The Catholic University of America

Summary of Federal Laws

Miscellaneous Laws

The Sarbanes Oxley Act of 2002 (SOX)

Compliance Partners

General Counsel

Related Policies

Bylaws of the University
Board of Trustees Conflict of Interest
Record Retention

Public Law 107-204

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

AGB Board of Directors' Statement on the Fiduciary Duties of Governing Board Members, issued August 1, 2015.

Association of Governing Boards of Universities and Colleges Statement on Board Responsibility for Institutional Governance: Approved by AGB Board of Directors on January 22, 2010. The principles set forth are intended to guide boards in the governance of colleges, universities, and systems, inform them of their roles and responsibilities, and clarify their relationships with presidents, administration, faculty, and others involved in the governance process.

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.


DOJ Field Guidance on Sarbanes Oxley

NACUANOTE January 2003 Sarbanes Oxley, Corporate Responsibility and Colleges and Universities

2005 JCUL Article by Carl Oxholm III: Sarbanes Oxley in Higher Education: Bringing Corporate America's Best Practices to Academia (Password Needed for Access)

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