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Sarbanes-Oxley impact extends far beyond public companies

When the Sarbanes-Oxley Act was enacted into law in 2002, the focus primarily was on oversight of publicly traded companies and accounting. The legislation, while it did have some application to not-for-profits, was seen essentially as a way to clean up corporate America.

One of many books written on the Sarbanes-Oxley act.

In an article in Buisness Journalism James K. Gentry, a professor and former dean of the School of Journalism and Mass Communications at the University of Kansas, asks if Sarbanes-Oxley Act should be extended.

It is now apparent, however, that Sarbanes-Oxley's impact has been far broader than its supporters intended or envisioned. Not-for-profits and private companies quickly began to feel SOX' impact and now some are calling for similar regulation at the state and local government level.

To review, here are some highlights of Sarbanes-Oxley:

Created the Public Company Accounting Oversight Board, an independent entity to oversee the profession of accounting.
Limited narrowly the types of services that accounting firms can provide their public company clients.
Increased disclosure requirements for public companies.
Required top executives of public companies to take personal responsibility for the content of financial statements.
Required analysts to disclose potential conflicts of interest.
Added rigorous penalties for fraud and other misdeeds.

Interestingly, while most of SOX' attention focused on public companies, it did impose two little-noted provisions on all corporations, whether non-profit or for profit (public or private). The two requirements are:

Destruction of documents: SOX makes it illegal to destroy or alter a document to prevent its use in a legal action, such as a federal investigation.
Protection for whistle-blowers: SOX makes it illegal for corporations to retaliate against an employee who reports a suspected illegal action by the employer.

The impact of Sarbanes-Oxley on organizations such as non-profits, private companies and governments has received very little attention from the business press. Numerous stories are sitting there, waiting to be written.

http://www.businessjournalism.org/pages/biz/2006/06/sarbanesoxley_impact_extends_f/