ACCOUNTING AND AUDIT ENFORCEMENT 2
Sarbanes-Oxley Act of 2002 (SOX) actually only applies to publically traded companies.
However, the scrutiny that nonprofit health organizations live under due to the nature of their
business and tax-exempt status, likely leads the public to require that non-profit companies
adhere to the same if not greater standards. SOX requires various standards be met in order to
protect investors as well as increase corporate oversight of for profit health care organizations.
Non-profit health care organizations tend to adhere to the same regulations. SOX requires that
these companies adhere to many regulations. Amongst these regulations are the requirements
that main executives and financial officers of publically traded companies must sign and certify
annual and quarterly financial statements, as well as that all companies audit committeesmust be
comprised only of independent directors. Additionally, SOX lays out guidelines regarding
internal control reporting, code of conduct and business ethics as well as programs for whistle
blowers[Jon03].
If adhered to strictly, SOX provisions will prove to be helpful in the reduction of fraud and an
increase in corporate responsibility for both profit and non-profit healthcare organizations. The
provisions of SOX seek to create an ethical work space in which employees at all levels are
held to a high standards in their business practices. If followed properly the regulations will
create opportunities for effective audits that can detect any errors or fraud before it becomes a
huge scandal. SOX also creates opportunities to increase the reliability and transparency of
financial reports. The requirement of high ranking executives to personally sign vouching for the
accuracy of financial reports will increase the corporate governance overall.
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