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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?

2. 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
record date
dividend

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

4. 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

5. Bank statement
all employees who work for public companies as long as they qualify as a 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
Allows a business to reconcile the cash transactions recorded
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud

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

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

8. Personal liability provision
They are not protected
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
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.

9. 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
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud
Sarbanes-Oxley Act
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.
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10. 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
quorum
preemptive rights
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
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.

11. 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?
retaliates against a whistleblower
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
The employee can file a lawsuit in federal district court
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud

12. Examples of complaints found not to be covered under SOX
duty of care
duty of obedience
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
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)

13. Internal Complaint Procedures
board of directors
preemptive rights
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
A control for cash recevied throught the mail

14. If a hearing is requested - it will be held before an __ who will issue a __ and __.
retaliates against a whistleblower
administrative law judge - decision - order
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.
A control for cash recevied throught the mail

15. What are the conditions under which OSHA will investigate individual complaints?
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
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
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
voting trust

16. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
annual shareholders' meeting
derivative lawsuit
Providing information about conduct he or she reasonably believes violates the federal laws - SEC regulations - or federal laws against shareholder fraud

17. What provision is enforced by the SEC only?

18. What is one of the most important controls to protect cash received in over-the-counter sales?
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.
Sarbanes-Oxley
Cash Register
buy-and-sell agreement

19. Elements of Internal Control
termination - demotion - suspension - threats - harassment
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
duty of loyalty
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

20. 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
cumulative voting
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
review

21. 4 elements that must be proven to show usurping of corporate opportunity:

22. SOC record keeping requirements
shareholder voting agreement
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)
record date
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

23. The number of directors necessary to hold a board meeting or transact business of the board
quorum
all employees who work for public companies as long as they qualify as a whistleblower
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
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24. 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
quorum
terms - conditions
Any company that has a class of securities registered with the Securities and Exchange Commission (SEC) under 15 U.S.C.
all employees who work for public companies as long as they qualify as a whistleblower

25. The duties of obedience - care - and loyalty owed by directors and officers to their corporation and its shareholders
termination - demotion - suspension - threats - harassment
fiduciary duties
They are not protected
preemptive rights

26. A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders
supramajority voting requirement
duty of loyalty
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
quorum

27. The employee must also service the notice on whom?
duty of obedience
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)
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.
inside director

28. The company or person must present evidence within __ days after receiving notice of 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
In the wake of corporate scandals involving WorldCom - Enron - and other large companies accused of defrauding shareholders
They are not protected
20

29. The SEC regulations to not require companies to follow what?
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
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)
Petty Cash Fund or travel funds are used by businesses to meet specific needs. Cashing a check for the amount of cash needed
dividend

30. Usurping of corporate opportunity

31. If OSHA investigates - it will issue findings and a preliminary order within __ days after the complaint is filed.
Sarbanes-Oxley
petition - Administrative Review Board - 10
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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

32. Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business
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 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
negligence
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)

33. 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
business judgment rule
The employee can file a lawsuit in federal district court
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.

34. What is required to qualify as a protected whistleblower
The person or company must present it's evidence within 20 days after it receives the complaint
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
piercing the corporate veil
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

35. An agreement between two or more shareholders that stipulates how they will vote their shares
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
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.
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
shareholder voting agreement

36. Voucher
Any document that serves as proof of authority to pay cash or issue an electronic funds transfer.
The employee can file a lawsuit in federal district court
interference with employment or livelihood of the informant
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication

37. SOX generally only applies to __ - however - it's whistleblower provision also applies to company representatives.
fiduciary duties
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
public companies
cumulative voting

38. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation
duty of care
Investigations - Legal proceedings
Any officer - contractor - subcontractor - agent - or employee of a company
Assets are Safeguarded and used for business purposes - Business information is Accurate - Employees comply with Laws and Regulations

39. Rights that give existing shareholders the option of subscribing to new share being issued in proportion to their current ownership interests
The person or company must present it's evidence within 20 days after it receives the complaint
Cash Register
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
preemptive rights

40. SOX states that __ - __ - __ - __ and __ all constitute retaliation.
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
termination - demotion - suspension - threats - harassment
negligence
fiduciary duties

41. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares
annual report
retaliates against a whistleblower
voting trust
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

42. 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
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
Set of procedures for authorizing and recording liabilities and cash payments. It may be either manual or computerized.
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
petition - Administrative Review Board - 10

43. Sarbanes-Oxley Act of 2002
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.
SEC - PCAOB - FASB - IASB - AICPA - CPA - IFRS - GAAP - GAO - CRARA - PSLRA - FINRA - FCPA - OSHA - ERISA - FSG
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.

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

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

46. The criminal provision could apply to anyone who ____________ - whether or not the perpetrator works for or has any association with a public company
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
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shareholder voting agreement
retaliates against a whistleblower

47. Bank accounts
board of directors
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
Investigations - Legal proceedings
Help control cash by reduicng the amount of cash on hand and facilitating the transfer of cash between businesses and locations

48. What procedures must the audit committee of a public company establish?
Control environment - Risk assessment - Control procedures - Monitoring - Information and communication
termination - demotion - suspension - threats - harassment
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
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.

49. What is the stated purpose of SOX?
duty of loyalty
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.
duty of care

50. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation
outside director
all employees who work for public companies as long as they qualify as a whistleblower
right of first refusal
officer