A new study finds that private companies and nonprofit organizations are embracing many of the reforms that Congress imposed on public companies in the 2002 Sarbanes-Oxley Act, Dow Jones Newswires reports.

Sponsored by the Chicago-based law firm Foley & Lardner LLP and based on information collected from chief executives, chief financial officers, compliance officers, directors, and other officials at twenty-nine nonprofits and thirty-nine private firms, the study found that 87 percent of private firms and nonprofits said the reforms mandated by Sarbanes-Oxley are having an impact on their operations, up from 77 percent in 2004.

Three-quarters of those surveyed said they now require board approval of non-audit services provided by the organization's auditor, one of the features of the 2002 law. Nearly 68 percent also said they require their CEO and CFO to certify financial results, or plan to do so, up from 57 percent in 2004, while 72 percent said they had put protections in place for whistle-blowers, up from 57 percent in the last survey. In addition, the study found that nonprofits are more amenable than private companies to restricting executive compensation, with 59 percent of nonprofit respondents saying they planned to implement such restrictions, compared to only 38 percent of for-profit companies.

More than three-quarters of those surveyed said the decision to adopt governance reforms is self-imposed. About half said their board members had called for the changes, while one-third said their auditor had done so. Respondents, especially nonprofit respondents, also indicated that the cost of adopting Sarbanes-Oxley reforms was expensive, with for-profit firms estimating that their governance costs had risen roughly 26 percent since 2002; nonprofits reported a 46 percent increase. While the reforms contained in the legislation apply only to public companies, some of those interviewed by Dow Jones for the article said they expected the law to be extended to nonprofits at some point.

To read or download the complete study (16 pages, PDF), visit: http://www.foley.com/files/tbl_s60WorkingGroups/
FileUpload627/69/privatestudydraft3-04-05.pdf.