This is a law designed to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws. It applies to publicly traded companies, and, with a few exceptions noted below, does not apply to institutions of higher education. University governing boards deal with similar issues in corporate activities, and thus universities are looking to this law as a framework for evaluating financial risks. For a full report on what the recommendations are with respect to higher education, see The NACUBO Advisory Report on this topic, which was issued Nov. 20, 2003.

The two sections of SOX that apply to non-profit entities are the following:

No person may

(1) knowingly, with the intent to retaliate, take any action harmful to any person, including interference with the lawful employment or livelihood of any person, for providing to a law enforcement officer any truthful information relating to the commission or possible commission of any federal offense, see Sarbanes-Oxley Act § 1107 (codified at 18 U.S.C.A. § 1513(e)), or

(2) knowingly alter, destroy, mutilate, conceal, cover up, falsify or make a false entry in any record, document, or tangible object with the intent to obstruct or influence any U.S. governmental investigation or administrative procedure before any U.S. department or agency or any contemplated or filed bankruptcy proceeding, see id. § 802 (codified at 18 U.S.C.A. § 1519).

Note that SOX contains criminal penalties, and thus issues such as retaliation which might have been a civil tort matter may now become a criminal matter. Adoption of records retention programs and training on same will assist in ensuring compliance with Section 1519.

Related Issues: See Proposed FAR Rule on Contractor Code of Ethics

Resources

Arthur Gallagher Report titled *Road to Implementation: Enterprise Risk Management for Colleges and Universities*.  September 2009

ACE Paper on Conflict of Interest: January 2008. 10 page paper and an executive summary. The paper is to help IHEs strengthen  policies and practices with regard to ethical institutional practices, including identification and management of conflict of interest.

Principles for Good Governance: October 2007 publication issued by the Panel on the Non-Profit Sector. This report describes sound practice principles for non-profit and charitable organizations. Topics include Legal Compliance and Public Disclosure, Effective Governance, Financial Oversight, and Responsible Fundraising.

Compliance Guide for 501(c)(3) Public Charities,  IRS Publication 4221. Includes responsibilities of a 501(c)(3) as well as an overview of activities that might jeopardize the tax exempt status of the organization.

NACUA Resource Page (password protected to NACUA members, this page includes a number of excellent outlines on the topic)

Good Governance Practices for 501(c)(3) Organizations
The IRS issued these "Best Practices" guidelines (Feb. 2007) for Non-Profit Organizations. While these are not mandatory, the IRS believes adoption or clarification of policy in the following areas is advisable:  mission statement; code of ethics and whistleblower policies; director duties of loyalty and due diligence and oversight of conflicts of interest; public transparency of activities and finances; fundraising policies; board oversight of finances; compensation of directors, officers and staff; and a document retention policy.

Draft Principles on Self Regulation of the Charitable Sector: Issued by the Advisory Committee on Self Regulation of the Charitable Sector.

AGB Statement on Board Accountability: Adopted by the AGB Board of Governors on Jan. 17, 2007. The AGB is the Association of Governing Boards of Colleges and Universities. This document encourgages governing boards and chief executives to examine the clarity, coherence and appropriateness of the schools' governance structures, policies, and practices.

U.S. Dept. of Treasury Anti-Terrorist Financing Guidelines: Voluntary Best Practices For U.S. -Based Charities (updated Sept. 2006)
Voluntary guidelines which do not supercede or modify current legal requirements applicable to 501(c)(3)s. The guidelines address Governance, Financial Practice and Accountability, and Disclosure and Transparency in Governance and Finances.

Response to Comments Submitted on the Draft December 2005 version of the Anti-Terrorist Financing Guidelines
(released September 2006)

Strengthening Transparency Governance and Accountability of Charitable Organizations.
June 1, 2005 Final Report. This report was done at the suggestion of the Senate Finance Committee, to make recommendations to strengthen governance, ethical practice and accountability within the nonprofit sector.  The report by "The Independent Sector," a nonprofit coalition of approximately 500 charities, convened a panel at the encouragement of members of the Senate Finance Committee to examine governance, transparency, and ethical standards of the nonprofit sector.