California’s “Nonprofit Integrity Act” (SB1262)
Provisions That Apply to Nonprofits with Budgets in Excess of $2 Million: The state of California passed a “Nonprofit Integrity Act” that imposes many of the features of SOX on nonprofits with budgets in excess of $2 million operating in that state. Some of the key provisions of this law include:
- Nonprofits will be required to have an annual audit performed by a CPA who is “independent” as defined by U.S. Government auditing standards.
- The results of the audit will need to be made available to the public and the Attorney General.
- Nonprofits will be required to have an audit committee whose membership cannot include staff and must not overlap more than 50 percent with the finance committee; the audit committee can include members who are not on the organization’s board of directors.
What does this mean for nonprofits in California? To ensure greater accountability in executive compensation, the law requires that the board ap-24 chapter 1 overview of the legislation prove the compensation, including benefits, of the corporation’s president or CEO, and its treasurer or CFO, for the purposes of assuring that these executives’ compensation packages are reasonable. [Sarbanes Oxley for Non Profits, Peggy M Jackson]
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