University Business - July 2007 - (Page 77)

A CORPORATE CEO MIGHT RISK SCANDAL and bad press in the pursuit of profits, but prison? When the Sarbanes-Oxley Act of 2002 (often known as SOX) included criminal penalties for fraud in financial statements, corporate executives took notice. And in their fear, they made SOX seem like a horrible burden. “There’s nothing in Sarbanes-Oxley that is harmful to anybody,” contends Peggy M. Jackson, author of Sarbanes-Oxley for Nonprofit Boards: A New Governance Paradigm (Wiley, 2006), whose background is in business administration and insurance. “It’s all things people should be doing anyway.” SOX legislation applies to publicly traded companies as well as those that hope to become public or to be acquired by a public company some day. While it does not apply to such nonprofit organizations as colleges and universities, its underlying principles shouldn’t be ignored. The Sarbanes-Oxley Act sets forth standards for good organizational governance; it helps donors, trustees, and other stakeholders have confidence in the financial statements that the organization presents; and it’s increasingly the model for proposed state and federal laws addressing nonprofit accountability. “We thought at some point in time this would flow down to nonprofits, so why not get started?” explains Marshall Moore, chief business officer at Montgomery College (Md.). “Some of these things made sense to do whether they were mandated or not.” It took big scandals—such as those at Enron and WorldCom—to show public company investors just how lax the oversight was at many companies. And the current concern over payments and donations for student loan company referrals is raising questions about how conflicts of interest, one of the areas covered by Sarbanes-Oxley, are being addressed on campus. What Is SOX? The Sarbanes-Oxley Act was passed in response to a spate of huge corporate scandals, where executives at major corporations misled their shareholders; these businesses were not nearly as stable as people had thought. Pension funds, mutual funds, and other investors lost billions of dollars, and thousands of people lost their jobs and their retirement savings. It turned out that the managers, the boards of directors, and the audit firms had developed such a collegial working relationship that no one questioned it when either small or large corners were cut. In 2002, Senator Paul Sarbanes (D-Md.) and Representative Michael Oxley (R-Ohio) proposed a bill that would overhaul financial reporting for public companies, and it passed. The Sarbanes-Oxley Act is a huge bill, and public companies have been scrambling to keep up with it ever since. Its key provisions include: • the creation of a new regulatory body, the Public Company Accounting Oversight Board (PCAOB); • the establishment of independent audit committees on boards of directors; • conflict of interest disclosure; • protections for employees reporting suspected financial July 2007 | 77 ward: By Ann C. Logue At nonprofits that demonstrate financial accountability, such as Montgomery College (Md.), stakeholders can worry less about the validity of financial statements and everyone can focus more on students’ education. universitybusiness.com

Table of Contents for the Digital Edition of University Business - July 2007

Contents
College Index
Company Index
Advisory Board
Editor's Note
People Watch
Sense of Place
Marketing
Viewpoint
Human Resources
Money Matters
Financial Aid
Community Colleges
Seeds of Scandal
Controlling the Flow
Special Delivery
Presidential Progress
Best Foot Forward: SOX and Financial Standards
Business Technology
What's New
Calendar of Events
Direct Connect
End Note

University Business - July 2007

https://www.nxtbook.com/pmg/UB/UB_0520
https://www.nxtbook.com/pmg/UB/UB_0320
https://www.nxtbook.com/pmg/UB/UB_0120
https://www.nxtbook.com/pmg/UB/UB_1119
https://www.nxtbook.com/pmg/UB/UB_1019
https://www.nxtbook.com/pmg/UB/UB_0819
https://www.nxtbook.com/pmg/UB/UB_0719
https://www.nxtbook.com/pmg/UB/UB_0619
https://www.nxtbook.com/pmg/UB/UB_0419
https://www.nxtbook.com/pmg/UB/UB_0319
https://www.nxtbook.com/pmg/UB/UB_0119
https://www.nxtbook.com/pmg/UB/UB_1218
https://www.nxtbook.com/pmg/UB/UB_1118
https://www.nxtbook.com/pmg/UB/UB_1018
https://www.nxtbook.com/pmg/UB/UB_0918
https://www.nxtbook.com/pmg/UB/UB_0818
https://www.nxtbook.com/pmg/UB/UB_0718
https://www.nxtbook.com/pmg/UB/UB_0618
https://www.nxtbook.com/pmg/UB/UB_0518
https://www.nxtbook.com/pmg/UB/UB_0418
https://www.nxtbook.com/pmg/UB/UB_0318
https://www.nxtbook.com/pmg/UB/UB_0218
https://www.nxtbook.com/pmg/UB/UB_0118
https://www.nxtbook.com/pmg/UB/UB_1217
https://www.nxtbook.com/pmg/UB/UB_1117
https://www.nxtbook.com/pmg/UB/UB_1017
https://www.nxtbook.com/pmg/UB/UB_0917
https://www.nxtbook.com/pmg/UB/UB_0817
https://www.nxtbook.com/pmg/UB/UB_0717
https://www.nxtbook.com/pmg/UB/UB_0617
https://www.nxtbook.com/pmg/UB/UB_0517
https://www.nxtbook.com/pmg/UB/UB_0417
https://www.nxtbook.com/pmg/UB/UB_0317
https://www.nxtbook.com/pmg/UB/UB_0217EPUB
https://www.nxtbook.com/pmg/UB/UB_0217
https://www.nxtbook.com/pmg/UB/UB_0117
https://www.nxtbook.com/pmg/UB/UB_1216
https://www.nxtbook.com/pmg/UB/UB_1116
https://www.nxtbook.com/pmg/UB/UB_1016
https://www.nxtbook.com/pmg/UB/UB_0916
https://www.nxtbook.com/pmg/UB/UB_0816
https://www.nxtbook.com/pmg/UB/UB_0816CG
https://www.nxtbook.com/pmg/UB/UB0716
https://www.nxtbook.com/pmg/UB/GlobalSellSheet
https://www.nxtbook.com/pmg/UB/UB_0616
https://www.nxtbook.com/pmg/UB/UB_0516
https://www.nxtbook.com/pmg/UB/UB0416
https://www.nxtbook.com/pmg/UB/UB0316
https://www.nxtbook.com/pmg/UB/UB_0216r2
https://www.nxtbook.com/pmg/UB/UBGuide
https://www.nxtbook.com/pmg/UB/UB0116
https://www.nxtbook.com/pmg/UB/UB
https://www.nxtbook.com/nxtbooks/pmg/ub201511
https://www.nxtbook.com/nxtbooks/pmg/ub201510
https://www.nxtbook.com/nxtbooks/pmg/ub201509
https://www.nxtbook.com/nxtbooks/pmg/ub201508
https://www.nxtbook.com/nxtbooks/pmg/ub201508_ConsultantsGuide
https://www.nxtbook.com/nxtbooks/pmg/ub201507
https://www.nxtbook.com/nxtbooks/pmg/ub201506
https://www.nxtbook.com/nxtbooks/pmg/ub201506_AudioVisualSolutions
https://www.nxtbook.com/nxtbooks/pmg/ub201505
https://www.nxtbook.com/nxtbooks/pmg/ub201504
https://www.nxtbook.com/nxtbooks/pmg/ub201503
https://www.nxtbook.com/nxtbooks/pmg/ub201502
https://www.nxtbook.com/nxtbooks/pmg/ub201501
https://www.nxtbook.com/nxtbooks/pmg/ub201501_FinancialServicesGuide
https://www.nxtbook.com/nxtbooks/pmg/ub201412
https://www.nxtbook.com/nxtbooks/pmg/ub201411
https://www.nxtbook.com/nxtbooks/pmg/ub201410
https://www.nxtbook.com/nxtbooks/pmg/ub201409
https://www.nxtbook.com/nxtbooks/pmg/ub201408
https://www.nxtbook.com/nxtbooks/pmg/ub201408_ConsultantsGuide
https://www.nxtbook.com/nxtbooks/pmg/ub201407
https://www.nxtbook.com/nxtbooks/pmg/ub201406
https://www.nxtbook.com/nxtbooks/pmg/ub201406_AudioVisualSolutions
https://www.nxtbook.com/nxtbooks/pmg/ub201405
https://www.nxtbook.com/nxtbooks/pmg/ub201404
https://www.nxtbook.com/nxtbooks/pmg/ub201403
https://www.nxtbook.com/nxtbooks/pmg/ub201402
https://www.nxtbook.com/nxtbooks/pmg/ub201401
https://www.nxtbook.com/nxtbooks/pmg/ub201401_FinancialServicesGuide
https://www.nxtbook.com/nxtbooks/pmg/ub201312
https://www.nxtbook.com/nxtbooks/pmg/ub201311
https://www.nxtbook.com/nxtbooks/pmg/ub201310
https://www.nxtbook.com/nxtbooks/pmg/ub201309
https://www.nxtbook.com/nxtbooks/pmg/ub201308
https://www.nxtbook.com/nxtbooks/pmg/ub201308_ConsultantsGuide
https://www.nxtbook.com/nxtbooks/pmg/ub201307
https://www.nxtbook.com/nxtbooks/pmg/ub201306_AudioVisualSolutions
https://www.nxtbook.com/nxtbooks/pmg/ub201306
https://www.nxtbook.com/nxtbooks/pmg/ub201305
https://www.nxtbook.com/nxtbooks/pmg/ub201304
https://www.nxtbook.com/nxtbooks/pmg/ub201303
https://www.nxtbook.com/nxtbooks/pmg/ub201302
https://www.nxtbook.com/nxtbooks/pmg/ub201301
https://www.nxtbook.com/nxtbooks/pmg/ub201301_FinancialServicesGuide
https://www.nxtbook.com/nxtbooks/pmg/ub1212
https://www.nxtbook.com/nxtbooks/pmg/ub1112
https://www.nxtbook.com/nxtbooks/pmg/ub1012
https://www.nxtbook.com/nxtbooks/pmg/ub0912
https://www.nxtbook.com/nxtbooks/pmg/ub_cg12
https://www.nxtbook.com/nxtbooks/pmg/ub070812
https://www.nxtbook.com/nxtbooks/pmg/ub0612
https://www.nxtbook.com/nxtbooks/pmg/ub_avguide0612
https://www.nxtbook.com/nxtbooks/pmg/ub0512
https://www.nxtbook.com/nxtbooks/pmg/ub0412
https://www.nxtbook.com/nxtbooks/pmg/ub0312
https://www.nxtbook.com/nxtbooks/pmg/ub0212
https://www.nxtbook.com/nxtbooks/pmg/ub_financeguide0112
https://www.nxtbook.com/nxtbooks/pmg/ub1211
https://www.nxtbook.com/nxtbooks/pmg/ub1011
https://www.nxtbook.com/nxtbooks/pmg/ub0911
https://www.nxtbook.com/nxtbooks/pmg/ub_cg11
https://www.nxtbook.com/nxtbooks/pmg/ub0711
https://www.nxtbook.com/nxtbooks/pmg/ub0611_av
https://www.nxtbook.com/nxtbooks/pmg/ub0611
https://www.nxtbook.com/nxtbooks/pmg/ub0511
https://www.nxtbook.com/nxtbooks/pmg/ub0411
https://www.nxtbook.com/nxtbooks/pmg/ub0311
https://www.nxtbook.com/nxtbooks/pmg/ub0211
https://www.nxtbook.com/nxtbooks/pmg/ub0111
https://www.nxtbook.com/nxtbooks/pmg/ub_financeguide0111
https://www.nxtbook.com/nxtbooks/pmg/ub1110
https://www.nxtbook.com/nxtbooks/pmg/ub1010
https://www.nxtbook.com/nxtbooks/pmg/ub0910
https://www.nxtbook.com/nxtbooks/pmg/ub_2010financeguide
https://www.nxtbook.com/nxtbooks/pmg/ub_2010consultants
https://www.nxtbook.com/nxtbooks/pmg/ub_2010avguide
https://www.nxtbook.com/nxtbooks/pmg/ub0710
https://www.nxtbook.com/nxtbooks/pmg/ub0610
https://www.nxtbook.com/nxtbooks/pmg/ub0510
https://www.nxtbook.com/nxtbooks/pmg/ub0410
https://www.nxtbook.com/nxtbooks/pmg/ub0310
https://www.nxtbook.com/nxtbooks/pmg/ub0210
https://www.nxtbook.com/nxtbooks/pmg/ub0110
https://www.nxtbook.com/nxtbooks/pmg/ub1109
https://www.nxtbook.com/nxtbooks/pmg/ub1009
https://www.nxtbook.com/nxtbooks/pmg/ub0909
https://www.nxtbook.com/nxtbooks/pmg/ub0709
https://www.nxtbook.com/nxtbooks/pmg/ub_fg09
https://www.nxtbook.com/nxtbooks/pmg/ub0609
https://www.nxtbook.com/nxtbooks/pmg/ub0509
https://www.nxtbook.com/nxtbooks/pmg/ub0409
https://www.nxtbook.com/nxtbooks/pmg/ub0309
https://www.nxtbook.com/nxtbooks/pmg/ub0209
https://www.nxtbook.com/nxtbooks/pmg/ub0109
https://www.nxtbook.com/nxtbooks/pmg/ub1208
https://www.nxtbook.com/nxtbooks/pmg/ub1108
https://www.nxtbook.com/nxtbooks/pmg/ub1008
https://www.nxtbook.com/nxtbooks/pmg/ub0908
https://www.nxtbook.com/nxtbooks/pmg/ub0808
https://www.nxtbook.com/nxtbooks/pmg/ub0708
https://www.nxtbook.com/nxtbooks/pmg/ub0608
https://www.nxtbook.com/nxtbooks/pmg/ub0508
https://www.nxtbook.com/nxtbooks/pmg/ub0408
https://www.nxtbook.com/nxtbooks/pmg/ub0308
https://www.nxtbook.com/nxtbooks/pmg/ub0208
https://www.nxtbook.com/nxtbooks/pmg/ub0907
https://www.nxtbook.com/nxtbooks/pmg/ub0807
https://www.nxtbook.com/nxtbooks/pmg/ub0707
https://www.nxtbook.com/nxtbooks/pmg/ub0607
https://www.nxtbook.com/nxtbooks/pmg/ub0507
https://www.nxtbook.com/nxtbooks/pmg/ub0407
https://www.nxtbook.com/nxtbooks/pmg/ub0307
https://www.nxtbook.com/nxtbooks/pmg/ub0207
https://www.nxtbook.com/nxtbooks/pmg/ub0107
https://www.nxtbook.com/nxtbooks/pmg/ub1206
https://www.nxtbook.com/nxtbooks/pmg/ub1106
https://www.nxtbook.com/nxtbooks/pmg/ub1006
https://www.nxtbook.com/nxtbooks/pmg/ub0906
https://www.nxtbook.com/nxtbooks/pmg/ub0806
https://www.nxtbook.com/nxtbooks/pmg/ub0706
https://www.nxtbook.com/nxtbooks/pmg/ub0606-GG
https://www.nxtbook.com/nxtbooks/pmg/ub0606
https://www.nxtbook.com/nxtbooks/pmg/ub0506
https://www.nxtbook.com/nxtbooks/pmg/ub0406
https://www.nxtbookmedia.com