"To Be Compliant with the Requirements of the Sarbanes-Oxley Act

question 119

Multiple Choice

"To be compliant with the requirements of the Sarbanes-Oxley Act, I will need to ensure that our company ________," thought Hilmar Preiss, Chairman of the Board.

• A)has a more independent board of directors
• B)loosens up our accounting procedures
• C)keeps two sets of books, one public and one private
• D)managers do not sign off on financial results
• E)executives earn large annual bonuses

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Definitions:

Agency Agreement

A legal contract creating a fiduciary relationship whereby the first party ("the principal") agrees that the actions of a second party ("the agent") binds the principal to later agreements made by the agent as if the principal had himself personally made the later agreements.

Gratuitous Basis

A voluntary action carried out without the expectation of payment or compensation.

Unconscionable

A term applied to a contract in which one party has so much more bargaining power than the other party that the powerful party dictates the terms of the agreement and eliminates the other party’s free will.

Constructive Trust

An equitable trust imposed on a person who wrongfully obtains or holds legal right to property he or she should not possess.