Question

In: Accounting

Can public trust in nonprofits and governments be restored? by Regina Herzlinger; Harvard Business Review 1....

Can public trust in nonprofits and governments be restored? by Regina Herzlinger; Harvard Business Review

1. Background
2. Ethical Issue
3. Managements Response
4. Internal Controls implemented as a result
5. How would you have handled issue differently?
6. Recommendations to management

Solutions

Expert Solution

Background on Public Trust on Non profits and Government department - will it be possible to restored?

Non profits and Government always look on Society's most important function - 1) protecting public health , 2) Safety

Revenue of Non Profit Organization has increased a lot in phase manner and at present touch almost Trillion $ Value.

The performance of Non profits and Government is shrouded behind a veil of secrecy that lifted only when disaster happen .

Ethical Issue - Public losing trust on Non Profits and Government mainly because 1) Ineffective Organization 2) lack of social mission 3 ) resources usage for own benefit 4) abnormal salary payment to Non profit Executive .5) Excessive risk

All the above factor badly impacted on Public Trust

Management Response + Internal control to rescue from above situation =Need compete disclosure , analysis of all processes in details

Need to review ( periodical ) performance of Non profits Organization and Government department.

Need to implement audit of Financial Books of accounts relates to Non Profits and Government . Presently They are not giving any proper financial statement as per USGAAP to SEC , Also books are not audited by External Auditor ,

Need to start complete Financial Analysis ( like Ratio , Financial Health analysis periodically )

Need to implement strong Penalty clause by SEC , if Non profits and Government will not follow process , Tax hide , presentation of financial statement with complete disclosure , fund movement details .

The IRS can implement capital punishment on a Non profit by revoking tax exempt status

Without proper information,the publock can not know if an Organization  fulfilling its mission

We need Quality and Quantitative information to disclose in front of public .

All hospital , School , Education need to disclose complete details in front of Public .

Complete details of Higher Level Executive compensation details

Most important , No profit Organization should follow Public compnay model and report to ll relevant stakeholders ( SEC filing )

How would you have handled - I believe with help of all above positive step , I am confident that Public confidence will restored . SEC rules , GAAP base disclosure , Management and Discussion Analysis report along with Audited financial report will definitely disclose real scenario of Non Profits Organization and Government.

We are hopeful Managers and Other person relates to Non profits and Government Organization should understand the process and assist others to follow the same .  


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