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A commentary by Brian Schebler, director of services to the public sector The Sarbanes-Oxley Act is one of the most significant business-related events to impact the commercial market place in recent years. As issued, most provisions of the act are only applicable to public companies and their auditors. Although I do not advocate that not-for-profit organizations blindly adopt all of the provisions of the act, government entities should acquaint themselves with some of its key concepts: - Governance is best addressed through the creation and operation of a strong and independent audit committee
- To maintain independence, both management and the audit committee should take great care when making any arrangements for the auditor to provide non-audit services
- The CEO and CFO should understand the financial, compliance and other external information reporting
- Management should establish, maintain and document significant financial and compliance controls
- Criminal penalties for retaliation against whistleblowers should encourage individuals to report concerns
- All appropriate entity records should be maintained and archived
Special interest groups and oversight agencies have taken an interest in the spirit behind the Sarbanes-Oxley requirements. A number of state legislators and attorneys general are considering proposals to increase nonprofit accountability at the state level. Not-for-profit organizations should not put their heads in the sand and hope this issue just passes by. Brian Schebler focuses on public sector entities, including monitoring and reporting developments of professional standards. He is a certified government financial manager, who develops and delivers CPE and produces firm manuals. He serves on the U.S. Government Accountability Office Advisory Council on Government Auditing Standards, the AICPA Government Audit Quality Center Executive Committee and on the AICPA State and Local Government Expert Panel.
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