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Sarbanes-Oxley 'Creep'

By Ronald H. Levine
June 29, 2004

The Sarbanes-Oxley Act (SOX) responded to well-publicized allegations of securities fraud. Its commandments about financial and internal control certifications, audit committees, auditor independence and the like expressly target publicly traded corporations. Yet much has been written about the “inevitable” spillover of SOX-type obligations onto not-for-profit organizations, especially in the health care sector. As a result, not-for-profit CEOs, compliance officers and counsel have practical questions.

What SOX-like standards apply or are likely to apply to them? As a matter of risk management, what standards should be adopted as “best” practices? Importantly, how does one draw the line between reasonably meeting any such standards and overreacting at financial cost to their mission-driven institutions?

This article examines recent trends and provides a framework for dealing with these legitimate questions.

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