• Effective Audit Committee Guide

We will continue to stress the importance of understanding an organization’s tone at the top because it provides the basis for ethical behavior within an organization. Under Section 406 of the Sarbanes-Oxley Act, an organization is required to disclose whether or not it has adopted a code of ethics for senior financial officers. While nonprofit organizations are not subject to this provision, this is a best practice that should be considered. A “code of ethics” encompasses such standards as are reasonably necessary to promote:
  1. Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships
  2. Full, fair, accurate, timely and understandable disclosure in the financial reports and tax returns prepared by the organization
  3. Compliance with applicable governmental rules and regulations
Most audit committees believe that they can assess the tone at the top from their periodic meetings with management. However, best practices continue to develop which, in addition to these periodic meetings, may include more formal assessments, such as conducting confidential employee surveys, focus groups, one-on-one discussions with second and third levels of management, as well as holding separate discussions with internal and external auditors.



Andrea Espinola Wilson.
Andrea Wilson Managing Partner; Industry Specialty Services National Co-Leader, Nonprofit & Education Practice 703-752-2784
Adam Cole.
Adam Cole Managing Partner; Nonprofit & Education Advisory Practice National Co-Leader 212-885-8327
Laurie De Armond.
Laurie De Armond Assurance Office Managing Partner; Institute for Nonprofit Excellence Executive Director 703-336-1453
Marc Berger
Marc Berger National Director, Nonprofit Tax Services 703-336-1420
Lee Klumpp
Lee Klumpp National Professional Practice Partner – Nonprofit and Government Industries 703-336-1497
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