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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. 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
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.
duty of obedience
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

2. 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)
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
Sarbanes-Oxley
outside director

3. The number of directors necessary to hold a board meeting or transact business of the board
personal liability
quorum
60
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.

4. 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
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations
Sarbanes-Oxley
duty of obedience
shareholder voting agreement

5. A member of the board of directors who is also an officer of the corporation
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
derivative 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)
inside director

6. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
shareholder voting agreement
terms - conditions
60
dividend

7. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
special shareholders' meetings
15
retaliates against a whistleblower
60

8. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
supramajority voting requirement
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)
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
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.

9. Bank statement
duty of loyalty
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
Allows a business to reconcile the cash transactions recorded
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations

10. Special-purpose cash funds
The person or company must present it's evidence within 20 days after it receives the complaint
right of first refusal
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed

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

13. What is one of the most important controls to protect cash received in over-the-counter sales?
stock dividend
interference with employment or livelihood of the informant
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
Cash Register

14. The criminal provision of SOX
dividend
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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

15. A panel of decision makers who are elected by the shareholders
duty of obedience
proxy
board of directors
annual report

16. Company representative
The person or company must present it's evidence within 20 days after it receives the complaint
Any officer - contractor - subcontractor - agent - or employee of a company
voting trust
annual report

17. SOX creates __ for company representatives.
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
personal liability
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
terms - conditions

18. Bank reconcilation
retaliates against a whistleblower
The employee can file a lawsuit in federal district court
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.
Any officer - contractor - subcontractor - agent - or employee of a company

19. Why did Congress pass SOX?
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
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
negligence
petition - Administrative Review Board - 10

20. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
voting trust
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
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
preemptive rights

21. Elements of Internal Control
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
inside director
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
shareholder voting agreement

22. 4 elements that must be proven to show usurping of corporate opportunity:

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23. 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
piercing the corporate veil
shareholder voting agreement
quorum
review

24. 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
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)
piercing the corporate veil

25. Voucher
proxy
dividend
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
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.

26. What is the stated purpose of SOX?
30
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
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
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

27. Additional shares of stock distributed as a dividend
The employee can file a lawsuit in federal district court
preemptive rights
stock dividend
dividend

28. The Board can either adopt the judge's decision as its own or __ the case itself
derivative lawsuit
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
review

29. If a hearing is requested - it will be held before an __ who will issue a __ and __.
administrative law judge - decision - order
cumulative voting
They are not protected
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

30. Types of proceedings protected under SOX?
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.
officer
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
Investigations - Legal proceedings

31. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
The person or company must present it's evidence within 20 days after it receives the complaint
straight voting
officer
fiduciary duties

32. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
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.
public companies
buy-and-sell agreement
derivative lawsuit

33. What provision is enforced by the SEC only?

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34. 'The employee's claim of shareholder fraud does not have to be correct.'
quorum
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
review

35. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
60
termination - demotion - suspension - threats - harassment
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.
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. Voucher System
Cash Register
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
A control for cash recevied throught the mail
They can have their stocks delisted by the national securities exchange and associations

37. 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
personal liability
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
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
right of first refusal

38. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
Allows a business to reconcile the cash transactions recorded
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
negligence
30

39. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
duty of care
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
negligence
buy-and-sell agreement

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

41. 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
proxy
20
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
straight voting

42. How does this Act define 'harm'?
Sarbanes-Oxley Act
interference with employment or livelihood of the informant
petition - Administrative Review Board - 10
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.

43. Bank reconcilation steps
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 person or company must present it's evidence within 20 days after it receives the complaint
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
administrative law judge - decision - order

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

45. What is required to qualify as a protected whistleblower
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
voting trust
proxy
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

46. Public company
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
officer
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.

47. Objectives of Internal Control
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
The employee can file a lawsuit in federal district court
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
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

48. 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
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
piercing the corporate veil
20
duty of loyalty

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
buy-and-sell agreement
duty of obedience
all employees who work for public companies as long as they qualify as a whistleblower
Sarbanes-Oxley Act

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

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