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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. 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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2. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
business judgment rule
derivative lawsuit
They are not protected
dividend

3. Bank reconcilation
officer
stock dividend
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.
petition - Administrative Review Board - 10

4. Company representative
public 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
Any officer - contractor - subcontractor - agent - or employee of a company
inside director

5. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
cumulative voting
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
They can have their stocks delisted by the national securities exchange and associations
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

6. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
The employee can file a lawsuit in federal district court
preemptive rights
administrative law judge - decision - order
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

7. 'The employee's claim of shareholder fraud does not have to be correct.'
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
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

8. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
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
retaliates against a whistleblower
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
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.

9. Why did Congress pass SOX?
negligence
dividend
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
personal liability

10. The criminal provision of SOX
20
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
fiduciary duties

11. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
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
officer
negligence
retaliates against a whistleblower

12. Bank accounts
Allows a business to reconcile the cash transactions recorded
The person or company must present it's evidence within 20 days after it receives the complaint
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG

13. SOX deadlines

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

15. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
business judgment rule
public 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
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. Public company
officer
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
termination - demotion - suspension - threats - harassment
voting trust

17. 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
right of first refusal
board of directors
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
terms - conditions

18. Personal liability provision
The employee can file a lawsuit in federal district court
proxy
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
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

19. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
supramajority voting requirement
inside director
officer
60

20. Examples of complaints found not to be covered under SOX
quorum
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)
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

21. The penalties that may be imposed under SOX.
quorum
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.
personal liability
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. 4 elements that must be proven to show usurping of corporate opportunity:

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23. If a hearing is requested - it will be held before an __ who will issue a __ and __.
buy-and-sell agreement
terms - conditions
administrative law judge - decision - order
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

24. To be protected by sox an employee must do one of what activities?
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
review
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
business judgment rule

25. 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
preemptive rights
public companies
right of first refusal
15

26. 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
Cash Register
The employee can file a lawsuit in federal district court
interference with employment or livelihood of the informant

27. The employee must also service the notice on whom?
Investigations - Legal proceedings
dividend
15
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)

28. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
duty of care
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 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

29. 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
30
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)
Investigations - Legal proceedings
duty of obedience

30. An agreement between two or more shareholders that stipulates how they will vote their shares
interference with employment or livelihood of the informant
shareholder voting agreement
duty of loyalty
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

31. SOX creates __ for company representatives.
personal liability
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
cumulative voting
proxy

32. 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
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
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
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

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

34. A panel of decision makers who are elected by the shareholders
review
board of directors
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
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)

35. Sarbanes-Oxley Act of 2002
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.
petition - Administrative Review Board - 10
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.
Any officer - contractor - subcontractor - agent - or employee of a company

36. What is one of the most important controls to protect cash received in over-the-counter sales?
duty of care
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
proxy
Cash Register

37. A member of the board of directors who is also an officer of the corporation
Allows a business to reconcile the cash transactions recorded
right of first refusal
inside 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

38. Bank statement
record date
review
15
Allows a business to reconcile the cash transactions recorded

39. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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 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)
voting trust

40. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
Sarbanes-Oxley
cumulative voting
record date
petition - Administrative Review Board - 10

41. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
termination - demotion - suspension - threats - harassment
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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

42. The Board can either adopt the judge's decision as its own or __ the case itself
business judgment rule
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
review
inside director

43. Even if the employee provides evidence of individual complaints - OSHA will not investigate under what condition?
fiduciary duties
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
record date

44. Under what conditions may an employee claim protection of SOX?
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 Register
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
duty of care

45. The company or person must present evidence within __ days after receiving notice of the complaint.
all employees who work for public companies as long as they qualify as a whistleblower
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
petition - Administrative Review Board - 10

46. Types of proceedings protected under SOX?
shareholder voting agreement
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
Investigations - Legal proceedings
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud

47. Usurping of corporate opportunity

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48. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
A control for cash recevied throught the mail
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.
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
30

49. 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
termination - demotion - suspension - threats - harassment
review
buy-and-sell agreement
Cash Register

50. 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
Sarbanes-Oxley
terms - conditions
duty of obedience