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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. 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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
piercing the corporate veil
30

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

3. Audit committee

4. What is required to qualify as a protected whistleblower
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
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)
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders

5. What procedures must the audit committee of a public company establish?
petition - Administrative Review Board - 10
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
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
dividend

6. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct
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.
voting trust
duty of care

7. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
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)
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
15

8. Types of proceedings protected under SOX?
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
20
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
Investigations - Legal proceedings

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

10. Bank accounts
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
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
cumulative voting
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

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

12. 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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
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

13. SOX (or SARBOX)
duty of obedience
buy-and-sell agreement
Sarbanes-Oxley
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)

14. To be protected by sox an employee must do one of what activities?
They are not protected
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 loyalty
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct

15. Usurping of corporate opportunity

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

17. Internal Complaint Procedures
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
retaliates against a whistleblower
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)

18. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
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
fiduciary duties
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supramajority voting requirement

19. The employee must also service the notice on whom?
interference with employment or livelihood of the informant
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
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)
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud

20. SOX deadlines

21. What employees are protected under SOX?
inside director
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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
all employees who work for public companies as long as they qualify as a whistleblower

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

23. 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
officer
Sarbanes-Oxley Act
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations

24. Voucher
special shareholders' meetings
voting trust
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.

25. 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
duty of obedience
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

26. 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.
retaliates against a whistleblower
annual report
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations

27. Sox important Organizations that you must know
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
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 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
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

28. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
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.
60
15
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

29. The company or person must present evidence within __ days after receiving notice of the complaint.
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
Allows a business to reconcile the cash transactions recorded
20
retaliates against a whistleblower

30. Why did Congress pass SOX?
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.
Make a complaint to specific groups or people about certain types of misconduct - Participate in certain types of proceedings relating to shareholding misconduct

31. Company representative
Sarbanes-Oxley Act
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
stock dividend
Any officer - contractor - subcontractor - agent - or employee of a company

32. Voucher System
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
30
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

33. If a hearing is requested - it will be held before an __ who will issue a __ and __.
annual report
administrative law judge - decision - order
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.
Cash Register

34. Who signs Report for internal contro?
They can have their stocks delisted by the national securities exchange and associations
personal liability
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.
Cash Register

35. Additional shares of stock distributed as a dividend
business judgment rule
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
stock dividend
petition - Administrative Review Board - 10

36. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
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
buy-and-sell agreement
fiduciary duties
public companies

37. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
record date
supramajority voting requirement
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
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

38. How does this Act define 'harm'?
30
interference with employment or livelihood of the informant
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
Sarbanes-Oxley Act

39. Bank reconcilation steps
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
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)
straight voting

40. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
They are not protected
Sarbanes-Oxley
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)

41. 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
right of first refusal
A control for cash recevied throught the mail
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

42. 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
right of first refusal
piercing the corporate veil
negligence
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.

43. SOX creates __ for company representatives.
duty of loyalty
Investigations - Legal proceedings
personal liability
duty of obedience

44. If a public company fails to adopt the complaint procedures mandated by SOX what may happen?
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)
inside director
annual shareholders' meeting
They can have their stocks delisted by the national securities exchange and associations

45. 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
They are not protected
quorum
voting trust
personal liability

46. A member of the board of directors who is also an officer of the corporation
inside director
Cash Register
petition - Administrative Review Board - 10
annual report

47. What is one of the most important controls to protect cash received in over-the-counter sales?
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.
Cash Register
Any officer - contractor - subcontractor - agent - or employee of a company
duty of care

48. The criminal provision of 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
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
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 distribution of profits of the corporation to shareholders
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
dividend
personal liability
retaliates against a whistleblower

50. Examples of complaints found not to be covered under SOX
inside director
Sarbanes-Oxley Act
The employee can file a lawsuit in federal district court
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)