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Sarbanes Oxley Act: SOX Corporate Governance

Subjects : certifications, sarbanes-oxley

Instructions:

Answer 50 questions in 15 minutes.
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Match each statement with the correct term.
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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. To be protected by sox an employee must do one of what activities?
Cash Register
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.
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
outside director

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

3. 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
straight voting
negligence
Allows a business to reconcile the cash transactions recorded
stock dividend

4. SOC record keeping requirements
public companies
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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
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

5. A member of a board of directors who is not an officer of the corporation
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)
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
outside director
petition - Administrative Review Board - 10

6. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
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.
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
shareholder voting agreement
They are not protected

7. Either party may object to these findings and request a hearing within __ days after receiving the finding and order.
30
terms - conditions
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
dividend

8. Why did Congress pass SOX?
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
review
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations

9. 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

10. 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
duty of loyalty
buy-and-sell agreement
review
inside director

11. 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
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)
A control for cash recevied throught the mail
derivative lawsuit
piercing the corporate veil

12. What employees are protected under SOX?
fiduciary duties
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
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
all employees who work for public companies as long as they qualify as a whistleblower

13. Who signs Report for internal contro?
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.
terms - conditions
duty of loyalty

14. Under what conditions may an employee claim protection of SOX?
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
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.
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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. 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
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)
Cash Register
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
quorum

16. 4 elements that must be proven to show usurping of corporate opportunity:

17. SOX deadlines

18. Examples of complaints found not to be covered under SOX
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
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)
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.
retaliates against a whistleblower

19. A distribution of profits of the corporation to shareholders
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
Cash Register
dividend
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.

20. Sarbanes-Oxley Act of 2002
duty of obedience
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.
Investigations - Legal proceedings
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.

21. Personal liability provision
retaliates against a whistleblower
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
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
Sarbanes-Oxley

22. Objectives of Internal Control
business judgment rule
The person or company must present it's evidence within 20 days after it receives the complaint
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
cumulative voting

23. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
15
preemptive rights
60
termination - demotion - suspension - threats - harassment

24. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
right of first refusal
fiduciary duties
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

25. Public company
annual shareholders' meeting
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
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
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

26. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
Cash Register
record date
quorum
They are not protected

27. What is required to qualify as a protected whistleblower
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
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
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

28. How does this Act define 'harm'?
interference with employment or livelihood of the informant
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
annual report

29. 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 Act
personal liability
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
15

30. The company or person must present evidence within __ days after receiving notice of the complaint.
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
retaliates against a whistleblower
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
20

31. SOX (or SARBOX)
Sarbanes-Oxley
special shareholders' meetings
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
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

32. The number of directors necessary to hold a board meeting or transact business of the board
Sarbanes-Oxley
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
all employees who work for public companies as long as they qualify as a whistleblower
quorum

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

34. A panel of decision makers who are elected by the shareholders
board of directors
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
derivative lawsuit
record date

35. The criminal provision of SOX
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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)
Cash Register
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

36. Additional shares of stock distributed as a dividend
stock dividend
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding 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.
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)

37. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
personal liability
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
piercing the corporate veil

38. What is one of the most important controls to protect cash received in over-the-counter sales?
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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
Cash Register
all employees who work for public companies as long as they qualify as a whistleblower

39. An agreement between two or more shareholders that stipulates how they will vote their shares
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
shareholder voting agreement
Sarbanes-Oxley
buy-and-sell agreement

40. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
supramajority voting requirement
termination - demotion - suspension - threats - harassment
Allows a business to reconcile the cash transactions recorded
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)

41. The Board can either adopt the judge's decision as its own or __ the case itself
personal liability
board of directors
review
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

42. Elements of Internal Control
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
all employees who work for public companies as long as they qualify as a whistleblower
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
right of first refusal

43. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
officer
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
30
derivative lawsuit

44. 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
A control for cash recevied throught the mail
buy-and-sell agreement
stock dividend
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

45. What are the conditions under which OSHA will investigate individual complaints?
60
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
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

46. The employee must also service the notice on whom?
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.
straight voting
outside director
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)

47. Bank accounts
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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
preemptive rights
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud

48. 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
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.
dividend
petition - Administrative Review Board - 10

49. 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.
termination - demotion - suspension - threats - harassment
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

50. Sox important Organizations that you must know
petition - Administrative Review Board - 10
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
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