SOX and Non profits Organization
Currently, only a few of the provisions in SOX directly apply to nonprofit organizations. Nonprofits are required to adhere to Title III, Section 806, and Title XI, Section 1107, which provide protection to employees who report suspected fraud or other illegal activities. In addition, Title VIII, Section 802, and Title XI, Section 1102, which address the destruction or falsification of records or documents, apply to nonprofits.
The nonprofit sector has recently experienced its own recent scandals of perceived wrongdoing and fiscal mismanagement. For example, the United Way and the American Red Cross have received substantial unfavorable media coverage of their apparent failures in accountability and adherence to mission. Incidents such as these have cast the nonprofit sector in an unfavorable light, and have damaged the public’s trust in the integrity and the public benefit of nonprofits. While it is true that the majority of the SOX provisions currently only apply to publicly traded corporations and not to nonprofit organizations, nonprofits could benefit operationally from adopting some of the SOX rules as “best practices.” In addition, voluntarily adhering to the SOX “gold standards” would create greater credibility and ability to recruit high-quality board members, as well as attracting the favorable attention of major donors, foundations, and other funding sources.
If the nonprofit sector wants to obtain its current level of relative selfregulation, nonprofit leaders need to make a visible effort to improve organizational governance and accountability. If this does not occur, nonprofits may come under additional unwanted regulation by the government. Some state attorneys general have already suggested that additional provisions of SOX should be applied to nonprofits. The nonprofit sector needs to show the government and the public that it can effectively regulate nonprofit governance to avoid the imposition of external regulation. In the remaining chapters of this book, we focus on the provisions of SOX that directly apply to nonprofit organizations, and those provisions that could serve as “best practices” for the nonprofit sector. [Sarbanes Oxley for Non Profits, Peggy M Jackson]
Popularity: 55% [?]
