Private providers which have been topic to SOX face strict guidelines about what accounting services an independent audit firm can and cannot execute to get a enterprise. Generally, Congress didn’t want auditors to become auditing their very own operate. Any functions that the audit firm cannot execute underneath SOX should be sent to a further accounting firm, performed by an outside consultant, or handled internally.
The audit committee has sign-off authority for audit services, which suggests that it ought to authorize just about every accounting service the company’s audit firm delivers, like confirmation letters and compliance together with the economic reporting needs of regulatory agencies. Your nonprofit audit committee may perhaps choose to take a cue from SOX and go over underneath what circumstances it is actually okay for the audit firm to execute the following services when undertaking an audit or overview for the organization:
- Bookkeeping or other services associated with accounting records or economic statements
- Economic information and facts systems style and implementation
- Appraisal or valuation services, fairness opinions, or contribution-inkind reports
- Actuarial services
- Internal audit outsourcing services, management or human resources functions
- Broker or dealer, investment advisor, or investment banking services
- Legal services or specialist services unrelated for the audit
If a nonaudit service is not on this list, it is permitted underneath SOX provided that the audit committee approves the service ahead of the audit firm delivers it.
