What Is the Sarbanes-Oxley Act? And What Does It Have to Do With My Nonprofit?
What Is the Sarbanes-Oxley Act? And What Does It Have to Do With My Nonprofit?Nonprofits are under tremendous pressure to be financially responsible and transparent. The Sarbanes-Oxley Act, while meant for the business world, provides a blueprint for nonprofit financial clarity as well.Answer: The Sarbanes-Oxley Act refers to “The American Competitiveness and Corporate Accountability Act of 2002.” It applies to publicly-traded companies and requires them to adhere to standards in governance that increase the role board members play in overseeing financial transactions and auditing procedures. The law was created in response to corporate accounting scandals that rocked the nation in recent years and made names such as Enron synonymous with corporate malfeasance. Although the new law applies to publicly-traded corporations, it has served as a wake-up call to the nonprofit community as well. In fact, it has been proposed that the law be broadened to apply to nonprofit organizations. Meanw
