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


2. Examples of complaints found not to be covered under SOX
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
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)
stock dividend
buy-and-sell agreement


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


4. A report provided to shareholders that contains a balance sheet - an income statement - and a statement of changes in shareholder equity
inside director
annual report
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)
stock dividend


5. 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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6. 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
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
Investigations - Legal proceedings
piercing the corporate veil
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


7. Company representative
Sarbanes-Oxley
Any officer - contractor - subcontractor - agent - or employee of a company
quorum
Investigations - Legal proceedings


8. Who signs Report for internal contro?
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
special shareholders' meetings
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.
voting trust


9. What about an employee whose complaint is based on a feeling or hunch - in the absence of any evidence?
derivative lawsuit
Sarbanes-Oxley
They are not protected
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication


10. An agreement between two or more shareholders that stipulates how they will vote their shares
annual report
shareholder voting agreement
Allows a business to reconcile the cash transactions recorded
quorum


11. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting
fiduciary duties
preemptive rights
proxy
record date


12. A distribution of profits of the corporation to shareholders
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
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
dividend
record date


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


14. Usurping of corporate opportunity

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15. What provision is enforced by the SEC only?

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16. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
60
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.
fiduciary duties
duty of obedience


17. Special-purpose cash funds
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)
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
Investigations - Legal proceedings
voting trust


18. 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
review
supramajority voting requirement
right of first refusal
board of directors


19. A member of the board of directors who is also an officer of the corporation
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
inside director
duty of loyalty
review


20. SOC record keeping requirements
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
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
20


21. 'The employee's claim of shareholder fraud does not have to be correct.'
They can have their stocks delisted by the national securities exchange and associations
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
right of first refusal
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. Why did Congress pass SOX?
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
straight voting
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)
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.


23. 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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24. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
Investigations - Legal proceedings
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations
termination - demotion - suspension - threats - harassment
review


25. What is the stated purpose of SOX?
outside director
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
60
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed


26. 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
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
special shareholders' meetings
20


27. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
The person or company must present it's evidence within 20 days after it receives the complaint
They can have their stocks delisted by the national securities exchange and associations
public companies
duty of loyalty


28. A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment
interference with employment or livelihood of the informant
terms - conditions
straight voting
business judgment rule


29. 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
special shareholders' meetings
fiduciary duties
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations


30. Public company
shareholder voting agreement
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
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
record date


31. Bank reconcilation steps
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 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
officer


32. Even if the employee provides evidence of individual complaints - OSHA will not investigate under what condition?
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
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
Cash Register
Any officer - contractor - subcontractor - agent - or employee of a company


33. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its 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
piercing the corporate veil
fiduciary duties
duty of loyalty


34. What are the conditions under which OSHA will investigate individual complaints?
review
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
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


35. Sarbanes-Oxley Act of 2002
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.
review
A control for cash recevied throught the mail


36. 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
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
all employees who work for public companies as long as they qualify as a whistleblower
stock dividend


37. Audit committee

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38. The criminal provision 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
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
personal liability
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication


39. The number of directors necessary to hold a board meeting or transact business of the board
quorum
interference with employment or livelihood of the informant
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
administrative law judge - decision - order


40. The employee must file a notice with the administrative law judge assigned to the original complaint __ days before filing the lawsuit.
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
15
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.


41. SOX (or SARBOX)
Sarbanes-Oxley Act
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Sarbanes-Oxley
shareholder voting agreement


42. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
voting trust
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
30


43. The company or person must present evidence within __ days after receiving notice of the complaint.
20
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
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
negligence


44. Types of proceedings protected under SOX?
stock dividend
derivative lawsuit
The employee only needed to show that he or she had a reasonable belief that the conduct constituted fraud
Investigations - Legal proceedings


45. 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
public companies
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
annual report


46. The Board can either adopt the judge's decision as its own or __ the case itself
shareholder voting agreement
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
Any officer - contractor - subcontractor - agent - or employee of a company
review


47. Either party may request a review of the judge's decision by filing a __ with the __ within __ days after the date on the judge's order
business judgment rule
board of directors
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
petition - Administrative Review Board - 10


48. Additional shares of stock distributed as a dividend
piercing the corporate veil
supramajority voting requirement
board of directors
stock dividend


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


50. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
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.
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
negligence
interference with employment or livelihood of the informant