Nonprofits Implement New Accountability Standards
Mitchell, Jessica, THE JOURNAL RECORD
Nonprofit agencies in Oklahoma are joining others across the nation as they implement new accountability standards in a world of better-educated donors.
The American Competitiveness and Corporate Accountability Act of 2002, commonly known by the names of the act's authors, U.S. Sen. Paul Sarbanes, D-Md., and U.S. Rep. Michael Oxley, R-Ohio, was passed in response to the corporate and accounting scandals of Enron, Arthur Andersen and others. Although the act is mainly directed toward American publicly traded companies, two provisions apply to all corporate entities, including nonprofit organizations.
The Sarbanes-Oxley Act has forced nonprofits to analyze board practices and internal operations. Non-profit advisers and watchdog organizations are advising nonprofits to take seriously the implications of Sarbanes-Oxley for nonprofits, according to Monica Swink, a local certified public accountant who works exclusively with nonprofits in Oklahoma, consulting on financial issues, including financial reports, systems and board education on financial matters.
The climate for publicly traded organizations demands more accountability and transparency in financial reporting and operations, she said, and that climate also demands more accountability for nonprofits in the same areas.
Determining the results expected within the for-profit industry and implementing appropriate changes in their governance and monitoring systems will be crucial in preventing regulations for the same provisions for nonprofits. Self-regulation is always more powerful than regulated compliance with laws, Swink said. Most organizations I deal with understand the importance of transparency and accountability within the nonprofit sector and are interested in how to ensure they are fulfilling the spirit of the new regulations.
Swink said she has witnessed an increased interest in Sarbanes- Oxley from nonprofits since it was signed into law on July 30, 2002.
National nonprofit associations and consulting firms have encouraged nonprofits to review the provisions and to proactively implement any changes necessary to ensure the nonprofit industry measure up to the standards presented in Sarbanes-Oxley, as much as possible. Accounta-bility is key to the survival of nonprofits, and implementing the key provisions of the Act will only improve the accountability of nonprofits, she said.
Lynn Kickingbird, a local nonprofit consultant, said while she hasn't received any specific requests regarding the Sarbanes-Oxley Act, she has seen a sharp increase in requests for board training about legal responsibilities and revising bylaws. …