Most nonprofit organizations have the perpetual predicament of also handful of dollars chasing also lots of worthy causes. This signifies that, in particular for smaller organizations, if they devote extra revenue to voluntarily comply with SOX, they’ll have much less revenue to carry out their applications and missions.
Nonprofits are not underneath a distinct deadline to comply with SOX standards like the for-profit corporations are. In actual fact, for-profit corporations reported producing lots of pricey blunders because of rushing to comply with deadlines. These blunders resulted in bureaucratic structures, unnecessary projects, and redundant charges.
So, as opposed to their for-profit counterparts, nonprofits can (and should really) strive to meticulously and effectively revamp governance structures and migrate steadily and proficiently toward complete compliance. In other words, do not rush it. Especially, nonprofits should really:
- Have an understanding of what SOX does and does not call for. Lots of for-profit providers wasted millions of dollars on useless information security applications, redundant testing, and misguided education applications, only to comprehend that these initiatives had been extraneous for the actual legal specifications of SOX.
- Concentrate on the rationale of SOX for every single provision that is not mandatory. In other words, SOX is concerned together with the integrity of economic reporting, not no matter if information is processed effectively or with unrelated internal procedures.
- Adopt a logical timeline for compliance. Do not rush to artificial deadlines. As an alternative, set priorities and demonstrate a pattern of continuing sustainable compliance.
- Balance system ambitions together with the ambitions of complying with SOX. Risks inside the organization should really be objectively assessed by the board, and when risks are low in distinct regions, your nonprofit may perhaps not have to have to divert system charges for instant compliance projects.
