49 Steps to Implement Sarbanes-Oxley Best Practices In Private and Nonprofit Health Care Entities

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Place an order or get more information at 800-521-4323 Price: $385 (Includes CD with documents and tools) Pages: 285 ISBN: 1-933801-05-0 © 2006 Pub Code: GSARB2

The passage of Sarbanes-Oxley has created a sea change for business entities of all types and continues to have a profound impact on the way business is conducted. While private and nonprofit health care entities are not mandated to comply with the federal law, they would be well-advised to adopt these best practices because:

1. Significant liability for officers and Board members could result;
2. Bond ratings and the costs of loans can be impacted significantly;
3. Sarbanes-Oxley provisions are being demanded by business partners and government regulators; and
4. Sarbanes-Oxley principles are being adopted for all sectors, public or private, by accountants and auditors.

• Ensure adequate Audit Committee oversight
• Eliminate potential auditor conflicts
• Achieve better accountability and accuracy of financial documentation
• Implement an effective records retention program
• Update your Code of Ethics and written guidance
• Ensure that auditors are not pressured or coerced
• Establish procedures for confidential, anonymous receipt of complaints

• Background to the Passage of the Act
• Evolution of Corporate Accountability Laws and Regulations

• Sarbanes-Oxley Standards: Good for Business
• Best Practice Standards for Business Entities
• Reduction in Liability Exposure for Officers and Board Members
• Directors and Officers Insurance
• Bondholder Ratings
• OIG and Sentencing Commission Guidance
• Similar State Measures
• Third Parties and Business Partners May Demand Higher Standards
• Investors or Purchasers of Businesses May Expect Adherence
• Changing GAAP and FASB Accounting Principles
• Accountants Are Likely to Adopt the Same Principles and Standards for All Sectors
• Avoiding Litigation
• Potential Initial Public Offerings
• Impact of Sarbanes-Oxley on Accountants and Lawyers

Step 1. Conduct a gap analysis.
Step 2. Gain "top-down" written agreement on the process, form and format for policy development and implementation.

Step 3. Establish an executive Compliance or Governance Committee to oversee implementation of compliance efforts.
Step 4. Establish a compliance or governance officer function.
Step 5. Define the position of the individual who will be responsible for the compliance office function.

Step 6. Develop a job description for members of the Board that defines their roles and responsibilities.
Step 7. Develop a policy regarding orientation and education of Board directors on their fiduciary duties and responsibilities.
Step 8. Create a Board Governance Committee.

Step 9. Define Board of Directors independence.
Step 10. Prohibit the company from extending or maintaining credit arrangements for any director or executive officer.

Step 11. Establish and charter an Audit Committee of the Board of Directors with defined responsibilities for compliance oversight
Step 12. Develop operating policies and procedures for carrying out the Audit Committee's chartered mission.
Step 13. Consider melding the Audit Committee oversight responsibilities of the Act with general compliance oversight.
Step 14. Establish composition of and meetings for the committee.
Step 15. Establish and define the relationship between the Audit Committee and management.
Step 16. Mandate that a member of the Audit Committee is a financial expert, and define what constitutes financial expertise.
Step 17. Establish the process for addressing the oversight and qualifications of auditors.
Step 18. Define how the Audit Committee should go about providing oversight of the auditors and accountants.
Step 19. Require preapproval by the committee of all services provided by an audit firm, with a review and verification process.

Step 20. Prohibit a public accounting firm performing audit services from performing contemporaneously non-audit services.
Step 21. Prohibit the financial auditor from providing audit services for more than five consecutive fiscal years, under certain circumstances.
Step 22. Require those performing audits to report: accounting policies and practices; alternative treatments of financial information within GAAP; other written communications between the financial audit organization and the organization's management.

Step 23. Prohibit any officer or director of the organization to fraudulently influence, coerce, manipulate, or mislead any auditor.
Step 24. Establish a companywide conflicts-of-interest policy.
Step 25. Ensure that accountants and auditors do not receive additional compensation related to the engagement.
Step 26. Prohibit a financial audit organization from performing audit services if key officers of the company were employed by it and participated in the audit during the prior year.

Step 27. Establish a policy to approve a written Code for guidance on expectations for workplace conduct.
Step 28. Develop a Code of Business Ethics.
Step 29. Include a message in the Code of Business Ethics by the CEO reinforcing commitment to compliance.
Step 30. Establish a training program for all covered employees on the content of the Code of Business Ethics and Conduct.

Step 31. Establish a Hotline and/or other communication channels between employees and a designee of the Audit Committee without going through management.
Step 32. Create an affirmative duty for employees to report any potential violations of federal, state, or local laws or regulations.
Step 33. Permit employees and agents to report or seek guidance regarding potential or actual criminal conduct.
Step 34. Prohibit retaliation against anyone for reporting potential violations of law, regulations, or code of conduct.
Step 35. Develop and implement written guidelines for the investigation of whistleblower complaints and allegations.
Step 36. Establish a records management, retention, and destruction policy for compliance Hotline-related documents.

Step 37. Mandate certifications for annual reports.
Step 38. Develop financial report certification forms to be signed by the CFO and CEO.
Step 39. Establish a disclosure committee to ensure that financial reporting contains all identified material correcting adjustments.
Step 40. Define the policy for when disclosures are required and how this will be done.
Step 41. Develop a financial records management program.
Step 42. Ensure accurate retention of records.
Step 43. Establish a process by which the internal controls of the company are tested on an ongoing basis.
Step 44. Establish a process and requirement for annual internal control reports certified by senior management.
Step 45. Define the affirmative duties of attorneys for reporting potential material violations of laws.

Step 46. Establish an effective risk assessment process and work plan.
Step 47. Establish an ongoing auditing & monitoring program.
Step 48. Develop a general fraud and abuse policy for compliance with all applicable laws and regulations.
Step 49. Establish an audit follow-up and resolution process.

Written By

49 Steps to Implement Sarbanes-Oxley Best Practices is written by Richard P. Kusserow, president of Strategic Management Systems, Inc. (SMSInc), an industry-leading health care compliance consulting firm in Alexandria, Va., and Rita Kuyumcuoglu, Esq., MPA, an associate at SMSInc. Prior to founding SMSInc in 1992, Mr. Kusserow was the Inspector General of HHS for 11 years. He is among the top compliance consultants in the nation, well-known both for his ability to see the big picture and his intimate first-hand knowledge of the federal government's compliance initiatives. His extraordinary understanding of compliance requirements, and the ways in which health care organizations have responded, will help you understand today's Sarbanes-Oxley challenges and respond to them with effective tools that can be adapted for your organization. Ms. Kuyumcuoglu is responsible for researching and analyzing regulatory and industry information to serve the specialized needs of SMSInc's clients.

Written For

• Compliance officers
• Internal auditors
• Corporate executives
• Risk managers
• Officers and Board members
• Accountants
• Consultants
• Lawyers

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