In 2002, in reaction to major scandals at publicly traded business corporations, such as Enron and WorldCom, Congress passed the Sarbanes-Oxley Act (SOX). This act has eight provisions; only one places requirements on non-profit organizations. That provision makes it mandatory for non-profits and public companies to have in place policies and procedures to avoid destruction of documents that may be relevant to an ongoing or anticipated federal government investigation.
SFMA has a comprehensive document retention policy. In addition, SFMA has adopted the other principles of SOX. The most thorough, and expensive requirement, involves the SFMA audit. Non-profits are not required to have an independent annual audit; it is purely optional.
SFMA’s Finance and Audit Committee recommends the auditor to the Board of Directors for its approval. This year it recommends Spencer, Summers and Company, and the Board approved that recommendation. SFMA also changes auditors every five years, as recommended by SOX (the legal recommendation is that the lead auditor and its team rotate off), but since SFMA uses mid-sized audit firms, it is sounder to switch firms entirely. An annual audit provides a review of critical accounting principles to ensure that appropriate financial controls are in place and are being followed. Each year, SFMA has received an unqualified opinion (clean) from its auditor, which is the highest opinion available.
This year’s audit will take place in early June, and SFMA provides the Audit Results on its members only side and to the membership during the SFMA Annual Meeting, which is held at the conference each year.
