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Urban Institute:
Applying the Sarbanes-Oxley Act's audit committee provisions to nonprofit organizations would test the administrative mettle of two-fifths of America's charities, according to initial findings from the Urban Institute's National Survey of Nonprofit Governance.
Only 20 percent of the survey's respondents had an independent audit committee, ranging from 15 percent among nonprofits with under $100,000 in annual expenses to 58 percent among those with over $40 million.
The Sarbanes-Oxley Act, passed in 2002 after high-profile corporate scandals, requires publicly traded companies, but not nonprofits, to have an independent audit committee with at least one financial expert and no company employees.
Of the nonprofits without an audit panel, 51 percent said it would be somewhat or very difficult to create one.
Among the smallest nonprofits, 28 percent indicated it would be very difficult, compared with fewer than 10 percent with over $2 million in expenses.
The first wave of survey findings are examined in "Nonprofit Governance and the Sarbanes-Oxley Act," a research brief by Francie Ostrower, a senior research associate in the Urban Institute's Center on Nonprofits and Philanthropy, and Marla J. Bobowick, vice president of products at BoardSource.
"Nonprofit Governance and the Sarbanes-Oxley Act," by Francie Ostrower and Marla J. Bobowick, can be accessed at http://www.urban.org/url.cfm?id=311363 and http://www.boardsource.org/sarbox.
Posted on October 5, 2006 02:11 PM
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