Board Members and Sarbane-Oxley
By Steve Wagner, CPA
Wagner and Company, CPA
Board members have a fiduciary responsibility to oversee the organization they serve to the best of their ability. Sarbane-Oxley (SarBox) was intended to affect public companies. However, since nonprofit organization’s (NPO’s) are effectively public entities SarBox has been extended to NPO’s and some states have taken legislative action to force that issue.
In addition, board members who may not have acted in the best interest of the charity they serve have been ordered to pay restitution when the charity they served lost money in the Bernard Madoff Ponzi scheme. A NPO board member should be familiar with the organizations’ tax filings and the treasurer should take additional steps to assure payroll tax filings and tax deposits are current. SarBox requires public companies to create an audit committee made up of independent directors. Independence is lightly defined as not receiving any compensation from an organization. This is an excellent idea for a nonprofit organization and can serve as the financial information provider to the rest of the board.
Please do not view this as a reason to avoid serving on a NPO board. Serving on a board has many benefits but the responsibilities should not be taken lightly.
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