Boosting your company's credibility with a few key admin policies
Following the Enron scandal in 2001-2002, the federal government took steps towards avoiding such major breaches in good corporate practices. The Sarbanes-Oxley Act of 2002 put a much larger burden on public corporation's board of directors to oversee its company. The ultimate goal was to improve the accuracy of the information provided to investors. Corporations began putting internal controls in place like whistleblower and conflict of interest policies which are now the norm in corporate America. While emergency services may not have "investors" in the traditional sense, they certainly have an obligation to the public and their memberships to ensure proper management.
Fast-forward to 2007 when the federal government revised the tax-exempt organization's federal tax return (the "Form 990" for short). The Form 990 requires much more than just basic financial information but gets into the management of the organization, requesting specific information about the Board and how it functions. This is not the level of detail required by Sarbanes-Oxley but is certainly a movement in that direction. Importantly, it has a section dedicated to whether or not certain basic corporate policies are in place.
The government does not require that these policies are in place but there is no doubt that it is a strong suggestion, and for good reason. The Form 990 simply asks if they are in place.
Having these specific policies in place helps to foster an organization that functions in a consistent, ethical, and efficient manner. The policies specifically listed, and relevant to most emergency services organizations, are:
1) Conflict of Interest Policy
2) Whistleblower Policy
3) Document Retention and Destruction Policy
4) Policy for Determining Compensation for a CEO, Executive Director, Top Management Officials and/or Other Officers/Key Employees
Each of these policies has a purpose in furthering a well-run organization. One related item as well involves the Form 990 as a whole. Given the vast amount of organization-specific information on it, your Board of Directors should be reviewing it prior to it being filed. Oftentimes, the creation of the Form 990 is done by a hired CPA which is certainly recommended but much of the information will require a collaborative effort between the accountant and Board of Directors. The Board is ultimately signing off that the information is accurate.
If your organization needs assistance drafting or updating these, or any other, administrative policies please contact your organization's attorney or Valocchi Law, LLC if you do not currently have an attorney.