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Auditing and Accounting Guide: Not-for-Profit Entities, 2019

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Auditing and Accounting Guide: Not-for-Profit Entities, 2019

AICPA

ISBN: 978-1-948-30683-6 July 2019 784 Pages

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Description

A must-have resource for new FASB guidance

From financial reporting to revenue recognition to grants and contracts, you have a lot going on in the not-for-profit financial arena right now. Whether you're already an expert in NFP audit and accounting standards or just getting started, we’ve got the practical guidance you need.

This must-have resource for nonprofits accounting and auditing professionals is an essential reference which will assist you with the unique aspects of accounting and financial statement preparation and auditing for not-for-profit entities. The 2019 guide will help you do the following:

  • Understand and implement recent updates and changes, including those related to financial reporting, revenue recognition, and grants and contracts
  • Gain a full understanding of the accounting issues unique to not-for-profit entities

A must-have resource for accounting and auditing professionals who work with nonprofits, this essential reference will assist in the unique aspects of accounting and financial statement preparation and auditing for not-for-profit entities.

1 Introduction .01-.27

Scope .01-.12

GAAP for NFPs .13-.19

Fund Accounting and Net Asset Classes .20-.25

Other Resources for Financial Reporting by NFPs .26-.27

2 General Auditing Considerations .01-.150

Overview .01-.02

Purpose of an Audit of Financial Statements .03-.08

Terms of Engagement .09-.11

Audit Planning Considerations .12-.59

Use of Assertions in Assessment of Risks of Material Misstatement .60-.64

Risk Assessment Procedures .65-.88

Using Risk Assessment to Design Further Audit Procedures .89-.111

Evaluation of Misstatements Identified During the Audit .112-.114

Communication With Those Charged With Governance .115-.121

Completing the Audit .122-.149

Appendix A — Consideration of Fraud in a Financial Statement Audit .150

3 Financial Statements, the Reporting Entity, and General Financial Reporting Matters .01-.197

Introduction .01-.05

Statement of Financial Position .06-.28

Statement of Activities .29-.45

Statement of Cash Flows .46-.58

Comparative Financial Information .59-.61

Reporting of Related Entities, Including Consolidation .62-.125

Mergers and Acquisitions .126-.139

Collaborative Arrangements .140-.141

The Use of Fair Value Measures .142-.175

Financial Statement Disclosures Not Considered Elsewhere .176-.188

Auditing .189-.196

Supplement A — Flowcharts .197

4 Cash, Cash Equivalents, and Investments .01-.110

Cash and Cash Equivalents .01-.04

Investments Discussed in This Chapter .05-.10

Initial Recognition and Measurement of Investments .11-.12

Valuation of Investments Subsequent to Acquisition .13-.44

Investment Income and Expenses .45-.49

Unrealized and Realized Gains and Losses .50-.53

Investments Held as an Agent .54

Investment Pools .55-.61

Endowment Funds .62-.73

Financial Statement Presentation .74-.82

Disclosures .83-.94

Auditing .95-.109

Appendix A — Determining Fair Value of Alternative Investments .110

5 Contributions Received and Agency Transactions 01-.234

Introduction .01-.04

Distinguishing Contributions From Other Transactions .05-.57

Core Recognition and Measurement Principles for Contributions .58-.81

Additional Accounting Considerations for Certain Contributions .82-.171

Measurement Principles for Contributions Receivable .172-.204

Financial Statement Presentation .205-.207

Disclosures .208-.214

Auditing .215-.232

Appendix A — Excerpt From AICPA Financial Reporting White Paper Measurement of Fair Value for Certain Transactions of Not-for-Profit Entities .233

Appendix B — Technical Questions and Answers About Financially Interrelated Entities .234

6 Split-Interest Agreements and Beneficial Interests in Trusts .01-.95

Introduction .01

Types of Split-Interest Agreements .02-.03

Recognition and Measurement Principles .04-.45

Financial Statement Presentation .46-.53

Examples of Split-Interest Agreements .54-.87

Auditing .88-.93

Appendix A — Excerpt From AICPA White Paper Measurement of Fair Value for Certain Transactions of Not-for-Profit Entities .94

Appendix B — Journal Entries .95

7 Other Assets .01-.47

Introduction .01

Inventory .02-.11

Prepaid Expenses, Deferred Costs, and Similar Items .12-.16

Collections and Works of Art, Historical Treasures, or Similar Assets .17-.29

Goodwill .30-.32

Intangible Assets Other Than Goodwill .33-.37

Auditing .38-.47

8 Programmatic Investments .01-.71

Introduction .01-.07

Core Considerations for Accounting and Reporting .08

Loans .09-.52

Equity Instruments .53-.61

Programmatic Equity Investments That Are Consolidated .55

Programmatic Equity Investments Reported Using the Equity Method .56-.58

Guarantees .62

Concentrations of Risk .63

Presentation of Programmatic Investments .64-.69

Program-Related Investments of Private Foundations .70

Auditing .71

9 Property and Equipment .01-.47

Introduction .01-.02

Recognition and Measurement Principles .03-.32

Financial Statement Presentation .33-.38

Auditing .39-.47

10 Debt and Other Liabilities .01-.117

Introduction .01

Fair Value Measurement .02-.08

Municipal Bond Financing and Other Long-Term Debt .09-.87

Tax Liabilities .88

Deferred Revenue .89

Refunds Due to and Advances from Third Parties .90

Promises to Give .91-.95

Split-Interest Obligations .96

Amounts Held for Others under Agency Transactions .97

Revenue Sharing and Other Agreements .98

Exit or Disposal Activities .99

Guarantees .100-.101

Contingencies .102

Pension and Other Defined Benefit Postretirement Auditing .111-.115

Appendix A — Municipal Securities Regulation .116

Appendix B — Auditor Involvement with Municipal Securities Filings .117

11 Net Assets and Reclassifications of Net Assets .01-.58

Introduction .01-.02

Fiduciary Responsibilities to Meet Donor Restrictions .03-.08

Net Asset Classes .09-.11

Net Assets with Donor Restrictions .12-.22

Noncontrolling Interests .23-.25

Reclassifications of Net Assets .26

Expiration of Donor-Imposed Restrictions .27-.47

Disclosures .48-.54

Changing Net Asset Classifications Reported in a Prior Year .55

Auditing .56-.58

12 Revenues and Receivables from Exchange Transactions .01-.25

Introduction .01-.02

Difference between Revenues and Gains .03-.05

Recognition, Measurement, and Display of Revenue .06-.14

Receivables from Exchange Transactions .15-.17

Auditing .18-.24

Appendix A — Implementation Guidance for FASB Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) .25

13 Expenses, Gains, and Losses .01-.142

Introduction .01

Expenses .02-.06

Expense Recognition Issues .07-.34

Gains and Losses .35-.50

Functional Reporting of Expenses .51-.132

Income Taxes .133

Auditing .134-.139

Supplement A — Accounting for Joint Activities .139

Supplement B — Examples of Applying the Criteria of Purpose, Audience, and Content to Determine Whether a Program or Management and General Activity Has Been Conducted .140

Supplement C — Allocation Methods for Joint Costs .141

Supplement D — Examples of Disclosures .142

14 Reports of Independent Auditors .01-.30

Reports on Financial Statements .01-.02

Reports on Comparative Financial Statements and Presentation of Comparative Information .03-.08

Unmodified Opinions .09

Modified Reports and Departures from Unmodified Opinions .10

Going Concern .11

Reporting on Supplementary Information .12-.14

Special Considerations .15-.16

Reporting Under Other Technical Standards .17-.21

Reporting on Prescribed Forms .22-.25

Reports Required by Government Auditing Standards, the Single Audit Act Amendments of 1996, and the Uniform Guidance .26-.30

15 Tax and Regulatory Considerations .01-.74

Introduction .01-.03

Internal Revenue Service .04-.38

Income Tax Positions .39-.43

Deferred Tax Assets and Liabilities .44-.45

State and Local Regulations .46-.56

Securities Regulation .57-.60

Sarbanes Oxley and Governance Policies .61-.63

Executive Compensation .64-.67

Other Regulatory Activities .68-.70

Auditing .71-.74

16 Fund Accounting .01-.23

Introduction .01

Fund Accounting and External Financial Reporting .02-.05

Unrestricted Current (or Unrestricted Operating or General) Funds .06-.07

Restricted Current (or Restricted Operating or Specific-Purpose) Funds .08-.09

Plant (or Land, Building, and Equipment) Funds .10-.14

Loan Funds .15-.16

Endowment Funds .17-.19

Annuity and Life-Income (Split-Interest) Funds .20-.21

Agency (Or Custodian) Funds .22

Summary .23

Appendix

A FASB Accounting Standards Codification 958, Not-For-Profit Entities, Topic Hierarchy

B The New Revenue Recognition Standard: FASB ASC 606

C The New Leases Standard: FASB ASC 842

D Information Sources

E Overview of Statements on Quality Control Standards

F Schedule of Changes Made to the Text From the Previous Edition

Glossary

Index of Pronouncements and Other Technical Guidance

Subject Index