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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. Bank reconcilation steps
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
petition - Administrative Review Board - 10
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
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

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

3. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
The employee can file a lawsuit in federal district court
straight voting
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
negligence

4. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
voting trust
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
duty of obedience
buy-and-sell agreement

5. What procedures must the audit committee of a public company establish?
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.
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
stock dividend
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations

6. Under what conditions may an employee claim protection 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
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
proxy
fiduciary duties

7. The number of directors necessary to hold a board meeting or transact business of the board
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.
administrative law judge - decision - order
quorum
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

8. What are the conditions under which OSHA will investigate individual complaints?
straight voting
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
all employees who work for public companies as long as they qualify as a whistleblower
public companies

9. Why did Congress pass SOX?
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
preemptive rights
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.
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders

10. Bank reconcilation
interference with employment or livelihood of the informant
termination - demotion - suspension - threats - harassment
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.
review

11. SOX deadlines

12. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
A control for cash recevied throught the mail
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
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.
15

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

14. 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?
The employee can file a lawsuit in federal district court
duty of obedience
proxy
preemptive rights

15. Voucher System
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
Investigations - Legal proceedings
record date

16. Elements of Internal Control
voting trust
interference with employment or livelihood of the informant
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
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication

17. The employee must also service the notice on whom?
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)
officer
Allows a business to reconcile the cash transactions recorded
voting trust

18. 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
terms - conditions
duty of loyalty
20
proxy

19. 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
buy-and-sell agreement
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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
public companies

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

21. Remittance Advice
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
public companies
60
A control for cash recevied throught the mail

22. The company or person must present evidence within __ days after receiving notice of the complaint.
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
administrative law judge - decision - order
20
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. 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
voting trust
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
piercing the corporate veil
shareholder voting agreement

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

25. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
Sarbanes-Oxley
fiduciary duties
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 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

26. If a hearing is requested - it will be held before an __ who will issue a __ and __.
piercing the corporate veil
administrative law judge - decision - order
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 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

27. 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
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
retaliates against a whistleblower
30

28. A member of a board of directors who is not an officer of the corporation
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
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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.

29. What is required to qualify as a protected whistleblower
Sarbanes-Oxley Act
A control for cash recevied throught the mail
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

30. Additional shares of stock distributed as a dividend
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
stock dividend
A control for cash recevied throught the mail
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication

31. 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
The person or company must present it's evidence within 20 days after it receives the complaint
dividend
Cash Register
straight voting

32. Voucher
negligence
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
terms - conditions
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.

33. 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
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
supramajority voting requirement
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)

34. 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

35. The Board can either adopt the judge's decision as its own or __ the case itself
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
They are not protected
review
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 lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
Sarbanes-Oxley
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)
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
derivative lawsuit

37. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
business judgment rule
20
The employee can file a lawsuit in federal district court
supramajority voting requirement

38. 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.
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
petition - Administrative Review Board - 10
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)

39. 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
outside director
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
quorum
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

40. Sox important Organizations that you must know
negligence
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
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)
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud

41. Personal liability provision
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
straight voting
review

42. Audit committee

43. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
annual report
public companies
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

44. Objectives of Internal Control
A control for cash recevied throught the mail
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)
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

45. SOX (or SARBOX)
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
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Sarbanes-Oxley
inside director

46. Bank accounts
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
negligence
15
fiduciary duties

47. Bank statement
officer
administrative law judge - decision - order
Allows a business to reconcile the cash transactions recorded
public companies

48. What provision is enforced by the SEC only?

49. 4 elements that must be proven to show usurping of corporate opportunity:

50. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
fiduciary duties
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
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
60