Many health care organizations that are not required to comply with the new corporate governance rules established by the Sarbanes-Oxley Act have opted to do so. See our prior memo "Health Care - Corporate Governance Policies and Procedures" at http://www.velaw.com/resources/resource_detail.asp?rid=000322107601&rtype=pub. Now, Fitch Ratings, a well-known credit rating organization, has released a special report regarding the emergence of Sarbanes-Oxley standards as "best practices" in corporate governance, even for organizations that are not subject to the Act's requirements. Fitch Ratings has announced that the voluntary adoption by educational borrowers of some of the key Sarbanes-Oxley provisions is a best management practice that will be taken into consideration in determining an organization's credit rating. The report notes in particular the potential positive impact of adopting the Act's expanded financial management and oversight practices, including policies relating to the conduct of audits, interaction between the staff and the board, and internal controls. While the Fitch special report does not specifically address the use of Sarbanes-Oxley requirements as best practices for health care organizations, its conclusions and methodology relating to higher education are likely to inform future decisions by Fitch and the other rating agencies in the health care sector. Even if they are not covered by the Act, for-profit and non-profit health care organizations alike should be alert to the effects that evolving corporate governance standards are likely to have on them. Vinson & Elkins attorneys have helped publicly and privately held corporations, nonprofits, and government agencies incorporate Sarbanes-Oxley requirements into their policies and procedures.
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