust
30
inside director


39. SOX deadlines

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40. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
duty of obedience
record date
They are not protected
officer


41. 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?
business judgment rule
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)
20
The employee can file a lawsuit in federal district court


42. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
termination - demotion - suspension - threats - harassment
voting trust
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.
public companies


43. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
quorum
Sarbanes-Oxley Act
preemptive rights
proxy


44. The number of directors necessary to hold a board meeting or transact business of the board
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)
60


45. Personal liability provision
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
buy-and-sell agreement
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
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


46. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
voting trust
business judgment rule
piercing the corporate veil
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.'
proxy
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
inside director
buy-and-sell agreement


48. 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.
The person or company must present it's evidence within 20 days after it receives the complaint
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
Sarbanes-Oxley Act


49. Types of proceedings protected under SOX?
Investigations - Legal proceedings
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
annual report
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


50. Bank reconcilation steps
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
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
inside director