“Whistle Blower” Provisions May Apply to Private Companies

Source: AccountingWeb

Protection for whistle blowers under Sarbanes-Oxley may be available to employees of private companies that do business with public companies. In addition, criminal penalties will be enforced equally against private and public companies.

Audit committees are charged with the responsibility for setting up procedures for employees to anonymously report questionable accounting practices. But anonymity is difficult to preserve, especially when an investigation takes place.

Whistle-blowers are protected against retaliation by section 806 of Sarbanes-Oxley.

Public company auditors are prohibited from conducting investigations involving independence issues. Whether this applies to private companies is not clear, but accountants are advised to avoid such engagements.

Companies that have fired whistle-blowers may have done so even if there had not been a whistle-blowing incident. To deal with the risk inherent in such an action, employers should carefully document the reason for the dismissal, demotion, or other acts that might appear to be discriminatory.

From AccountingWeb.com. The complete article can be found at:

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