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. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
public companies
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
derivative lawsuit
Sarbanes-Oxley Act


2. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
annual report
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
The person or company must present it's evidence within 20 days after it receives the complaint
business judgment rule


3. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
30
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
annual shareholders' meeting
officer


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


5. Even if the employee provides evidence of individual complaints - OSHA will not investigate under what condition?
special shareholders' meetings
cumulative voting
all employees who work for public companies as long as they qualify as a whistleblower
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


6. 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
terms - conditions
outside director
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.
Allows a business to reconcile the cash transactions recorded


7. '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
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
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


8. Voucher
public companies
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
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
Cash Register


9. 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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10. What is required to qualify as a protected whistleblower
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
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.
30


11. A panel of decision makers who are elected by the shareholders
board of directors
voting trust
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
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. What are the conditions under which OSHA will investigate individual complaints?
public companies
negligence
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


13. Audit committee

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14. SOX creates __ for company representatives.
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.
supramajority voting requirement
personal liability
duty of loyalty


15. Types of proceedings protected 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.
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
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
Investigations - Legal proceedings


16. Internal Complaint Procedures
derivative lawsuit
all employees who work for public companies as long as they qualify as a whistleblower
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
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


17. Company representative
Any officer - contractor - subcontractor - agent - or employee of a company
retaliates against a whistleblower
record date
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.


18. A member of the board of directors who is also an officer of the corporation
inside director
personal liability
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
Any officer - contractor - subcontractor - agent - or employee of a company


19. 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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20. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
A control for cash recevied throught the mail
business judgment rule
They are not protected
15


21. The penalties that may be imposed under SOX.
inside director
They can have their stocks delisted by the national securities exchange and associations
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
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


22. Bank reconcilation
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.
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.
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.
stock dividend


23. 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
Any officer - contractor - subcontractor - agent - or employee of a company
duty of obedience
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
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


24. 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
A control for cash recevied throught the mail
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.
cumulative voting
business judgment rule


25. 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?
30
inside director
The employee can file a lawsuit in federal district court
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


26. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
special shareholders' meetings
petition - Administrative Review Board - 10
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


27. Additional shares of stock distributed as a dividend
administrative law judge - decision - order
30
piercing the corporate veil
stock dividend


28. If a hearing is requested - it will be held before an __ who will issue a __ and __.
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
duty of obedience
administrative law judge - decision - order
quorum


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

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30. 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)
A control for cash recevied throught the mail
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 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)


31. 4 elements that must be proven to show usurping of corporate opportunity:

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32. A distribution of profits of the corporation to shareholders
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
outside director
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
dividend


33. Bank accounts
business judgment rule
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
right of first refusal
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations


34. What is the stated purpose of SOX?
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
quorum
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
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


35. 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
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
straight voting
Sarbanes-Oxley Act
Investigations - Legal proceedings


36. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
derivative lawsuit
20
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
15


37. SOX (or SARBOX)
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)
all employees who work for public companies as long as they qualify as a whistleblower
Sarbanes-Oxley
administrative law judge - decision - order


38. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
stock dividend
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)
interference with employment or livelihood of the informant
voting trust


39. Usurping of corporate opportunity

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40. 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
duty of obedience
right of first refusal
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
voting trust


41. Public company
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
negligence
derivative lawsuit
Sarbanes-Oxley


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

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43. A member of a board of directors who is not an officer of the corporation
preemptive rights
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
straight voting
outside director


44. Sarbanes-Oxley Act of 2002
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
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.
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)
Investigations - Legal proceedings


45. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
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
duty of care
annual shareholders' meeting


46. The criminal provision of SOX
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
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 can file a lawsuit in federal district court
review


47. 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
fiduciary duties
proxy
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
Sarbanes-Oxley Act


48. Remittance Advice
outside director
A control for cash recevied throught the mail
annual report
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


49. 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
The employee can file a lawsuit in federal district court
duty of loyalty
duty of obedience
piercing the corporate veil


50. Elements of Internal Control
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
board of directors
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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