Question

How do SOX requirements apply to not-for-profit (NFP) entities? What improvements do you recommend to the application of SOX to NFP entities?

Answer 1

Answer

Sarbanes Oxley Act 2002 is created to stop the corporate world fraud. It is there to protect the whistleblowers,investors , to bring transparency in the entities , to strengthens the independence and financial position of the corporates. There are set of rules and regulation set by the board. The law was made specifically for Public listed company but it grabs the non profit making entitles also

How do SOX requirements apply to not-for-profit (NFP) entities ?

In following way , SOX requirements applies to not for profit entities :

1 ) All not for profit entities are required to form a audit committee to oversee the auditor work

2) Audit committee should have at least one person who is considered to be a expert in financial knowledge

3) All audit committee member should be independent in decision making

4) All non profit organizations should have in-house CFO who is well known with financial issue

What improvements do you recommend to the application of SOX to NFP entities?

Following additional provision should also be applicable to NFP entities

1) Protection should be given to whistle blowers and employees

2) More requiredement for transparency of each and every transactions

3) Policy or system should be in place for documentation retentions