S-OX Making an Impact on Not for Profits


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S-OX Making an Impact on Not for Profits

Jaeckle Fleischmann & Mugel Survey Finds

James Tanous
Chairman
Jaeckle Fleischmann & Mugel

Jaeckle Fleischmann & Mugel, LLP, a law firm with offices in Buffalo, Rochester, Amherst and New York City, conducted a survey during the fourth quarter of 2004 of Directors and executive officers of not-for-profit organizations related to their corporate governance practices. The survey, conducted in light of proposals that have been made at both the federal and the state levels to significantly tighten the rules by which not-for-profits are governed and operated, was completed by over 100 not-for-profit organizations headquartered throughout New York State, with a significant number based in the New York City area.

Significantly, a total of 36% of respondents reported that their organizations have made changes in response to Sarbanes-Oxley with respect to their governance structures and policies. In addition, 35% of respondents indicated that they anticipate making future changes as a result of Sarbanes-Oxley. A copy of the full survey report can be found on the Firm's website at www.jaeckle.com. In response to the results described above, James J. Tanous, Chairman stated, ?Even though Sarbanes-Oxley, for the most part, does not apply to not-for-profits, not-for-profits, as they should, are nevertheless beginning to take steps to comply with certain of its provisions. The changes we are seeing in the area of not-for-profit governance are a reflection of increasing sensitivity to the need for good governance in the wake of corporate scandals of recent years and the impact of the standards set forth in Sarbanes-Oxley."

In addition, the survey revealed significant findings with respect to the changes that not-for-profits have made in response to the two provisions of Sarbanes-Oxley that currently apply to not-for-profits: Section 802, which prohibits the destruction of documents under certain circumstances and Section 1107, which protects employees who report suspicious activities (i.e. whistleblowers). Not-for-profits should demonstrate compliance with these provisions by adopting records retention/document destruction and whistleblower policies. However, 61% of respondents reported that they still have no whistleblower policy and 30% reported they have no records retention or document destruction policy. In response to these results, Vincent P. Ravaschiere, Of Counsel to Jaeckle Fleischmann & Mugel stated, "As a best practice, not-for-profits should create and enforce document destruction and whistleblower policies. Doing so is a cost-effective way to ensure compliance with Sarbanes-Oxley."

Jaeckle Fleischmann & Mugel, LLP, with more than 70 legal professionals, serves clients in need of Bankruptcy, Board Governance, Business and Corporate, Economic and Land Development, Employee Benefits, Environmental, Estates & Trusts, Healthcare, Immigration, Intellectual Property, International Trade, Labor & Employment, Litigation, Nonprofit, Real Estate, Securities/Finance and Tax matters. For four consecutive years, the Firm was named to Corporate Board Member magazine's list of Best Corporate Law Firms in America.

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