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Key Issues Drive How Non-Profits Do Business

Key Issues Drive How Non-Profits Do Business

by Rick Turoczy on August 8, 2006

On everyone’s mind since the implementation of Sarbanes-Oxley (SOX) is the Audit Committee. We quite often get asked, “Does our organization need to have an audit committee?” We’ve have seen many forward-thinking non-profits consider and implement them.

If implemented correctly, an audit committee should provide the board of directors with a clear independent voice to address financial matters. It reinforces that the auditors are neither engaged by nor report to management, but rather, the board, through its audit committee.

The committee members will need to devote the time and develop the expertise to monitor effectively increasingly complex financial practices. Many non-profits will find it difficult to populate such a committee with qualified individuals. If an organization creates an audit committee, it has to actually “do” what it is designed to do. Also, an audit committee faces strong fiduciary responsibilities, though its presence does not diminish those of the board itself.

Key Issues Drive How Non-Profits Do Business

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