Q. I work for a nonprofit social service organization. Do such organizations have to comply with SOX rules? —J.M., New Jersey
A. It's a common misconception that the Sarbanes-Oxley (SOX) Act applies only to publicly traded companies. In fact, the criminal provisions of the law apply to all organizations regardless of size, including small and nonprofit companies. The criminal provisions are quite strict and concern two issues:
First, they prohibit obstructing justice via document destruction or retaliating against informants. Second, they prohibit retaliatory employment practices against whistle-blowers. The maze of corporate governance provisions set forth in the law applies only to publicly traded companies. However, many organizations have voluntarily adopted SOX standards, in whole or in part, to ensure legally sound practices.
Note: For more advice on complying with Sarbanes-Oxley, visit these sites: www.aicpa.org/sarbanes, www.sarbanes-oxley.com or www.sarbanes-oxley-101.com.