Question 1

Accounting firms that audit public companies accessing __________ capital markets are required to register with the Public Company Accounting Oversight and are subject to its oversight and enforcement authority.

Accepted Answer

Accounting firms that audit public companies accessing U.S. capital markets must register with the Public Company Accounting Oversight Board (PCAOB) and are subject to its oversight and enforcement authority. This requirement is specific to the U.S. and is part of the regulations established to enhance the integrity of financial reporting.

Question 2

The Sarbanes-Oxley Act seeks to increase __________ independence

Accepted Answer

The Sarbanes-Oxley Act was enacted in response to a series of high-profile financial scandals to increase corporate governance and accountability, with a significant focus on enhancing auditor independence from the companies they audit.

Question 3

The Sarbanes-Oxley Act makes key __________ officers more accountable for financial reporting by requiring that chief executive officers and chief financial officers personally certify the accuracy of all required SEC filings.

Accepted Answer

The Sarbanes-Oxley Act specifically targets corporate officers, making CEOs and CFOs personally responsible for the accuracy of their company's financial statements.

Question 4

The Sarbanes-Oxley Act specifically gives the SEC the authority to intervene in any __________ payments made by a company that may be the subject of an SEC investigation.

Accepted Answer

The Sarbanes-Oxley Act allows the SEC to intervene in "extraordinary" payments made by a company under investigation, aiming to prevent the dissipation of assets that could be used to satisfy potential fines or penalties.

Question 5

Upon approval by a __________ court, the Sarbanes-Oxley Act allows the SEC to force any extraordinary corporate payouts into a government-controlled emergency escrow fund that is held pending further investigation by authorities.

Accepted Answer

The Sarbanes-Oxley Act is a federal law, and thus, actions taken under it, including the approval to force corporate payouts into an escrow fund, would require the involvement of a federal court.

Question 6

The Sarbanes-Oxley Act specifically directs the __________ to amend sentencing guidelines to provide for harsher penalties for those convicted of securities fraud statutes.

Accepted Answer

The Sarbanes-Oxley Act directs the U.S. Sentencing Commission to amend sentencing guidelines, aiming to impose harsher penalties for those convicted under securities fraud statutes. This is part of the act's broader effort to enhance corporate accountability and protect investors.

Question 7

Through the Dodd-Frank Wall Street Reform and Consumer Protection Act, also known simply as Dodd-Frank, Congress imposed tighter restrictions on:

Accepted Answer

The Dodd-Frank Wall Street Reform and Consumer Protection Act imposed tighter restrictions on public corporations, financial markets, and the conduct of firms engaging in risky investment transactions, thus all of the choices are correct.

Question 8

The American Recovery and Reinvestment Act of 2009 was created in order to:

Accepted Answer

The American Recovery and Reinvestment Act of 2009 was created to authorize direct government loans to corporations in order to stimulate the economy during the Great Recession.

Question 9

The loan program created by the American Recovery and Reinvestment Act of 2009, established the __________ to administer the loans.

Accepted Answer

The American Recovery and Reinvestment Act of 2009 established the Troubled Assets Relief Program (TARP) to administer loans, primarily aimed at stabilizing the country's financial system during the economic crisis.

Question 10

The Troubled Assets Relief Program (TARP) provisions empowered the Department of the __________ to recover any bonuses paid that were inconsistent with the law's requirements.

Accepted Answer

The Troubled Assets Relief Program (TARP) provisions empowered the Department of the Treasury to recover any bonuses paid that were inconsistent with the law's requirements, as part of its oversight and regulation of the financial sector during the crisis.

Question 11

The restrictions imposed on recipients of Troubled Assets Relief Program (TARP) funds have several recipients to repay the funds:

Accepted Answer

The restrictions imposed on recipients of TARP funds encouraged them to repay the funds as soon as possible to avoid the stringent conditions attached to the bailout money.

Question 12

Within five months of the Troubled Assets Relief Program law executive compensation mandates, approximately __________ banks were approved to pay back the TARP funds.

Accepted Answer

34 banks were approved to pay back the TARP funds within five months of the Troubled Assets Relief Program law executive compensation mandates.

Question 13

According to the U.S. Treasury Department, the government __________ from the TARP loans.

Accepted Answer

The U.S. Treasury Department reported that the government profited from the TARP (Troubled Asset Relief Program) loans, contrary to the common belief that it was a financial loss.

Question 14

What Act no longer applies to the SEC in an investigation under the Dodd-Frank Act?

Accepted Answer

The Dodd-Frank Act allows the SEC to refuse requests under the Freedom of Information Act (FOIA) during an investigation, providing the SEC with the ability to keep its investigations confidential and protect sensitive information.

Question 15

Dodd-Frank requires companies to adopt a __________ policy through a nonbinding resolution in their proxy statements asking shareholders whether they approve the compensation or any severance agreement provision (i.e., golden parachute) for their executive management.

Accepted Answer

The Dodd-Frank Wall Street Reform and Consumer Protection Act requires companies to include a "say-on-pay" provision in their proxy statements, allowing shareholders to vote on executive compensation and golden parachute arrangements in a nonbinding resolution.

Question 16

In __________, the SEC issued a rule required by the Dodd-Frank Act that requires a company to disclose (1) the median of the annual total compensation of all its employees except the CEO, (2) the annual total compensation of its CEO, and (3) the ratio of those two amounts.

Accepted Answer

In 2015, the U.S. Securities and Exchange Commission (SEC) issued a rule mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, requiring public companies to disclose the pay ratio between their chief executive officer (CEO) and the median compensation of their employees.

Question 17

Rules mandated by Dodd-Frank require companies to disclose their __________ structure in their SEC filings.

Accepted Answer

Dodd-Frank requires companies to disclose their board leadership structure in their SEC filings.

Question 18

An important part of the new SEC regulatory scheme is the protection of __________ who report illegal conduct committed by employees, directors, and executives of the company.

Accepted Answer

Whistleblowers are individuals who report illegal or unethical behavior within an organization. The SEC (Securities and Exchange Commission) regulatory scheme includes protections for whistleblowers to encourage them to come forward with information about illegal activities without fear of retaliation.

Question 19

The Dodd-Frank whistleblower provisions are based on a __________ plan.

Accepted Answer

The Dodd-Frank whistleblower provisions are based on a bounty plan, which rewards individuals for providing information about securities law violations to the SEC.

Question 20

Under the Dodd-Frank Act, the whistleblower rewards range from __________ percent of the recovery.

Accepted Answer

The Dodd-Frank Act specifies that whistleblowers can receive between 10 to 30 percent of the monetary sanctions collected in actions where the sanctions exceed $1 million.

Quiz 35: Regulation of Corporate Governance