U.S. study finds not-for-profits more focused on corporate governance

A study of U.S. not-for profit organizations finds them more focused on corporate governance issues, but still lacking in some key governance areas.
The survey of 700 organizations, conducted by accounting firm Grant Thornton International, revealed awareness of the Sarbanes-Oxley Act of 2002 (SOX) had surged since last year’s survey 83% of NFP organizations now say they are either “very” or “somewhat” familiar with the legislation, up from 56% last year.
About 48% of these organizations have changed corporate governance policies as a result of SOX, and the number of NFPs with audit committee has also risen over the past year, to 84% from 77%. And while NFPs are not required to have a financial expert on their audit committees, 82% of those surveyed say they do.
One area where respondents report enhanced scrutiny since SOX, is in internal controls, cited by 81%. And of the few who have not reviewed their internal audit controls since SOX, the majority intend to do so in the future.
The majority of NFPs do have conflict of interest and records retention policies in place. However, only 26% of NFPs surveyed say they have a a whistle-blowing policy in place, and of those which don’t, more than half say they have no plans to initiate such a policy. “Whistle-blower policies allow not-for-profit organizations to learn about potential fraud regarding internal controls and financial reporting,” says Frank Kurre, managing director of Grant Thornton’s national NFP practice. “By putting a whistle-blower policy in place, organizations can mitigate risks that could ruin their good name and reputation within the not-for-profit community and the general public.”
Another area of concern is that the majority of NFPs say they meet with their external auditor just once per year.