INTRODUCTORY MATERIAL

• PREFACE
• PEER REVIEW OF THIS GUIDE
• HOW TO USE THE GUIDE
• ACKNOWLEDGMENTS
• ACKNOWLEDGMENT OF COPYRIGHTS
• ABOUT THE AUTHORS . . .
• LIST OF SUBSTANTIVE CHANGES AND ADDITIONS

CHAPTER 1: BACKGROUND INFORMATION

• 100 INTRODUCTION
  • What Is a Nonprofit Organization?
    • IRS Definition.
  • Types of Nonprofit Organizations
    • IRS Classification.
    • FASB Classification.
  • Voluntary Health and Welfare Entities
    • FASB ASC 958 Definition.
    • Nonauthoritative Guidance in the Black Book.
    • Example Voluntary Health and Welfare Organizations.
    • Other Organizations Concentrating on Health, Welfare, or Community Services.
    • Classification of National Headquarters May Differ.
  • Governmental Nonprofit Organizations
    • The Effect of GASB Statement No. 34 on Governmental Nonprofit Organizations.
  • Nonprofit Organizations Covered and Not Covered by This Guide
• 101 SIMILARITIES BETWEEN NONPROFIT ORGANIZATIONS AND BUSINESS ENTERPRISES
• 102 DIFFERENCES BETWEEN NONPROFIT ORGANIZATIONS AND BUSINESS ENTERPRISES
  • Differences in Organizational Goals
  • Differences in Sources and Uses of Resources
    • Grants.
    • Payment for Providing Goods or Services.
    • Support from Members.
    • Support from the General Public.
    • Revenue from Investments.
    • Multiple Methods or Sources of Funding.
    • Differences between Resource Providers and Beneficiaries.
  • Different Measurement of Performance
    • No Single Performance Indicator.
    • More Complex Measurement.
  • Personnel and Management Differences
    • Volunteer Governing Boards.
    • Restrictions on Recruitment, Hiring, and Compensation.
    • Job Security and Turnover.
    • Employee Training and Skills.
    • Volunteer Personnel.
  • Differences in Accounting and Control Matters
    • Importance of Budgetary Accounting.
    • Determining Fiscal Year.
    • Cash or In-kind Matches.
    • Other Budget and Funding Source Requirements.
  • Different Constraints on Activities
    • Eligibility Requirements.
    • IRS Requirements.
    • Funding Source Requirements.
    • State Fund-raising Requirements.
• 103 EFFECT OF DIFFERENCES ON THE AUDIT
• 104 AUTHORITATIVE LITERATURE
  • General Literature
    • Generally Accepted Accounting Principles.
    • Generally Accepted Auditing Standards.
  • Specific Accounting Literature
  • Specific Auditing Literature
  • Generally Accepted Auditing Standards (GAAS)
    • Defining Professional Responsibility.
    • Use of the Terms Must and Should.
    • Clarified Auditing Standards.
    • Effective Date.
    • Subsequently Issued Standards.
    • Form and Structure of the Standards.
    • AU-C Section Organization.
    • Preface.
    • Overall Objectives and Requirements.
    • Interpretive Publications.
    • Other Auditing Publications.
  • Quality Control
    • Statement on Quality Control Standards.
    • Quality Control Auditing Standard.
  • Implementation of the Clarified Auditing Standards
    • Implementation in This Guide.
    • Major Changes in Practice.
    • Other Changes in Practice.
  • Specific Ethics Literature
  • Specific Government Pronouncements
• 105 ACCOUNTING STANDARDS FOR NONPROFIT ORGANIZATIONS
  • History
  • Objectives of Nonprofit Accounting and Financial Reporting
  • Fund Accounting
    • GAAP Requirements for Presentation of Financial Statements by Fund.
  • Basis of Accounting
• 106 FINANCIAL STATEMENTS OF NONPROFIT ORGANIZATIONS
  • Basic Financial Statements
  • Financial Statement Format
• 107 CURRENT DEVELOPMENTS
  • Sarbanes-Oxley Act of 2002
    • Requirements for All Entities.
    • Impact on the Nonprofit Environment.
  • Current Developments in Nonprofit Accounting and Auditing Standards
    • AICPA Audit and Accounting Guide.
    • Accounting Standards Updates.
    • The FASB Not-for-Profit Advisory Committee.
    • Significant Proposed Accounting Standards.
  • Other Governance and Accountability Standards
    • The Panel on the Nonprofit Sector Reports.
    • Other.
  • Current Events Affecting Nonprofit Organizations
• 108 AUDIT REQUIREMENTS OF NONPROFIT ORGANIZATIONS
  • Reasons for Audits of Nonprofit Organizations
  • Requirements of GAAS Related to Compliance with Laws and Regulations
  • Government Auditing Standards
    • The Yellow Book's Ethical Principles.
    • Yellow Book Independence Requirements.
    • Yellow Book Competence and Continuing Education Requirements.
    • Yellow Book Communication Requirements.
    • Yellow Book Professional Judgment Requirements.
    • Yellow Book Reporting Requirements.
    • Yellow Book Quality Control and Assurance Requirements.
  • Single Audit Requirements
  • Resources for Auditors
• 109 REVIEWS OF INTERIM FINANCIAL INFORMATION
  • Applicability
    • Overall Objectives and Approach.
    • Additional Information.
• 110 THE PPC AUDIT PROCESS
  • Practice Aids
• 111 ORGANIZATION OF THIS GUIDE
  • Chapter 2--Pre-engagement Activities
  • Chapter 3--Risk Assessment Procedures and Planning
  • Chapter 4--Assessing Risks and Developing the Detailed Audit Plan
  • Chapter 5--Substantive Procedures
  • Chapter 6--Testing Internal Control
  • Chapter 7--Audit Sampling in a Nonprofit Organization Audit Engagement
  • Chapter 8--Audit Documentation
  • Chapter 9--Special Accounting and Auditing Considerations for Nonprofit Organizations
  • Chapter 10--Tax Considerations in Audits of Nonprofit Organizations
  • Chapter 11--Concluding the Audit
  • Chapter 12--Financial Statements of Nonprofit Organizations
  • Chapter 13--Auditor's Reports
  • Chapter 14--Single Audits
  • Chapter 15--Compilation and Review Procedures
  • Practice Aids

CHAPTER 2: PRE-ENGAGEMENT ACTIVITIES

• 200 INTRODUCTION AND AUTHORITATIVE LITERATURE
  • Introduction
  • Authoritative Literature
• 201 OBJECTIVES AND REQUIREMENTS
  • Objectives
  • Requirements
• 202 CLIENT ACCEPTANCE AND CONTINUANCE
  • Preconditions for an Audit
    • Financial Reporting Framework.
    • Agreement of Management.
    • Management-imposed Limitation on Scope.
  • Risk-based Perspective
  • Client Acceptance: Decision-making Process
  • Prospective Client's Reputation
    • Sources of Information.
  • Communication with a Predecessor
  • Assessment of Services
  • Independence Requirements--GAAS
    • Nonattest Services.
    • Staff Members on Loan.
    • Unpaid Fees.
    • Client Employee.
    • Financial Interests.
    • Other Independence Requirements.
  • Independence Requirements--Government Auditing Standards
    • Major Independence Differences from the 2007 Yellow Book.
    • Required Period of Independence.
    • The Meaning of Independence.
    • Conceptual Framework for Independence.
    • Independence Threat Identified after Report Is Issued.
    • Nonaudit Services.
    • Documentation.
  • Meeting Other Professional Standards and Requirements
    • Competency.
    • Condition of the Financial Reporting System.
    • Ability to Meet Time Requirements and Deadlines.
    • Ability to Meet Funding Source Audit Requirements.
    • Integrity and Objectivity.
    • Use of Third-party Service Providers.
    • Degree of Competition.
    • Adequacy of Fees.
    • Specialized Procedures When Using the Work of Another Auditor.
  • Engagement Acceptance Forms
  • Annual Evaluation for Continuing Engagement
• 203 ESTABLISHING TERMS OF THE ENGAGEMENT
  • Documenting the Understanding with the Client
  • Reasons for an Engagement Letter
    • Overcoming Client Resistance.
  • Compliance Audit Engagement Letter Considerations
    • Required Communications.
    • Clarification of Report Distribution.
    • Nonaudit Services.
    • Engagement Letters for Yellow Book Audits.
    • Additional Communications Required for Single Audits.
    • Additional GAAS Requirements for Compliance Audits.
  • Suggested Content of Engagement Letter
  • Using the Engagement Letter to Improve Client Assistance
  • Multi-year Engagement Letters
  • Sample Engagement Letters
  • Change in the Terms of an Audit Engagement
    • Change in the Level of Service.
    • Unacceptable Change in the Level of Service.
    • Change in Financial Reporting Framework.
    • Document Change in the Terms of an Engagement.
  • Early Communication with Those Charged with Governance
  • Privacy Considerations under the Health Insurance Portability and Accountability Act (HIPAA)
• 204 USING THE ENGAGEMENT LETTER TO LIMIT LIABILITY
  • Legal Protection Clauses
    • Loss Limitation and Indemnification Clauses.
    • Time Limitation Clauses.
    • Undertaking-to-be-truthful Clause.
    • Protecting the Statute of Limitations Defense.
    • Collection of Fees and Expenses Relating to Client Litigation When the Auditor Is Not a Party.
    • Notification of Report Reproduction.
  • Alternative Dispute Resolution
    • Arbitration.
    • Mediation.
    • Other ADR Techniques.
    • Effect on Independence.
• 205 INITIAL ENGAGEMENTS
  • Objectives and Requirements
    • Objectives.
    • Requirements.
  • Audit Procedures in an Initial Engagement
    • Preliminary Knowledge of Client.
    • Opening Balances.
    • Consistency.
    • Considerations Specific to Nonprofit Organizations.
  • Replacing a Predecessor Auditor
    • Consideration of Predecessor's Independence and Competence.
    • Review of the Predecessor's Workpapers.
    • Consideration of Reporting Options.
  • Initial Audit of an Unaudited Nonprofit Organization
  • Pre-engagement Forms Related to Initial Audit
• 206 USE OF SERVICE ORGANIZATIONS
  • Objectives and Requirements
    • Objectives.
    • Requirements.
  • Determining Whether a Service Organization's Services Are Part of the Client's Information System
  • Fraud, Noncompliance with Laws and Regulations, and Uncorrected Misstatements Related to Activities at the Service Organization
  • Obtaining an Understanding of the Service Organization's Services and Internal Control
  • Obtaining an Understanding or Testing Service Organization Controls
  • Using Service Auditor's Reports
    • Types of Service Auditor's Reports.
    • Using a Service Auditor's Report.
• 207 USE OF A SPECIALIST
  • Objectives and Requirements
    • Objectives.
    • Requirements.
  • Using the Work of an Auditor's Specialist
    • Examples of Auditor's Specialists.
    • General Requirements.
    • Client Notification.
    • Determining the Need for a Specialist.
    • Competence, Capabilities, and Objectivity.
    • Understanding the Specialist's Field of Expertise.
    • Agreement with the Specialist.
    • Evaluating the Adequacy of the Specialist's Work.
    • Considering the Nature, Timing, and Extent of Audit Procedures.
    • References to the Specialist in the Auditor's Report.
  • Using the Work of a Management's Specialist
    • Competence, Capabilities, and Objectivity.
    • Understanding the Work of a Management's Specialist.
    • Evaluating the Work of a Management's Specialist.
  • Other Specialists
    • Specialists on the Engagement Team.
  • Government Auditing Standards Requirements
    • Technical Knowledge.
    • Continuing Professional Education.
• 208 AUDITS OF GROUP FINANCIAL STATEMENTS
  • Overview and Definitions
    • Approach to Presentation of Group Audit Requirements.
    • Definitions Relevant to Group Audits.
  • Objectives and Requirements
    • Objectives.
    • Requirements.
  • Determining Whether to Act as the Auditor of Group Financial Statements
  • Identifying Components and Significant Components
    • Identifying Components.
    • Significant Components.
  • Determining Whether to Make Reference to the Audit of a Component Auditor
  • Communications with Component Auditors
  • Obtaining Sufficient Appropriate Evidence on Group Financial Statements
    • Group-wide Controls.
    • Consolidation Process.
    • Component Materiality.
    • Additional Procedures When Assuming Responsibility for the Work of Component Auditors.
  • Other Group Audit Requirements
    • Audit Reporting.
    • Identification of Subsequent Events.
    • Communications with Management and Those Charged with Governance.
    • Group Audit Documentation.
  • Special Group Audit Considerations
    • Using Other Auditors in Situations Other Than Group Audits.

CHAPTER 3: RISK ASSESSMENT PROCEDURES AND PLANNING

• 300 INTRODUCTION AND AUTHORITATIVE LITERATURE
  • Authoritative Literature
  • Objectives and Requirements
    • Objectives.
    • Requirements.
  • Nature of Audit Planning
  • The Risk Assessment Process
    • Procedures Performed.
    • Understanding Obtained.
    • Decisions and Judgments Made.
    • Summary of Risk Assessment Process.
  • The Sequence of Audit Planning
  • Organization of This Chapter
• 301 RISK ASSESSMENT AND OTHER PLANNING PROCEDURES
  • Types of Risk Assessment Procedures
    • Nature, Timing, and Extent--General Considerations.
    • Gathering Other Information Needed to Identify Fraud Risks.
    • Using the Results of Risk Assessment Procedures Performed in Prior Periods.
    • Specialized Considerations for Nonprofit Organizations.
  • Inquiries of Management and Others
    • Matters and Parties of Inquiry.
    • Government Auditing Standards Requirements.
    • Fraud-related Inquiries.
    • Related Party Inquiries.
    • Inquiries about Accounting Estimates.
    • Inquiries about Compliance with Laws and Regulations.
    • Inquiries Related to Service Organizations.
    • Documentation.
  • Analytical Procedures
    • Using Analytical Procedures When Large Audit Adjustments Are Expected.
    • The Value of Preliminary Analytical Procedures in Risk Identification.
    • Analytical Procedures Related to Revenue.
    • Documentation.
  • Observation and Inspection
    • Documentation.
  • Discussion among the Engagement Team
    • Matters to Be Discussed.
    • Impact on Significant Audit Areas.
    • Who Attends the Discussion?
    • When Does the Discussion Occur?
    • Other Matters That May Be Discussed.
    • Documentation.
  • Other Sources of Information for Identifying Risks of Material Information
• 302 UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT
  • Introduction
  • Specialized Considerations for Nonprofit Organizations
  • Components of the Understanding
    • Documentation.
    • Special Considerations When Performing a Single Audit.
    • Purpose of This Section.
  • Activity, Regulatory, and Other External Factors
    • AICPA Audit Risk Alert.
    • AICPA Not-for-Profit Entities Risk Alert.
    • AICPA Audit Risk Alert for Single Audits.
    • Possible Risk Assessment Procedures and Factors to Consider.
    • Funding Source and Legal Requirements.
    • Economic and Political Considerations.
  • Nature of the Entity
    • Risk Assessment Procedures and Factors to Consider.
  • Objectives, Strategies, and Related Operating Risks
    • Risk Assessment Procedures and Factors to Consider.
  • Measurement and Review of the Entity's Financial Performance
    • Risk Assessment Procedures and Factors to Consider.
  • Selection and Application of Accounting Policies and Accounting Estimates
    • Risk Assessment Procedures.
  • Fraud Risk Factors
    • Examples of Fraud Risk Factors.
    • Auditor's Considerations of Fraud Risk Factors.
• 303 THE UNDERSTANDING OF INTERNAL CONTROL
  • Components of Internal Control
  • Nature of the Auditor's Understanding
  • Extent of the Auditor's Understanding
  • Understanding Controls Related to Significant Risks and Risks for Which Substantive Procedures Alone Are Not Sufficient
  • Effect of Information Technology (IT) on Internal Control
    • Considering Whether Specialized IT Skills Are Needed to Understand Internal Control.
  • How Are the Results of the Understanding Used?
  • A Practical Approach for Obtaining an Understanding of Internal Control
    • Develop an Overall Strategy for Understanding Internal Control.
    • Perform Scoping Activities.
    • Evaluate the Design and Implementation of Entity-level Controls.
    • Evaluate the Design and Implementation of Activity-level Controls.
    • Document the Understanding of Internal Control.
  • Considering Control Objectives and Key Controls
    • Control Objectives.
    • Key Controls.
    • Do Not Forget about Indirect or Complementary Controls and Controls over Spreadsheets.
    • Consider Segregation of Duties.
• 304 UNDERSTANDING ENTITY-LEVEL CONTROLS
  • Control Environment
    • What Is the Control Environment?
    • Characteristics of Nonprofit Organizations That Affect Internal Control.
    • Control Objectives.
    • Risk Assessment Procedures and Factors to Consider.
    • Considering Management Control Consciousness.
    • Impact of the Control Environment in Assessing Risk.
    • Documentation of the Control Environment.
  • Risk Assessment
    • The Entity's Fraud Risk Assessment and Monitoring.
    • Control Objectives.
    • Risk Assessment Procedures and Factors to Consider.
    • Documentation of the Client's Risk Assessment Process.
  • Information and Communication
    • Information.
    • Communication.
    • Documentation of the Understanding of Information and Communication.
  • Monitoring
    • Additional COSO Guidance on Monitoring.
    • Risk Assessment Procedures and Factors to Consider.
    • Consideration of Internal Audit Function.
    • Documentation of the Client's Monitoring Process.
  • IT Environment and General Computer Controls
    • IT Environment.
    • General Computer Controls.
    • Documenting the IT Environment and General Computer Controls.
• 305 UNDERSTANDING ACTIVITY-LEVEL CONTROLS
  • Financial Reporting System
    • Understanding the Financial Close and Reporting Process.
    • Identifying Significant Transaction Classes.
    • Understanding the Flow of Information for Significant Transaction Classes.
    • Control Objectives.
    • Risk Assessment Procedures.
    • Walkthroughs.
  • Control Activities
    • Obtaining an Understanding of Control Activities.
    • When Is an Additional Understanding of Control Activities Necessary?
    • Control Activities for Contributions.
    • Control Activities for Governmental Financial Assistance Programs.
    • Control Activities for Other Areas.
  • Documenting Activity-level Controls
    • Documenting the Financial Reporting System and Walkthroughs.
    • Documenting Control Activities.
• 306 PLANNING DECISIONS AND JUDGMENTS
  • Determining Materiality at the Financial Statement Level
    • Quantifying Planning Materiality.
    • Desirability of a Single Benchmark.
    • Benchmarks.
    • Selecting a Percentage.
    • Adapting the Approach to Nonprofit Organizations.
    • Documenting Planning Materiality Using the PPC Approach.
  • Determining Materiality for Particular Items of Lesser Amounts
    • Documentation.
  • Determining Performance Materiality
    • A Practical Approach to Determining Performance Materiality.
  • Implementing Use of Performance Materiality
    • Caution on Use of Planning Materiality for Evaluation.
  • Clearly Trivial Misstatements
    • Documentation Requirements--Materiality.
  • Single Audit Materiality
  • Assessing Risks of Material Misstatement at the Financial Statement Level
    • Responding to Risks at the Financial Statement Level.
    • Documentation.
  • Establishing an Overall Audit Strategy
    • Significant Engagement Factors, Results of Preliminary Engagement Activities, and Knowledge Gained on Other Engagements.
    • Nature, Timing, and Extent of Resources.
    • Timing of Further Audit Procedures.
    • Effect of Information Technology (IT) on Audit Strategy.
    • Timing of Developing the Audit Strategy.
    • Revising the Initial Audit Strategy.
    • Communicating with Those Charged with Governance.
    • Documentation.
• 307 CONSIDERATION OF FRAUD
  • Introduction
  • Types of Misstatements Caused by Fraud
    • Misstatements Resulting from Fraudulent Financial Reporting.
    • Misstatements Resulting from Misappropriation of Assets.
  • The Auditor's Responsibility for Fraud Detection
    • Immaterial Misstatements Caused by Fraud.
  • The Importance of Exercising Professional Skepticism
  • The Auditor's Fraud Risk Assessment Process
    • Practice Aids for Documenting the Fraud Risk Assessment.
  • Fraud Consulting Services
• 308 CONSIDERATION OF LAWS AND REGULATIONS
  • GAAS Guidance on Auditing Compliance with Laws and Regulations
    • Responsibilities When Planning the Audit.
    • Provisions with a Direct Effect.
    • Provisions of Other Laws and Regulations.
  • Government Auditing Standards Requirements
    • Requirements Related to Laws and Regulations.
    • Compliance Auditing.
    • Requirements Related to Abuse.
    • Requirements Related to Ongoing Investigations or Legal Proceedings.
    • Developing Elements of a Finding.
    • Communication Requirements.
• 309 GENERAL PLANNING PROCEDURES AND FORMS
• 310 PLANNING THE AUDIT TIME ESTIMATE
  • Managing Client Assistance to Improve Efficiency
    • Schedules Prepared by the Client.
• APPENDIX 3A: Common Control Objectives by Audit Area and Transaction Class

CHAPTER 4: ASSESSING RISKS AND DEVELOPING THE DETAILED AUDIT PLAN

• 400 INTRODUCTION AND AUTHORITATIVE LITERATURE
  • Authoritative Literature
• 401 THE CONCEPT OF FINANCIAL STATEMENT ASSERTIONS
  • Assertions for Classes of Transactions
  • Assertions for Account Balances
  • Assertions for Presentation and Disclosure
  • Relevant Assertions
  • Implementation of Assertion Categories
    • Using the PPC Approach.
• 402 IDENTIFYING RISKS OF MATERIAL MISSTATEMENT AT THE RELEVANT ASSERTION LEVEL
  • Gathering Information from Risk Assessment and Other Planning Procedures
  • Synthesizing the Information
    • Why Is Synthesis Important?
    • Synthesis Considerations.
    • Considering the Type of Risk.
    • Considering Pervasiveness of the Risk.
    • Considering What Can Go Wrong at the Assertion Level.
    • Considering Fraud Conditions.
    • Considering Magnitude of the Risk.
    • Synthesis Questions.
  • Identifying Risks of Material Misstatement
    • Articulating Risks.
    • Examples of Synthesis.
  • Documenting Identified Risks
  • Assessing Identified Risks
• 403 ASSESSING RISKS OF MATERIAL MISSTATEMENT AT THE RELEVANT ASSERTION LEVEL
  • The Audit Risk Model
  • Risk of Material Misstatement
  • Assessing the Risk of Material Misstatement at the Relevant Assertion Level
    • PPC Approach.
    • General Risk Assessment Factors.
    • Determining Significant Audit Areas.
    • Describing Specific Risks of Material Misstatement.
    • Determining the Documentation Approach to Be Used When Assessing the Risk of Material Misstatement.
    • Assessing Inherent Risk.
    • Assessing Control Risk.
    • Assessing the Combined Risk of Material Misstatement.
    • Documenting the Risk of Material Misstatement.
    • Responding to the Risk Assessment.
• 404 CONSIDERING FRAUD RISKS
  • Specialized Considerations for Nonprofit Organizations
  • Fraud Risk Factors
  • Identifying Risks of Material Misstatement Due to Fraud
    • Considering Fraud Conditions.
    • The Synthesis Process.
    • Articulating Fraud Risks.
    • Presumption of Revenue Recognition as a Fraud Risk.
  • Assessing Risk of Material Misstatement Due to Fraud
    • Considering Mitigating Controls.
  • Responding to Fraud Risks
  • Documenting Risks of Material Misstatement Due to Fraud
• 405 RESPONDING TO THE RISK ASSESSMENT AND PREPARING THE DETAILED AUDIT PLAN
  • Determining the Audit Approach
    • Limited Procedures Approach.
    • Choosing between Core Audit Programs and Specified Risk Audit Programs.
    • Basic and Extended Approaches (Core).
    • Specified Risk Approach.
    • Documenting the Response.
  • Types of Substantive Procedures and Audit Strategies
    • Basic Types of Substantive Procedures.
    • Limited, Basic, and Extended Approaches.
    • Specified Risk Approach.
  • Tailoring the Audit Programs
    • Core and Specified Risk Programs Provide Starting Points.
    • Initial Audit Programs.
    • Electronic Tools.
    • Core Audit Programs.
    • Specified Risk Audit Programs.
    • Can the Auditor Use a Combination of Core Audit Programs and Specified Risk Audit Programs?
    • PPC's SMART Practice Aids.
    • Initial Audit Programs.
  • Documentation Requirements

CHAPTER 5: SUBSTANTIVE PROCEDURES

• 500 INTRODUCTION AND AUTHORITATIVE LITERATURE
  • Introduction
  • Considerations in a Single Audit
  • Authoritative Literature
• 501 OBJECTIVES AND REQUIREMENTS
  • Objectives
  • Requirements
• 502 SUBSTANTIVE PROCEDURES REQUIRED IN EVERY AUDIT
  • Material Account Balance, Transaction Class, or Disclosure
  • Other Required Procedures
    • Financial Close and Reporting Process.
    • Management Override of Controls.
    • Significant Risks.
    • Other Specific Requirements.
  • Documentation
• 503 CHOOSING SUBSTANTIVE PROCEDURES
  • Considering the Sufficiency and Appropriateness of Audit Evidence
  • Nature, Timing, and Extent of Substantive Procedures
  • Basic Types of Substantive Procedures
  • Selecting Appropriate Substantive Procedures
    • Considering the Account Being Tested.
    • Considering the Financial Statement Assertion.
    • Considering the Nature of Risks Identified.
    • Considering the Degree of Risk.
    • Considering the Available Evidence.
    • Considering the Effectiveness and Efficiency of Substantive Procedures.
  • Choosing between Analytical Procedures and Substantive Tests of Details
• 504 CONFIRMATION PROCEDURES
  • Types of Confirmations
  • Confirmation Design
  • Electronic Confirmations
  • Timing of Confirmation Procedures
  • Selecting the Accounts to Be Confirmed
  • Management Refuses to Allow External Confirmations
  • Alternative Procedures
  • Evaluating Confirmation Results
  • Nontraditional Confirmations
  • Using Client Personnel to Clear Confirmation Exceptions
• 505 TESTS OF DETAILS
  • Confusion about Tests of Details of Transactions
  • Selecting Items for Testing
  • Required Documentation
• 506 SUBSTANTIVE ANALYTICAL PROCEDURES
  • Types and Purposes of Analytical Procedures
    • What Are Analytical Procedures?
    • Purposes of Analytical Procedures.
    • What Distinguishes Substantive Analytical Procedures?
  • How to Design Effective Substantive Analytical Procedures
    • First Ask Management.
    • Consider the Budgetary Process.
    • Identify Comparables.
    • Talk to Operating Personnel.
  • Consider Whether Circumstances Are Favorable to Substantive Analytical Procedures
    • Audit Area or Type of Account.
    • Likely Cause of Potential Misstatements.
    • Availability of Reliable Data.
    • Precision of Expectation.
    • Efficiency.
    • Specialized Considerations for Nonprofit Organizations.
  • Using Computer Software to Help Perform the Analytical Procedures
    • Data Extraction Software (DES).
  • Analytical Procedures and Fraud Detection
    • Corroboration of Explanations.
  • Analytical Procedures and Interim Testing
  • Analytical Procedures and Accounting Estimates
  • How to Identify and Evaluate Significant Differences
    • Evaluating the Significance of Differences.
    • Corroborating the Explanation of Differences.
  • How to Document Substantive Analytical Procedures
  • Practice Aids
• 507 OTHER ISSUES RELATED TO SUBSTANTIVE PROCEDURES
  • The Use of Audit Evidence from Prior Periods
  • Responding to Fraud Risks
    • Overall Responses.
    • Specific Responses.
    • Professional Skepticism.
    • Responding to the Risk of Misappropriation of Assets.
    • Responses to Further Address the Risk of Management Override of Controls.
    • Effect on Audit Programs.
    • Documenting Fraud Risk Responses.
  • Completeness--the Elusive Assertion
    • Procedures Related to Completeness.
    • Observation and Inquiry.
    • Analytical Procedures.
    • Tests of Details of Transactions.
    • Management Representations.
• 508 TIMING OF SUBSTANTIVE PROCEDURES
  • Interim Audit Procedures
    • Evaluating the Practicality of Performing Interim Audit Procedures.
    • Choosing an Interim Date.
    • Audit Risk Considerations.
    • Account Considerations.
    • Financial Reporting System Considerations.
    • Testing the Remaining Period.
    • Evaluating Audit Results.

CHAPTER 6: TESTING INTERNAL CONTROL

• 600 INTRODUCTION
  • Unique Considerations for Nonprofit Organizations
  • Authoritative Literature
• 601 OBJECTIVES AND REQUIREMENTS
  • Objective
  • Requirements
• 602 INTERNAL CONTROL TESTING--AN OVERVIEW
  • Practical Considerations Related to Tests of Controls
  • Basic Approach to Tests of Controls
• 603 DECIDING WHETHER TO TEST CONTROLS
  • A Unique Consideration for Nonprofit Organizations--Single Audit Requirements
  • The Risk Assessment Includes an Expectation of Operating Effectiveness
    • Materiality and Inherent Risk Considerations.
    • Feasibility of Performing Tests.
    • Audit Efficiency Considerations.
    • Considerations When Performing a Single Audit.
  • Substantive Procedures Alone Do Not Provide Sufficient Audit Evidence
    • Examples of When Testing Controls May Be Necessary.
    • Controls over Contributions.
• 604 DECIDING WHICH CONTROLS TO TEST
  • Improperly Designed Controls or Controls Not Implemented
  • Tests of Controls versus Processes
  • Controls Relevant to Identified Risks for Relevant Assertions
  • Key Controls
  • Indirect or Complementary Controls
  • Easy-to-test Controls
• 605 SELECTING APPROPRIATE PROCEDURES
  • Nature and Types of Tests of Controls
    • Inquiry and Observation.
    • Inspection of Documents, Reports, or Electronic Files.
    • Walkthroughs.
    • Reviews of Reconciliations and Similar Bookkeeping Routines.
    • Reperformance of the Control Activity.
• 606 PERFORMING TESTS OF CONTROLS
  • Timing of Tests of Controls
    • Interim Testing of Controls.
    • Using Audit Evidence Obtained in Previous Audits.
  • Extent of Tests of Controls
    • Use of Audit Sampling in Tests of Controls.
    • Sampling Considerations for a Nonprofit Organization.
  • Concurrent Tests of Controls and Substantive Procedures
  • Efficiency Opportunities in Testing Controls
    • Using Compliance Audit Tests in Financial Statement Audits.
• 607 TESTING IT RELATED CONTROLS
  • How a Client's Computer Affects Internal Control
  • Types of Computer Controls
    • Application Controls.
    • General Controls.
  • Approaches to Testing Computer Controls
    • Test Manual User Controls.
    • Test Automated Application Controls and Manual Follow-up Activities.
    • Test General Controls and Manual Follow-up Activities.
    • Need for a Specialist to Test Computer Controls.
  • Testing Procedures
    • Testing Procedures for Manual Follow-up Activities.
    • Testing Procedures Using CAATs.
• 608 EVALUATING TESTS OF CONTROLS AND ASSESSING CONTROL RISK
  • Evaluating the Evidence about Operating Effectiveness
    • Sampling in Tests of Controls.
    • Evaluating the Operating Effectiveness of Controls at a Service Organization.
    • Considering Evidence from Substantive Procedures.
    • Communicating Internal Control Deficiencies.
  • Considering the Amount of Audit Evidence Necessary to Support a Control Risk Assessment
    • Type of Evidence.
    • Source of Evidence.
    • Considering Evidence about the Operation of Entity-level Controls.
  • Assessing Control Risk at Reduced Levels Based on Risk Assessment Procedures
  • Effect of the Control Risk Assessment on Substantive Procedures
    • Using the PPC Approach.
• 609 DOCUMENTING TESTS OF CONTROLS AND THE CONTROL RISK ASSESSMENT
  • Practice Aids
    • "Test of Controls Form."
    • "Activity and Entity-level Control Forms."
    • Memo.

CHAPTER 7: AUDIT SAMPLING IN A NONPROFIT ORGANIZATION AUDIT ENGAGEMENT

• 700 INTRODUCTION AND AUTHORITATIVE LITERATURE
  • Authoritative Literature
    • Single Audit Literature.
  • Means of Selecting Items for Testing
    • Selecting All Items.
    • Selecting Specific Items.
    • Audit Sampling.
  • Definitions
    • Audit Sampling.
    • Tolerable Misstatement.
    • Statistical Sampling.
    • Basis for the PPC Approach to Audit Sampling.
  • Uses of Audit Sampling
    • Substantive Tests of Account Balances.
    • Substantive Tests of Transactions.
    • Tests of Controls.
    • Tests of Compliance with Laws and Regulations.
  • Sampling Guidance for Single Audits
• 701 OBJECTIVES AND REQUIREMENTS
• 702 PLANNING THE EXTENT OF SUBSTANTIVE PROCEDURES
  • STEP 1 Assess the Appropriate Level of Tolerable Misstatement
  • STEP 2 Determine an Amount for Individually Significant Dollar Items
    • Case Study--Identifying Individually Significant Dollar Items.
  • STEP 3 Identify Unusual Items
    • Prior Experience.
    • Results of Analytical Procedures.
    • Unusual Characteristics.
  • STEPS 4 and 5 Consider the Remaining Balance
    • Comparing the Remaining Balance to Tolerable Misstatement.
    • Considering the Need to Apply Additional Audit Procedures to the Remaining Balance.
  • Worksheet for Planning the Extent of Substantive Procedures
  • The Importance of Identifying Individually Significant Items
• 703 REQUIREMENTS THAT APPLY TO ALL AUDIT SAMPLES
  • The Basic Requirements
  • Defining Population and Sampling Unit
    • Defining the Population.
    • Defining the Sampling Unit.
    • Considering the Completeness of the Population.
  • Representative Selection
    • Selecting Sample Items.
    • Choosing a Method.
    • Simple Random Selection Using Random Numbers.
  • Performing the Sampling Application
  • Evaluation and Other Requirements
    • Evaluating Sample Results.
    • Additional Requirements.
• 704 SUBSTANTIVE TESTS OF DETAILS
  • Planning Considerations
    • Assessing Risk of Incorrect Acceptance.
    • Assessing Tolerable Misstatement.
    • Assessing Expected Misstatement.
    • Considering Population Size.
    • Relating Factors to Determine Sample Size.
  • A Practical Approach to Nonstatistical Sampling
    • An Example Using the Approach.
  • Selecting the Sample
    • Using Data Extraction Software to Select the Sample.
  • Projecting the Misstatement
  • Considering Sampling Risk
    • Unacceptable Sampling Risk.
  • Evaluating Sample Results
  • Considering Qualitative Characteristics
  • Documentation of Substantive Sampling Applications
  • Alternative Approach for Substantive Tests of Transactions
• 705 TESTS OF CONTROLS USING AUDIT SAMPLING
  • Specialized Considerations for Nonprofit Organizations
  • The Use of Audit Sampling in Tests of Controls
  • Terminology for Sampling in Tests of Controls
  • STEP 1 Identify Controls and Related Substantive Procedures
  • STEP 2 Consider Whether Testing Controls Is Practical
  • STEPS 3 and 4 Select and Perform Tests of Controls
    • Define Deviations.
    • Define the Population.
    • Determine the Tolerable Rate of Deviation.
    • Determine the Allowable Risk of Overreliance.
    • Determine the Expected Rate of Deviations.
    • Compute Sample Size.
    • Determine Sample Selection Method.
  • STEP 5 Evaluate the Results of Tests of Controls Involving Sampling
    • Practical Implications if Deviations Are Found.
  • STEP 6 Assess Control Risk
  • STEP 7 Documenting Tests of Controls Involving Sampling
  • Using Data Extraction Software for Sampling in Tests of Controls
  • Other Aspects of Evaluating Sample Results
  • Test of Controls in a Single Audit
• 706 TESTS OF COMPLIANCE WITH LAWS AND REGULATIONS
• 707 AN EFFICIENT APPROACH TO TESTS OF TRANSACTIONS USING ATTRIBUTE SAMPLING
  • Conditions for Using Attribute Sampling Approach
    • Other Related Procedures.
    • Low Rate of Monetary Misstatement.
  • Sample Size for Substantive Tests of Transactions
    • Sample Size of 25.
    • Sample Size of 60.
  • Documentation of the Attribute Sampling Approach to Substantive Tests of Transactions
  • Applicability of Approach to Substantive Tests of Transactions
• 708 CASE STUDIES ON AUDIT SAMPLING IN A NONPROFIT ORGANIZATION ENGAGEMENT
  • Defining the Population--An Accounts Payable Example
    • Question.
    • Recommended Approach.
  • Applicability of Attribute Sampling Approach to Tests of Transactions
    • Question.
    • Recommended Approach.

CHAPTER 8: AUDIT DOCUMENTATION

• 800 INTRODUCTION AND AUTHORITATIVE LITERATURE
  • Introduction
  • Authoritative Literature
    • Government Auditing Standards, 2011 Revision.
    • OMB Circular A-133.
• 801 OBJECTIVES AND REQUIREMENTS
  • Objective
  • Requirements
• 802 PURPOSES AND BASIC REQUIREMENTS OF WORKPAPERS
  • Support for Auditor's Report
  • Basic Requirements for Content
  • Documenting Specific Items Tested and Other Procedures
  • Documenting the Identification of Preparer and Reviewer
    • Government Auditing Standards Requirements.
  • Documenting Significant Findings or Issues
  • Assembling, Completing, and Making Changes to Audit Documentation
    • Audit Report Date.
    • Report Release Date.
    • Documentation Completion Date.
    • Assembling and Completing the Audit File.
    • Making Changes to the Workpapers.
    • Changes to Permanent File.
• 803 WORKPAPER ORGANIZATION AND ARRANGEMENT
  • General Categories of Workpaper Files
  • Indexing Account Balance Files
• 804 OTHER WORKPAPER CONSIDERATIONS
  • Special Considerations for Yellow Book or Single Audits
  • Government Auditing Standards
    • Documenting Noncompliance with Government Auditing Standards.
  • Retention
    • Government Auditing Standards Requirements.
    • Single Audit Requirements.
  • Ensuring the Integrity of Workpapers
  • Loss or Destruction of Audit Documentation
    • GAO Guidance.
  • Access to Workpapers
    • Government Auditing Standards Requirements.
    • Access by Regulators to Workpapers.
• 805 ELECTRONIC (PAPERLESS) WORKPAPERS
  • Determining Which Documents to Keep in Hardcopy Form
    • Professional Standards.
    • Legal Considerations.
    • Determining What Works Best for the Firm.
    • Scanned Documents.
  • Signatures and Sign-offs
  • Backing up and Archiving
    • Saving Changes to Documents.
    • Backing up Engagements.
    • Archiving Engagements.
    • Software Applications.
  • Retention of Electronic Workpapers
• APPENDIX 8A: Audit Documentation Requirements

CHAPTER 9: SPECIAL ACCOUNTING AND AUDITING CONSIDERATIONS FOR NONPROFIT ORGANIZATIONS

• 900 INTRODUCTION
  • Accounting Guidance
    • Authoritative Guidance.
    • Nonauthoritative Accounting Guidance in the Audit Guide.
  • Responsibility for Fraud Detection
  • Responsibility for Communicating Internal Control Related Matters
  • Auditing Fair Value Measurements and Disclosures
  • Fair Value Accounting Considerations
    • Nonauthoritative Guidance on Fair Value Measurement Tailored for Nonprofit Organizations.
    • Fair Value Option.
• 901 CASH
  • Accounting Considerations
  • Internal Control Considerations
  • Auditing Considerations
    • Special Considerations for the Use of Electronic Bank Confirmations.
    • Bank Reconciliations.
    • Concentration of Credit Risk Disclosures.
    • Liquidity Restrictions.
    • Counting Cash.
    • Common Cash Overauditing Tendencies.
    • Common Cash Underauditing Tendencies.
  • Common Cash Fraud Schemes, Symptoms, and Related Audit Responses
• 902 INVESTMENTS
  • Investments Held by Nonprofit Organizations
  • Accounting Considerations--Equity Securities with Readily Determinable Fair Values and All Debt Securities
    • Basis of Valuation.
    • Fair Value Measurement and Disclosure Considerations.
    • Misappropriation of Securities.
    • Investment Income and Gains and Losses.
    • Impact of Laws on Net Appreciation of Endowment Funds.
    • Investment Expenses.
  • Accounting Considerations--Derivative Instruments
    • Definition.
    • Embedded Derivative Instruments.
    • Recognition and Measurement.
  • Accounting Considerations--Other Investments, Including Alternative Investments
    • Recognition and Measurement.
    • Cost Method Investments.
    • Investments in Entities That Calculate Net Asset Value Per Share.
  • Accounting Considerations--Investment Pools
  • Accounting Considerations--Investment Revenue Recorded on a Total Return Basis
  • Internal Control Considerations
  • Auditing Considerations
    • Specific Audit Considerations for Certain Investments.
  • Common Investment Fraud Schemes, Symptoms, and Related Audit Responses
• 903 CONTRIBUTIONS AND PROMISES TO GIVE
  • What Is a Contribution?
  • Accounting Considerations--Contributions
    • Restricted Support.
    • Unrestricted Support.
    • Special Considerations--Special Events.
    • Special Considerations--Guarantees of the Organization's Debt.
  • Internal Control Considerations--Contributions
    • Special Considerations--Cash Contributions.
  • Auditing Considerations--Contributions
    • Review for Restrictions.
    • Testing Completeness.
    • Consideration of Fraud.
  • Common Contributions Fraud Schemes, Symptoms, and Related Audit Responses
  • Accounting Considerations--Unconditional Promises to Give
    • Promises to Give with Payments Due in Future Periods.
    • Promises to Give Cash--Expected to Be Collected in Less Than One Year.
    • Promises to Give Cash--Expected to Be Collected in More Than One Year.
    • Promises to Give Noncash Assets--Expected to Be Collected in Less Than One Year.
    • Promises to Give Noncash Assets--Expected to Be Collected in More Than One Year.
    • Contributions Restricted to Acquisition of Long-lived Assets.
    • Donated Facilities and Services.
    • Donated Collections.
    • Interest-free or Below-market-interest Loans.
    • Subsequent Measurement of Unconditional Promises to Give.
  • Internal Control Considerations--Promises to Give
  • Auditing Considerations--Promises to Give
    • Confirmations.
    • Valuation of Promises to Give.
    • Collectibility of Promises to Give.
    • Consideration of Fraud.
  • Common Promises to Give Fraud Schemes, Symptoms, and Related Audit Responses
  • Additional Considerations Related to Contributions and Promises to Give
    • Conditional Transfers and Conditional Promises to Give.
    • Intentions to Give.
    • Agency Transactions.
    • Transfers That Are Not Contributions Because They Are Revocable, Repayable, or Reciprocal.
  • Accounting Considerations--Contributions That Arise from Split-interest Agreements
    • Types of Split-interest Agreements.
    • Accounting for Revocable Split-interest Agreements.
    • Accounting for Irrevocable Split-interest Agreements.
    • Internal Control Considerations.
    • Auditing Considerations.
• 904 PROGRAM SERVICE FEES, REVENUE, AND RECEIVABLES
  • Revenue Recognition as a Fraud Risk
  • Service Fees
    • Accounting Considerations for Service Fees.
    • Auditing Considerations for Service Fee Revenues.
    • Auditing Considerations for Service Fee Receivables.
    • Overauditing Tendencies for Receivables.
    • Underauditing Tendencies for Receivables.
    • Other Considerations.
  • Sales Revenue
    • Accounting Considerations.
    • Auditing Considerations.
  • Affinity Programs
  • Third-party Reimbursements
    • Accounting Considerations.
    • Auditing Considerations.
  • Grants
    • Accounting Considerations.
    • Auditing Considerations.
• 905 DONATED MATERIALS, LONG-LIVED ASSETS, FACILITIES, AND SERVICES
  • Donated Long-lived Assets and Facilities
    • Accounting Considerations.
    • Auditing Considerations.
  • Contributed Services
    • Accounting Considerations.
    • Internal Control Considerations.
    • Auditing Considerations.
    • Consideration of Fraud.
  • Common Overauditing and Underauditing Tendencies for Donated Materials, Long-lived Assets, Facilities, and Services
• 906 EXPENSES FOR PROGRAM AND SUPPORTING SERVICES
  • Program Service Expenses
  • Supporting Services Expenses
    • Management and General.
    • Fund-raising.
    • Membership Development.
  • Classification of Expenses
    • Natural (Object) Classification.
    • Functional Classification.
    • Accounting Considerations.
  • Allocation of Costs
    • Internal Control Considerations.
    • Auditing Considerations.
  • Fund-raising Costs
    • Accounting Considerations.
    • Costs of Activities That Include Fund-raising.
    • Auditing Considerations.
  • Matching Funds
  • Contributions and Grants to Others
    • Accounting Considerations.
    • Auditing Considerations.
  • Loans Made in Lieu of Grants
    • Accounting Considerations.
    • Auditing Considerations.
  • Payments to Affiliated Organizations
• 907 PAYROLL AND RELATED LIABILITIES
  • Internal Control Considerations
  • Auditing Considerations
  • Employee Benefits
    • Accounting Considerations.
    • Postemployment Benefit Plans.
    • Postretirement Defined Contribution Plans.
    • Postretirement Defined Benefit Plans.
    • Auditing Considerations.
  • Common Payroll Fraud Schemes, Symptoms, and Related Audit Responses
• 908 INVENTORIES
  • Accounting Considerations
    • Agency Transactions Involving Donated Materials and Supplies.
  • Internal Control Considerations
  • Auditing Considerations
    • The Need for Physical Counts.
• 909 PROPERTY AND EQUIPMENT
  • Accounting Considerations--Property and Equipment
    • Initial Values of Property and Equipment.
  • Accounting Considerations--Collections
  • Accounting Considerations--Depreciation
  • Impairment of Long-lived Assets
  • Asset Retirement Obligations
  • Internal Control Considerations--Property and Equipment
  • Internal Control Considerations--Collections
  • Auditing Considerations--Property and Equipment
  • Auditing Considerations--Depreciation
  • Auditing Considerations--Collections
    • Obtain an Understanding of Controls.
    • Review Donor Restrictions.
    • Consider Physical Inspection.
  • Common Property and Equipment Fraud Schemes, Symptoms, and Related Audit Responses
• 910 DEBT AND OTHER LIABILITIES
  • Accounting and Auditing Considerations
    • Loans Made in Lieu of Grants.
    • Guarantees.
  • Overauditing and Underauditing Tendencies for Debt and Other Liabilities
  • Common Debt and Other Liabilities Fraud Schemes, Symptoms, and Related Audit Responses
• 911 NET ASSETS
  • Reclassifications
  • Designations
  • Disclosure
  • Auditing Considerations
• 912 STATEMENT OF ACTIVITIES ACCOUNTS
  • Overauditing and Underauditing Tendencies for Statement of Activities Accounts
  • Common Cash Disbursement Fraud Schemes, Symptoms, and Related Audit Responses

CHAPTER 10: TAX CONSIDERATIONS IN AUDITS OF NONPROFIT ORGANIZATIONS

• 1000 INTRODUCTION
  • Worldwide Economic Crisis Update
  • Content and Organization of This Chapter
  • Formation of a Tax-exempt Organization
    • IRS Management of the Determination Process.
  • Increased Scrutiny and Oversight of Nonprofit Organizations
    • Scrutiny by Congress.
    • The Independent Sector.
    • Recent Legislation.
  • Internal Revenue Service
    • The Tax Exempt and Government Entities (TE/GE) Division.
    • Obtaining Information.
    • IRS Website and Social Media Resources.
    • Publications and Notices.
    • IRS Enforcement Actions.
    • Impact of National and International Disasters.
    • Basis of Tax Exemption.
    • Select Check.
• 1001 OPERATION OF A TAX-EXEMPT ORGANIZATION
  • Limitations and Requirements on Exempt Organizations
    • No Private Inurement.
    • Penalties against Individuals.
    • Lobbying Activities.
    • Political Intervention.
    • Public Advocacy.
    • Bipartisan Campaign Reform Act of 2002.
    • Section 527 Political Organizations.
    • Other Lobbying Disclosure Rules.
    • Annual Filing Requirements.
    • Disclosure Requirements.
    • Some Special Considerations for Form 990.
    • Investments in Alternative Investments and Foreign Partnerships.
  • Notification to Contributors about Tax Deductibility of Contributions
    • Nondeductible Contributions.
    • Written Acknowledgment of Contributions.
    • Substantiation Requirements for Payroll-based Contributions.
    • Donations of Property Valued at More Than $5,000.
    • Requirement to Notify the IRS of Dispositions of Contributed Property.
    • IRA Distributions.
    • Qualified Intellectual Property Contributions.
    • Quid Pro Quo Contributions.
    • Voluntary Disclosures.
  • Automobile Donation Programs
• 1002 PUBLIC CHARITY VERSUS PRIVATE FOUNDATION
  • Advantages of Public Charity Status
  • Private Foundations
    • Disadvantages of Private Foundation Status.
    • Excise Tax on Investment Income.
    • Minimum Required Distribution of Income.
    • Excess Business Holdings.
    • Prohibited Transactions.
• 1003 UNRELATED BUSINESS INCOME TAX
  • Classifying Income
    • Related Income.
    • Unrelated Business Income.
    • Exclusions from Unrelated Business Income.
  • Computation of Tax on Unrelated Business Income
  • Tax Shelters, Abusive Tax-avoidance Transactions (ATATs), and Accommodation Parties
  • Carrying over Unrelated Net Operating Losses
  • Special Considerations for Social Clubs
  • Corporate Sponsorship Payments
  • Associate Members' Dues
  • Investments in S Corporations
    • S Corporations, Charitable Family Limited Partnerships, and Conversions of Charities to S Corporations.
  • Payments from Subsidiaries
  • Ancillary Services
  • Real Estate Transactions
    • Low-income Housing.
    • New Markets Tax Credit.
  • Affinity Cards
  • Mailing List Sales
• 1004 OTHER TAX EXEMPTIONS
• 1005 STATE AND LOCAL FILING CONSIDERATIONS
  • Filing Requirements
  • Fund-raising
  • State Enforcement Action
  • Local Government Laws and Regulations
• 1006 IRS EXAMINATIONS
  • The 2012-2013 Priority Guidance Plan
  • IRS Scrutiny of Fund-raising Expenses
  • 403(b) Tax-sheltered Annuity Plans and 457 Deferred Compensation Plans
  • Social Clubs
  • Tax-exempt Bonds
  • Charitable Split-dollar Insurance Plans
  • Other Current Developments and Areas of IRS Interest
• 1007 TAX CONSIDERATIONS DURING THE AUDIT
  • Tax Planning
  • Use of Websites and Social Media
  • Recording Tax Provisions
  • Treatment and Disclosure of Tax-related Uncertainties or Disclosures
  • Compliance with Tax Laws
  • Filing Federal and State Reports and Returns
  • Understanding State Regulations and Requirements
  • Practice Aids on Tax Considerations

CHAPTER 11: CONCLUDING THE AUDIT

• 1100 INTRODUCTION AND AUTHORITATIVE LITERATURE
  • Authoritative Literature
  • 2011 Revision of Government Auditing Standards
• 1101 COMMITMENTS AND CONTINGENCIES
  • Accounting Standards
    • Commitments.
    • Contingencies.
    • Guarantees.
  • Audit Procedures
• 1102 ENVIRONMENTAL REMEDIATION LIABILITIES
  • Applicability to Nonprofit Organizations
  • Accounting Standards
  • Audit Procedures
• 1103 LITIGATION, CLAIMS, AND ASSESSMENTS
  • Introduction and Authoritative Literature
  • Objectives and Requirements
  • Inquiry of Legal Counsel
  • Pending or Threatened Litigation
  • Materiality Limit in the Legal Request
  • Unasserted Claims and Assessments
  • Other Matters
  • Client Has Not Consulted a Lawyer
  • Evaluation of Lawyers' Responses
  • Dating of Lawyer's Response
• 1104 WRITTEN REPRESENTATIONS
  • Introduction and Authoritative Literature
  • Objectives and Requirements under Clarified Standards
  • Written Representations to Be Obtained
  • Audit Adjustments
  • Modifications for a Nonprofit Organization
    • Modifications from the Audit Guide.
    • Other Modifications.
    • Alternative Wording.
  • Materiality
  • Periods Covered by the Letter
  • Signatures on the Representation Letter
  • Dating of the Letter and Updating Letters
    • Updating Letters.
  • Receipt of the Letter
  • Reliance on Management's Representations
• 1105 SUBSEQUENT EVENTS REVIEW
  • Introduction and Authoritative Literature
  • Objectives and Requirements
  • Dating the Auditor's Report and Subsequent Events Footnote
  • Types of Subsequent Events
  • Subsequent Events Review Procedures
• 1106 RELATED PARTIES
  • Introduction and Authoritative Literature
    • Accounting Standards.
    • Auditing Standards.
  • Objectives and Requirements
  • Audit Procedures
    • Substantiating Material Related Party Transactions.
    • Related Party Transactions and Fraud.
• 1107 GOING CONCERN CONSIDERATIONS
  • Objectives and Requirements
  • Evaluating the Entity's Ability to Continue as a Going Concern
  • Assessing Results of Audit Procedures
  • Conditions and Events
  • Consideration of Management Plans
  • Procedures When There Is Substantial Doubt
    • Documentation Requirements.
  • Proposed Accounting Standard on Going Concern
• 1108 RISKS AND UNCERTAINTIES
  • Scope and Applicability
    • Applicability.
    • OCBOA Financial Statements.
    • Excluded Items.
  • Disclosures about Risks and Uncertainties
    • Nature of Operations.
    • Use of Estimates.
    • Certain Significant Estimates.
    • Current Vulnerability Due to Concentrations.
    • Summary of Disclosure Requirements.
    • Wording the Disclosures.
  • Audit Procedures
    • Significant Estimates.
    • Current Vulnerability Due to Concentrations.
• 1109 ACCOUNTING ESTIMATES AND FAIR VALUE
  • Objectives and Requirements under Clarified Standards
    • Objectives.
    • Requirements.
  • Accounting Estimates
    • Auditing Accounting Estimates.
    • Responding to the Assessed Risks of Material Misstatement.
    • Significant Risks.
    • Evaluating the Reasonableness of Estimates and Determining Misstatements.
    • Disclosures.
    • Indicators of Possible Management Bias.
    • Documentation.
  • Fair Value Measurements and Disclosures
    • Accounting Standards.
    • Auditing Fair Value Measurements and Disclosures.
• 1110 CONSIDERING THE ACCUMULATED RESULTS OF AUDIT PROCEDURES
  • Reevaluating Risk Assessments and Evaluating Audit Evidence
  • Evaluating Significant Unusual Transactions
  • Considering the Application of Significant Accounting Principles for Bias
  • Documentation Requirements
  • Evaluating the Existence of Fraud
    • Fraud Risk Assessment Is an Ongoing Process.
    • Required Procedures.
• 1111 ANALYTICAL PROCEDURES AND REVIEW OF WORKPAPERS
  • Analytical Procedures
    • Introduction and Authoritative Literature.
    • Objective and Requirements.
    • Overall Review.
  • Review of Workpapers
    • Introduction and Authoritative Literature.
    • Objectives and Requirements.
    • Quality Control System.
    • Detailed Review of Audit Work.
    • Supervisory Review.
    • Review Checklists.
    • Sole Practitioners.
    • Tax Department Review.
    • Engagement Quality Control Review.
    • Is Workpaper Review Required before Dating the Auditor's Report?
• 1112 SUMMARIZATION AND EVALUATION
  • Introduction and Authoritative Literature
  • Objectives and Requirements
  • Nature of Misstatements
  • Categories for Evaluation
  • Audit Differences
    • Types of Misstatements.
    • Communication and Correction of Misstatements.
  • Evaluating Audit Differences
    • Uncorrected Misstatements.
    • Clearly Trivial Misstatements.
    • Evaluating Estimates.
    • Different Materiality Levels for Different Amounts, Subtotals, or Totals.
    • Qualitative Considerations.
    • Risk of Possible Undetected Misstatements and Overall Evaluation.
  • Evaluating the Existence of Fraud
  • Evaluating Noncompliance and Abuse--Government Auditing Standards Requirements
  • Documentation Requirements
  • Summary of Audit Differences
    • Treatment of Prior-year Waived Adjustments.
    • Applying the Rollover and Iron Curtain Methods.
    • Dual Approach Recommended.
    • Workpaper Format for Summary.
  • Evaluation of Overall Materiality
  • Analysis of Audit Time
  • Consultation on Technical Issues
• 1113 DRAFTING FINANCIAL STATEMENTS AND THE AUDITOR'S REPORT
  • Drafting Financial Statements
    • Government Auditing Standards Requirements.
  • Disclosure Checklist
  • Drafting the Auditor's Report
    • Authoritative Literature.
    • Dating the Auditor's Report.
  • Discussion with Management
    • Unresolved Issues.
    • Internal Control Related Matters, Errors, and Fraud.
    • Other Matters.
• 1114 COMMUNICATING INTERNAL CONTROL RELATED MATTERS
  • Introduction and Authoritative Literature
  • Definitions
  • Objectives and Requirements
  • Identifying Control Deficiencies
    • Examples of Deficiencies.
  • Evaluating Identified Deficiencies
    • Indicators of Material Weaknesses.
    • Factors Affecting the Magnitude of a Potential Misstatement.
    • Factors Affecting Whether There Is a Reasonable Possibility of a Misstatement.
  • PPC's Process for Evaluating the Severity of Deficiencies
  • Combination of Identified Deficiencies
  • Prudent Official Test
  • Control Deficiency Evaluation Worksheet
  • Control Deficiency Comment and Management Point Development Worksheet
  • Practice Issue #1--Can the Auditor Draft the Financial Statements?
  • Practice Issue #2--Auditor Identifies a Material Misstatement
  • Communication of Identified Deficiencies
    • Required Communications.
    • Significant Deficiencies and Material Weaknesses Remediated During the Audit.
    • Significant Deficiencies and Material Weaknesses Previously Communicated (but Not Remediated).
  • Contents of the Communication
    • Level of Detail Included in Written Communication.
  • Timing of the Communications
  • Reporting When There Are No Significant Deficiencies
  • Reporting When There Are No Material Weaknesses
  • Illustrative Communications
  • Yellow Book and Single Audit Reporting Requirements
  • Management's Response
  • Other Internal Control Deficiencies
  • Additional Guidance on Communicating Internal Control Matters
• 1115 COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE
  • Introduction and Authoritative Literature
  • Objectives and Requirements
  • Identifying Those Charged with Governance
  • Effective Two-way Communication
  • Matters to Be Communicated
    • The Auditor's Responsibilities under GAAS.
    • Planned Scope and Timing of the Audit.
    • Significant Findings from the Audit.
    • Uncorrected Misstatements.
    • When All Those Charged with Governance Are Not Involved in Management.
    • When the Auditor Is Restricted from Communicating with Those Charged with Governance.
  • The Communication Process
    • Timing of Communications.
  • Forms of Communication
  • Evaluation of the Adequacy of the Auditor's Communication
  • Documentation of Communications
  • Other Requirements to Communicate with Those Charged with Governance
  • Communication with Those Charged with Governance in a Compliance Audit
• 1116 COMMUNICATION OF FRAUD AND VIOLATIONS OF LAWS AND REGULATIONS
  • Introduction and Authoritative Literature
  • Objectives and Requirements
  • When Fraud or a Violation of Laws and Regulations May Have Occurred
  • Communications about Possible Fraud or Violations of Laws and Regulations
  • Communications about Fraud, Noncompliance, and Abuse--Government Auditing Standards Requirements
    • Reporting Directly to Outside Parties.
• 1117 USE OF MANAGEMENT LETTERS
  • Additional Guidance on Management Letters
• 1118 ENGAGEMENT SUMMARY MEMORANDUM (ESM)
  • Content of the ESM
    • Background Information.
    • Recap of Risk Assessments.
    • Summary of Financial Results.
    • Significant Accounting and Auditing Issues.
    • Review Performed by the Engagement Partner.
    • Summary of Audit Differences.
    • Summary of Significant Deficiencies and Material Weaknesses.
    • Subsequent Events.
    • Opinion.
    • Report Release Date and the Documentation Completion Date.
    • Subsequent Revisions to Workpapers.
    • Signing the ESM.
    • Specialized Considerations for Nonprofit Organizations.
• 1119 SUBSEQUENT DISCOVERY OF MATTERS AFTER DATE OF REPORT
  • Introduction and Authoritative Literature
  • Objectives and Requirements
  • Subsequent Discovery of Facts Existing at the Date of the Report
  • Consideration of Omitted Procedures
  • Documentation Requirements
• 1120 WORKPAPER FINALIZATION AND RETENTION
  • Assembling and Completing the Audit File
  • Documentation Completion Date
  • Workpaper Retention

CHAPTER 12: FINANCIAL STATEMENTS OF NONPROFIT ORGANIZATIONS

• 1200 INTRODUCTION
• 1201 FINANCIAL STATEMENT REQUIREMENTS
  • Statement of Financial Position
  • Statement of Activities
  • Statement of Functional Expenses
  • Statement of Cash Flows
• 1202 PREPARING FINANCIAL STATEMENTS
  • Financial Statement Format
    • Statement of Financial Position.
    • Statement of Activities.
    • Statement of Cash Flows.
    • Statement of Functional Expenses.
    • Fund Accounting.
    • Comparative Financial Statements.
  • Notes to Financial Statements
  • Nonaccounting Data in Financial Statements
  • OCBOA Financial Statements
    • Income Tax Basis Financial Statements.
    • Presentation of OCBOA Financial Statements.
  • Other Special Purpose Presentations
• 1203 TREATMENT OF AFFILIATED ORGANIZATIONS AND OTHER RELATED ENTITIES
  • Ownership Interests in For-profit Entities
  • Financially Related Nonprofit Organizations
    • Controlling Financial Interest.
    • Economic Interest and Control.
  • Combined (Rather Than Consolidated) Financial Statements
  • Separate Financial Statements of a Component of a Nonprofit Organization
• 1204 ILLUSTRATIVE FINANCIAL STATEMENTS
  • Illustrations in Authoritative Literature
  • Financial Statements in This Guide
    • Illustrative Examples.
    • Schedule of Federal Awards.
  • Note Illustrations
• APPENDIX 12A: Financial Statements with Information about Liquidity and Financial Flexibility Included in the Notes to the Financial Statements
• APPENDIX 12B: Sequenced Statements of Financial Position
• APPENDIX 12C: Classified Statements of Financial Position
• APPENDIX 12D: Multicolumn Statement of Activities

CHAPTER 13: AUDITOR'S REPORTS

• 1300 INTRODUCTION AND AUTHORITATIVE LITERATURE
• 1301 STANDARD REPORT ON BASIC GAAP FINANCIAL STATEMENTS OF NONPROFIT ORGANIZATIONS
  • Objectives and Requirements for a Standard Report
    • Objectives.
    • Requirements.
  • Standard Report--Voluntary Health and Welfare Organization
  • Standard Report--Other Nonprofit Organization
    • Schedule of Functional Expenses Presented as Additional Information.
    • Statement of Functional Expenses Presented as a Basic Financial Statement.
  • Objectives and Requirements for Changes Affecting Consistency
    • Objectives.
    • Requirements.
    • Adoption of New Accounting Principles.
    • Other Changes Affecting Consistency.
  • Standard Report on Financial Statements Issued in Accordance with Government Auditing Standards or in a Single Audit
    • References to Government Auditing Standards.
    • Noncompliance Findings.
    • Communicating Significant Matters.
    • Confidential or Sensitive Information.
    • Reporting on Supplementary Information in Relation to the Financial Statements as a Whole.
    • Part of Reporting Entity Does Not Have a Yellow Book Audit.
    • Single Audit Report Considerations.
    • Report Example.
  • Comparative Financial Statements
    • Comparative Totals.
    • Disclosures and Report Modifications Related to Prior Year Summarized Information.
    • Comparative Statements When Previous Year Has Been Audited by Other Auditors.
  • Combined or Consolidated Financial Statements (Group Financial Statements)
    • Reporting Requirements.
  • Reporting on Financial Statements Covering Periods Less Than 12 Months (Change in Fiscal Year End)
  • Reporting on Financial Statements Covering Periods Longer Than 12 Months
  • Auditor's Report Date
  • Report Release Date
  • International Auditing and Accounting Standards
    • Audit of Component Performed in Accordance with International Standards on Auditing (ISAs).
    • Reporting When the Audit Is Performed in Accordance with ISAs.
    • Reporting on Financial Statements Prepared in Conformity with International Financial Reporting Standards (IFRS).
• 1302 MODIFICATIONS OF THE STANDARD REPORT
  • Modifications to the Auditor's Report
    • Objectives.
    • Requirements.
    • Significant Changes Resulting from Clarified Auditing Standards--Modifications to the Auditor's Report.
    • Pervasive.
    • Significant Changes Resulting from Clarified Auditing Standards--Emphasis-of-matter and Other-matter Paragraphs.
  • Types of Modifications to the Standard Auditor's Report
  • GAAP Departures
    • Qualified Opinions for GAAP Departures--Improper Accounting for Donated Property.
    • Failure to Adopt FASB ASC 958.
  • Scope Limitations
    • Qualified Opinion because of a Scope Limitation.
    • Disclaimer of Opinion because of a Scope Limitation.
    • Scope Limitations and Alternative Investments.
  • Modification Because of an Uncertainty
    • Uncertainties Other Than Going Concern Uncertainties.
    • Going Concern Uncertainties.
  • Modification When the Organization Is Dissolved
  • Report Examples
• 1303 REPORTS ON SPECIAL PURPOSE FRAMEWORKS
  • Authoritative Literature
    • Objective.
    • Requirements.
    • Significant Changes Resulting from Clarified Auditing Standards.
  • Report on Cash Basis Statements
  • Report on Regulatory Basis Statements
    • Report on Regulatory Basis Financial Statements That Are Intended Solely for Internal Use and Regulatory Filing.
    • Report on Regulatory Basis Financial Statements for General Use.
  • Reports on Financial Statements Included in IRS Form 990
    • Report on Form 990 Statements That Are Intended Solely for Regulatory Filings.
    • Report on Form 990 Statements That Are Intended for General Use.
    • Can Form 990 Financial Statements Be Reported on as Tax Basis Financial Statements?
    • Reporting on the Other Information in Form 990.
  • Is Fund Accounting an Acceptable Special Purpose Framework for Nonprofit Organizations?
  • Reports on Tax Basis Statements
  • Report on Basis of Accounting Prescribed in a Contractual Agreement or Certain Regulatory Requirements
  • Report Examples
• 1304 REPORTING ON ADDITIONAL INFORMATION
  • Additional Information in Documents Containing Audited Financial Statements (Other Than Required Supplementary Information)
    • Requirements Related to Other Information under AU-C 720.
    • Requirements for Reporting on Supplementary Information under AU-C 725.
  • Required Supplementary Information
  • Reporting Responsibilities for Budget Information
  • Reporting Responsibilities for Charts and Graphs
  • Condensed Financial Information in Client-prepared Documents
  • Other Information in Electronic Sites Containing Audited Financial Statements
• 1305 REPORTS ON COMPONENTS OF A NONPROFIT ORGANIZATION
• 1306 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS REQUIRED BY GOVERNMENT AUDITING STANDARDS
  • Reporting on Internal Control
  • Reporting on Compliance with Laws and Regulations
  • Reporting Views of Responsible Officials
  • Reporting on Other Matters
  • Management Letters
  • Component Auditors
  • Report Examples
    • Government Auditing Standards Report on Internal Control over Financial Reporting and on Compliance and Other Matters--with No Material Weaknesses, Significant Deficiencies, or Reportable Instances of Noncompliance Identified.
    • Government Auditing Standards Report on Internal Control over Financial Reporting and on Compliance and Other Matters--with Significant Deficiencies and Reportable Instances of Noncompliance, and Other Matters Identified but No Material Weaknesses Identified.
    • Government Auditing Standards Report on Internal Control over Financial Reporting and on Compliance and Other Matters--with Material Weaknesses and Significant Deficiencies and Reportable Instances of Noncompliance, and Other Matters Identified.
• 1307 REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133
  • Reporting on Compliance with Major Program Requirements
    • Report Modifications.
  • Reporting on Internal Control over Major Program Compliance
  • Purpose Alert Paragraph
    • Effective Date for Purpose Alert.
  • Report Examples
    • OMB Circular A-133 Report on Compliance and Internal Control over Compliance--with Unqualified Opinion on Compliance and No Material Weaknesses or Significant Deficiencies.
    • OMB Circular A-133 Report on Compliance and Internal Control over Compliance--with Qualified Opinion on Compliance and Significant Deficiencies and Material Weaknesses.
  • Interim Communication of Deficiencies in Internal Control Over Compliance
• APPENDIX 13A: Standard Report on Basic GAAP Financial Statements
  • APPENDIX 13A-1: Standard Report--Voluntary Health and Welfare Organization
  • APPENDIX 13A-2: Standard Report--Other Nonprofit Organization
  • APPENDIX 13A-3: Standard Report--Report on Supplementary Information Included in the Standard Report--Other Nonprofit Organization
  • APPENDIX 13A-4: Standard Report--Report on Supplementary Information--Separate Report
  • APPENDIX 13A-5: Standard Report on Financial Statements and on the Supplementary Schedule of Expenditures of Federal Awards Issued in Accordance with Government Auditing Standards or in a Single Audit
  • APPENDIX 13A-6: Standard Report on Comparative Financial Statements--Other Nonprofit Organization
  • APPENDIX 13A-7: Standard Report on Comparative Financial Statements with Prior Year Summarized Information--Other Nonprofit Organization
  • APPENDIX 13A-8: Standard Report on Combined or Consolidated Financial Statements--Other Nonprofit Organization
  • APPENDIX 13A-9: Combined or Consolidated (Group) Financial Statements--Other Nonprofit Organization--Reference to Component Auditor
  • APPENDIX 13A-10: Standard Report on Financial Statements Covering Periods Less Than 12 Months (Change in Fiscal Year End)--Other Nonprofit Organization
• APPENDIX 13B: Modifications of the Standard Report
  • APPENDIX 13B-1: GAAP Departures--Improper Accounting for Donated Property--Other Nonprofit Organization
  • APPENDIX 13B-2: Adverse Opinion--GAAP Departures--Pervasive GAAP Departure for Failure to Follow Financial Statement Presentation Requirements of FASB ASC 958--Other Nonprofit Organization
  • APPENDIX 13B-3: Scope Limitations--Qualified Opinion Due to Inability to Obtain Sufficient Appropriate Audit Evidence on Cash Contributions--Other Nonprofit Organization
  • APPENDIX 13B-4: Scope Limitations--Disclaimer of Opinion Due to Inability to Obtain Sufficient Appropriate Evidence of Promises to Give--Voluntary Health and Welfare Organization
  • APPENDIX 13B-5: Report Modification Because of an Uncertainty--Going Concern Uncertainty--Voluntary Health and Welfare Organization
• APPENDIX 13C: Reports on Special Purpose Frameworks
  • APPENDIX 13C-1: Report on Cash Basis Statements
  • APPENDIX 13C-2: Report on Regulatory Basis Financial Statements That Are Intended Solely for Regulatory Filing
  • APPENDIX 13C-3: Report on Regulatory Basis Financial Statements Intended for General Use
  • APPENDIX 13C-4: Report on Form 990 Statements That Are Intended Solely for Regulatory Filing
  • APPENDIX 13C-5: Report on Tax Basis Statements
  • APPENDIX 13C-6: Report on a Contractual Basis of Accounting
• APPENDIX 13D: Report on a Branch--Other Nonprofit Organization
• APPENDIX 13E: Reports on Internal Control over Financial Reporting and on Compliance and Other Matters Required by Government Auditing Standards
  • APPENDIX 13E-1: Government Auditing Standards Report on Internal Control over Financial Reporting and on Compliance and Other Matters--with No Material Weaknesses, Significant Deficiencies, or Reportable Instances of Noncompliance or Other Matters Identified
  • APPENDIX 13E-2: Government Auditing Standards Report on Internal Control over Financial Reporting and on Compliance and Other Matters--with Significant Deficiencies and Reportable Instances of Noncompliance, Other Matters Identified, but No Material Weaknesses Identified
  • APPENDIX 13E-3: Government Auditing Standards Report on Internal Control over Financial Reporting and on Compliance and Other Matters--with Material Weaknesses and Significant Deficiencies and Reportable Instances of Noncompliance, and Other Matters Identified
• APPENDIX 13F: Reports on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and Internal Control over Compliance Required by OMB Circular A-133
  • APPENDIX 13F-1: OMB Circular A-133 Report on Compliance and Internal Control over Compliance--with Unmodified Opinion on Compliance; No Material Weaknesses or Significant Deficiencies
  • APPENDIX 13F-2: OMB Circular A-133 Audit Report on Compliance and Internal Control over Compliance--with Qualified Opinion on Compliance; Material Weaknesses and Significant Deficiencies

CHAPTER 14: SINGLE AUDITS

• 1400 INTRODUCTION AND AUTHORITATIVE LITERATURE
  • Authoritative Literature
    • Government Pronouncements.
    • AICPA Professional Resources.
    • Recent AICPA Developments.
    • Recent GAO Developments.
  • Recent Significant Legislation Related to Federal Awards
    • American Recovery and Reinvestment Act of 2009.
    • Federal Funding Accountability and Transparency Act.
    • Proposed Changes to Single Audit Requirements.
  • PPC's Government Documents Library
    • Website.
    • Government Documents.
  • How to Obtain Government Documents
  • Electronically Accessible Audit Information
• 1401 COMPLIANCE AUDITS
  • Applicability of AU-C 935
  • Definitions of Key Terms
    • Compliance Audit Objectives.
  • Performance Requirements
    • Establish Materiality.
    • Identify Programs and Compliance Requirements to Test.
    • Perform Risk Assessment Procedures.
    • Assess Risks of Material Noncompliance.
    • Assessing Risks of Material Noncompliance Due to Fraud.
    • Perform Further Audit Procedures.
    • Determine Supplementary Governmental Audit Requirements.
    • Request Management Representations.
    • Perform Subsequent Events Procedures.
    • Evaluate the Sufficiency and Appropriateness of Audit Evidence.
  • Reporting Requirements
  • Communication with Those Charged with Governance
  • Documentation
• 1402 APPLICABILITY OF THE SINGLE AUDIT
  • Federal Awards and the Expenditure Threshold
    • Nonfederal Entities.
    • Federal Awards.
    • Federal Financial Assistance.
    • Audit Threshold.
  • Determining the Amount of Federal Awards Expended
    • Basis for Determining Federal Awards Expended.
    • Determining the Amount of Noncash Assistance Expended.
  • Audit Frequency and Periods Covered
    • Frequency of the Audit.
    • Period to Be Included.
• 1403 AMERICAN RECOVERY AND REINVESTMENT ACT
  • OMB Guidance
    • CFDA Numbers for Recovery Act Awards.
    • Clusters of Programs.
    • Major Program Determination.
    • Section 1512 Reporting Requirement for Recipients.
    • Proposed Compliance Supplement Changes.
  • Schedule of Expenditures of Federal Awards
    • Quality Control Reviews.
  • Internal Control Considerations
    • Interim Communication of Control Deficiencies.
  • Other Auditor Considerations
• 1404 FEDERAL FUNDING ACCOUNTABILITY AND TRANSPARENCY ACT
  • Reporting Requirements
  • Audit Requirements
    • Good Faith Effort to Comply with FFATA Reporting Requirements.
    • Proposed Elimination of Audit Requirements.
• 1405 THE COGNIZANT OR OVERSIGHT AGENCY FOR AUDIT
  • Cognizant Agency for Audit
    • Responsibilities of the Cognizant Agency for Audit.
  • Oversight Agency for Audit
    • Responsibilities of the Oversight Agency for Audit.
• 1406 OBJECTIVES AND SCOPE OF THE SINGLE AUDIT
  • Objectives
    • Primary Objectives.
    • Specific Objectives.
  • Scope
  • Major Federal Award Programs
    • Program Identification.
    • Cluster of Programs.
    • Single Audit Risk-based Approach.
    • Type A Three-year Requirement.
    • Option 1 and the Type B Program Cap.
    • Option 2.
    • Selecting Type B Programs.
    • Recovery Act Considerations.
    • Percentage of Coverage Rule and Low-risk Auditee Exception.
    • Special Grantor Requests.
    • First Year Audit Exemption.
    • Low-risk Auditees.
    • Worksheets for Determining Major Programs.
  • Reporting Requirements in a Single Audit
    • Government Auditing Standards.
    • Recovery Act Considerations.
  • Reporting Requirements--Grantor Agency Variations
    • Reporting on Compliance with Laws and Regulations.
    • Reporting on Internal Control.
• 1407 FINANCIAL STATEMENTS AND SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
  • Effect of a Single Audit on Audit of Financial Statements
    • Applicability of GAAP.
  • Schedule of Expenditures of Federal Awards
    • Schedule Requirements.
    • Recovery Act Considerations.
    • CFDA Number Is Not Available.
    • Schedule May Not Agree with Other Federal Award Reports.
    • Major Program Designation.
    • Optional But Recommended Information.
    • Accumulating Information for the Schedule.
    • Auditing the Schedule of Expenditures of Federal Awards.
    • Audit Program for the Schedule of Expenditures of Federal Awards.
    • Common Deficiencies in the Schedule of Expenditures of Federal Awards.
  • Auditor's Report on Financial Statements
    • Reference to Government Auditing Standards.
    • References to Separately Issued Internal Control and Compliance Report.
    • The Auditor's Responsibility for Reporting on the Schedule of Expenditures of Federal Awards.
    • Report Illustrations.
• 1408 CONSIDERATION OF INTERNAL CONTROL IN A SINGLE AUDIT
  • Recovery Act Considerations
  • Obtaining an Understanding of Internal Control
    • Controls at Multiple Locations.
    • Compliance Supplement Guidance.
    • Recovery Act Considerations.
  • Evaluating the Design and Implementation of Controls
  • Assessing Audit Risk of Noncompliance
    • Recovery Act Considerations.
    • Detection Risk of Noncompliance.
    • Assessing the Risk of Material Noncompliance.
  • Assessing Control Risk of Noncompliance
  • Determining Controls to Test
    • Multiple Internal Control Processes.
    • Ineffective Internal Control.
    • Using Results of Prior Years' Tests of Controls.
    • Using Compliance Audit Testwork to Reduce Testwork in the Financial Statement Audit.
  • Performing Tests of the Operating Effectiveness of Controls
  • Sampling in Tests of Controls over Compliance
    • Recovery Act Consideration.
    • Considering Clusters of Programs.
    • Sample Size.
    • Multipurpose Tests.
  • Considering Multiple-components
  • Documentation
  • Evaluating the Results of Tests of Controls
    • Calculating the Deviation Rate.
    • Control Deficiencies.
  • Reporting Responsibilities
    • Report Illustrations.
    • Recovery Act Considerations.
• 1409 CONSIDERING COMPLIANCE WITH LAWS AND REGULATIONS IN A SINGLE AUDIT
  • Audit Risk of Noncompliance Considerations
  • Materiality Considerations
  • Performing a Compliance Audit
  • Identifying Direct and Material Compliance Requirements
    • Identification of Significant Laws and Regulations Applicable to Federal Awards.
    • OMB Circular A-133 Compliance Supplement.
    • Types of Compliance Requirements.
    • Determining Which Requirements to Test.
    • Suggested Audit Procedures.
    • Possible Changes/Additions to Compliance Requirements.
    • Determining Current Compliance Requirements.
    • Recovery Act Considerations.
    • Federal Programs Not Included in the Compliance Supplement.
    • Proposed Compliance Supplement Changes.
  • Planning the Audit of Compliance
  • Performing Tests of Compliance
    • Testing Individually Important Items.
    • Sampling Considerations.
    • Selecting the Sample.
    • Projecting the Sample Results.
    • Evaluating Sample Results.
    • Considering Qualitative Characteristics.
    • Documentation of Sampling Procedures.
    • Obtaining Sufficient Appropriate Audit Evidence.
    • Testing Transactions for Compliance with Requirements Applicable to Major Federal Programs.
    • Suggested Audit Procedures.
  • Consideration of Abuse
  • Consideration of Subsequent Events
  • Evaluating Results of Testing
    • Questioned Costs.
  • Reporting on Compliance
  • Schedule of Findings and Questioned Costs
    • Findings Required to Be Reported.
  • Preparing the Schedule of Findings and Questioned Costs
  • Illustrated Schedules of Findings and Questioned Costs
• 1410 AUDIT PROGRAMS
• 1411 SUBMISSION OF REPORTS FOR A SINGLE AUDIT
  • Reporting Package
  • Financial Statements and Schedules
  • Summary Schedule of Prior Audit Findings
    • Auditor Responsibility to Follow Up on Previously Reported Findings.
  • Corrective Action Plan
    • Information to Be Included in the Corrective Action Plan.
  • Data Collection Form
    • 2013 Data Collection Form--Important Changes Anticipated in New Form.
    • Due Date.
    • Recovery Act Considerations.
  • Responsibility for Submitting Reports
    • Additional Submission by Subrecipients.
• 1412 OTHER MATTERS
  • Responsibility for Subrecipients
    • Pass-through Entity Responsibilities--Recovery Act.
    • Pass-through Entity Responsibilities--Transparency Act.
    • Consideration of Subrecipient Monitoring.
    • OMB Circular A-133 Audit Threshold.
    • Allowable Audit Costs.
  • Written Representations
  • Audit Workpapers
  • Using Internal Auditors
    • Understanding and Evaluating the Internal Audit Function.
    • Extent of Internal Auditors' Work.
    • Using Internal Auditors to Provide Direct Assistance.
  • Restriction on Auditors Preparing Indirect Cost Proposals
  • Using the Work of Component Auditors
  • Audit Quality Concerns in Single Audit Engagements
    • Report on National Single Audit Sampling Project.

CHAPTER 15: COMPILATION AND REVIEW ENGAGEMENTS

• 1500 INTRODUCTION
  • What Are Compilation and Review Engagements?
  • Organization of This Chapter
• 1501 AUTHORITATIVE LITERATURE
  • Accounting Literature
    • Generally Accepted Accounting Principles.
  • Compilation and Review Literature
  • Engagement Conduct Standards
  • Quality Control Standards
• 1502 PRE-ENGAGEMENT AND PLANNING ACTIVITIES
  • Evaluating Engagement Acceptance and Continuance
    • Evaluating Firm Competence, Capabilities, and Resources.
    • Compliance with Legal and Ethical Requirements.
    • Management's Integrity and Reputation.
    • Communication with Predecessor Accountant.
    • Continuing Clients.
    • Engagement Acceptance Form.
  • Evaluating the Level of Service to Be Performed
    • Needs of Users of the Financial Statements.
    • Cost of the Engagement.
    • Independence.
    • Changes in the Level of Service.
  • Establishing Engagement Terms and Completing an Engagement Letter
    • Compilation.
    • Review.
  • Gaining Knowledge of the Client and Its Industry
    • Client Information Form.
• 1503 COMPILATION PROCEDURES
  • Compilation Performance Requirements
    • Actions Necessary When the Information Is Incorrect, Incomplete, or Otherwise Unsatisfactory.
    • Reading the Compiled Financial Statements.
    • Appropriate Workpaper Documentation.
  • Management-use-only Financial Statements
  • Checklists and Practice Aids
• 1504 REVIEW PROCEDURES
  • Review Performance Requirements
    • Designing and Performing Review Procedures.
    • Inquiries and Analytical Procedures.
    • Developing Expectations.
    • Documenting Expectations.
    • Appropriate Workpaper Documentation.
    • Use of Representation Letters.
  • Checklists and Practice Aids
• 1505 WRAP-UP AND OTHER ENGAGEMENT ACTIVITIES
  • Documentation of Procedures
    • Disclosure Checklists.
    • Routing Instructions.
    • Procedures, Review, and Approval Forms.
    • Accounting and Engagement Issues.
  • Required Workpapers for a Compilation Engagement
  • Required Workpapers for a Review Engagement
  • Filing Instructions
  • Subsequent Discovery of Facts Existing at Date of Report
  • Communication of Fraud or Illegal Acts
  • Communication of Internal Control Related Matters
• 1506 REPORTING ON COMPILED OR REVIEWED FINANCIAL STATEMENTS
  • Standard Reports
  • Required Elements of a Compilation Report
  • Required Elements of a Review Report
  • Illustrated Reports
  • Signature
  • Reporting on Financial Statements That Omit Substantially All Disclosures
  • Reporting When the Statement of Cash Flows Is Omitted
  • Reporting on Prescribed Forms under SSARS No. 3
  • Reporting When There Are Departures from an OCBOA or GAAP
  • Reporting When Not Independent

NONPROFIT ORGANIZATION AUDIT--FIRM POLICIES (NPO-FP)

• NPO-FP-1: Audit Team Members

NONPROFIT ORGANIZATION CONFIRMATION AND CORRESPONDENCE LETTERS (NPO-CL)

• NPO-CL-1: Engagement Letters
  • NPO-CL-1.1: Audit Engagement Letter
  • NPO-CL-1.2: Audit Engagement Letter--Single Audit
  • NPO-CL-1.3: Audit Engagement Letter--Yellow Book
  • NPO-CL-1.4: Resignation Letter
• NPO-CL-2: Legal Letters
  • NPO-CL-2.1: Request for Legal Representation--Lawyer Is Requested to Provide Information
  • NPO-CL-2.2: Request for Legal Representation--Lawyer Is Requested to Confirm Information Provided by Client
  • NPO-CL-2.3: Updating Request for Legal Representation
• NPO-CL-3: Management Representations
  • NPO-CL-3.1: Management Representation Letter
  • NPO-CL-3.2: Summary of Audit Differences
  • NPO-CL-3.3: Updating Management Representation Letter
  • NPO-CL-3.4: Minutes Representation Letter
• NPO-CL-4: Internal Control Communications
  • NPO-CL-4.1: Communication of Significant Deficiencies
  • NPO-CL-4.2: Communication of Significant Deficiencies and Material Weaknesses
  • NPO-CL-4.3: Communication of No Material Weaknesses in a Separate Report
• NPO-CL-5: Communication with Those Charged with Governance
  • NPO-CL-5.1: Communication with Those Charged with Governance during Planning
  • NPO-CL-5.2: Communication with Those Charged with Governance at the Conclusion of the Audit
• NPO-CL-6: Cash Confirmations and Letters
  • NPO-CL-6.1: Standard Form to Confirm Account Balance Information with Financial Institutions
  • NPO-CL-6.2: Receipt for Cash Counted by Auditor
• NPO-CL-7: Receivables Confirmations and Letters
  • NPO-CL-7.1: Positive Accounts Receivable Confirmation
  • NPO-CL-7.2: Negative Accounts Receivable Confirmation
  • NPO-CL-7.3: Confirmation of Contributions, Bequests, or Promises to Give Received and Receivable
  • NPO-CL-7.4: Confirmation of Grant, Contract, or Federated Fund-raising Allotment Payments and Receivables
  • NPO-CL-7.5: Confirmation of Note Receivable
• NPO-CL-8: Investments and Securities Confirmations and Letters
  • NPO-CL-8.1: Receipt for Securities Counted by Auditor
  • NPO-CL-8.2: Confirmation of Securities Held by Brokers
  • NPO-CL-8.3: Confirmation of Securities Held by a Third Party
  • NPO-CL-8.4: Confirmation of Alternative Investments
  • NPO-CL-8.5: Confirmation of Charitable Trust Held by a Third Party
• NPO-CL-9: Not Used
• NPO-CL-10: Payables and Debt Confirmations and Letters
  • NPO-CL-10.1: Accounts Payable Confirmation
  • NPO-CL-10.2: Note Payable Confirmation
  • NPO-CL-10.3: Confirmation of Debt for Which No Written Loan Agreement Exists
  • NPO-CL-10.4: Confirmation of Mortgage Debt
  • NPO-CL-10.5: Confirmation of Compensating Balances
  • NPO-CL-10.6: Confirmation of Line of Credit
  • NPO-CL-10.7: Confirmation of Contingent Liabilities with Financial Institutions
  • NPO-CL-10.8: Confirmation of Payments Made to Others under Agreements
• NPO-CL-11: Benefit Plan Confirmations and Letters
  • NPO-CL-11.1: Request for Defined Benefit Plan Information
  • NPO-CL-11.2: Request for Plan Asset Information--Defined Benefit Pension and Other Postretirement Benefit Plans
• NPO-CL-12: Other Confirmations and Letters
  • NPO-CL-12.1: Standard Confirmation Inquiry for Life Insurance Policies
  • NPO-CL-12.2: Confirmation of Insurance Coverage (Except Life Insurance)
  • NPO-CL-12.3: Confirmation of Lease Agreement
  • NPO-CL-12.4: Related Party Questionnaire
  • NPO-CL-12.5: Single Audit Letter to Regulator
  • NPO-CL-12.6: Letter to Client About Regulator Access to Audit Documentation
  • NPO-CL-12.7: Request for Service Auditor's Report
  • NPO-CL-12.8: External Peer Review Report Transmittal Letter
  • NPO-CL-12.9: Data Request Letter
  • NPO-CL-12.10: Client Assistance Request Letter
• NPO-CL-13: Predecessor/Successor Communications
  • NPO-CL-13.1: Request for Predecessor Auditor to Release Information to Successor Auditor
  • NPO-CL-13.2: Letter Granting Successor Auditors Access to Audit Documentation
  • NPO-CL-13.3: Client Consent and Acknowledgment Letter
  • NPO-CL-13.4: Representation from Successor Auditor to Predecessor Auditor--Predecessor's Report Is Reissued
• NPO-CL-14: Group and Other Auditor Communications
  • NPO-CL-14.1: Request for Representations from Component Auditor When Reference Will Be Made
  • NPO-CL-14.2: Request for Representations from Component Auditor When Responsibility Will Be Assumed
  • NPO-CL-14.3: Letter of Instructions from Group Auditor to Component Auditors When Reference Will Be Made
  • NPO-CL-14.4: Letter of Instructions from Group Auditor to Component Auditors When Responsibility Will Be Assumed
  • NPO-CL-14.5: Inquiry of Group Auditor by Component Auditor
  • NPO-CL-14.6: Group Auditor's Response to Inquiries from Component Auditor
  • NPO-CL-14.7: Request for Representations from Other Auditor Who Performs Audit Procedures on Certain Elements, Accounts, or Items in Nongroup Financial Statements
  • NPO-CL-14.8: Letter to Other Auditors Regarding Related Parties

NONPROFIT ORGANIZATION AUDIT CHECKLISTS AND PRACTICE AIDS (NPO-CX)

• NPO-CX-0.1: Application of Practice Aids to Engagements
• NPO-CX-1: Planning and Preliminary Engagement Activities
  • NPO-CX-1.1: Engagement Acceptance and Continuance Form
  • NPO-CX-1.2: ET Interpretation 101-3 Documentation Form
  • NPO-CX-1.3: Evaluating Independence--Government Auditing Standards, 2011 Revision
  • NPO-CX-1.4: Continuing Professional Education Documentation Form
  • NPO-CX-1.5: Single Audit and Major Program Determination Worksheet
  • NPO-CX-1.6: Low-risk Federal Program Determination Worksheet
  • NPO-CX-1.7: High-risk Federal Program Determination Worksheet
• NPO-CX-2: Materiality Worksheets
  • NPO-CX-2.1: Financial Statement Materiality Worksheet for Planning Purposes
  • NPO-CX-2.2: Component Materiality Worksheet
  • NPO-CX-2.3: Planning Materiality--Federal Award Programs
• NPO-CX-3: Understanding the Entity and Identifying Risks
  • NPO-CX-3.1: Understanding the Entity and Identifying Risks
  • NPO-CX-3.2: Engagement Team Discussion
  • NPO-CX-3.3: Fraud Risk Inquiries Form
  • NPO-CX-3.4: Audit Inquiries Summary Form
• NPO-CX-4: Understanding Internal Control
  • NPO-CX-4.1: Understanding the Design and Implementation of Internal Control
  • NPO-CX-4.2: Financial Reporting System Documentation Forms
    • NPO-CX-4.2.1: Financial Reporting System Documentation Form--Financial Close and Reporting, Significant Transaction Classes
    • NPO-CX-4.2.2: Financial Reporting System Documentation Form--IT Environment and General Computer Controls
  • NPO-CX-4.3: Walkthrough Documentation Table
  • NPO-CX-4.4: Not Used
  • NPO-CX-4.5: Internal Control System--Federal Award Programs
• NPO-CX-5: Activity and Entity-level Control Forms
  • NPO-CX-5.1: Entity-level Control Form for Control Environment
  • NPO-CX-5.2: Entity-level Control Form for Risk Assessment
  • NPO-CX-5.3: Entity-level Control Form for Information and Communication
  • NPO-CX-5.4: Entity-level Control Form for Monitoring
  • NPO-CX-5.5: Entity-level Control Form for General Computer Controls
  • NPO-CX-5.6: Control Activities Form for Financial Close and Reporting
  • NPO-CX-5.7: Control Activities Form for Cash
  • NPO-CX-5.8: Control Activities Form for Investments and Derivatives
  • NPO-CX-5.9: Control Activities Form for Support, Receivables, and Receipts
  • NPO-CX-5.10: Control Activities Form for Program Service Fees, Revenue, and Receivables
  • NPO-CX-5.11: Control Activities Form for Donated Materials, Facilities, and Services
  • NPO-CX-5.12: Control Activities Form for Expenses for Program and Supporting Services and Accounts Payable and Other Liabilities
  • NPO-CX-5.13: Control Activities Form for Payroll and Related Liabilities
  • NPO-CX-5.14: Control Activities Form for Inventories
  • NPO-CX-5.15: Control Activities Form for Property and Equipment
  • NPO-CX-5.16: Control Activities Form for Other Assets
  • NPO-CX-5.17: Control Activities Form for Debt and Other Liabilities
  • NPO-CX-5.18: Control Activities Form for Net Assets
  • NPO-CX-5.19: Control Activities Form for Grant and Similar Programs
• NPO-CX-6: Identifying Risk
  • NPO-CX-6.1: Entity Risk Factors
  • NPO-CX-6.2: Fraud Risk Factors
• NPO-CX-7: Risk Assessment
  • NPO-CX-7.1: Risk Assessment Summary Form
  • NPO-CX-7.2: Inherent Risk Assessment Form
  • NPO-CX-7.3: Risk of Material Noncompliance Assessment Worksheet--Federal Award Programs
  • NPO-CX-7.4: Inherent Risk of Noncompliance Assessment Form--Federal Award Programs
• NPO-CX-8: Planning Substantive Procedures
  • NPO-CX-8.1: Planning Worksheet to Determine Extent of Substantive Procedures
  • NPO-CX-8.2: Sampling Planning and Evaluation Form--Substantive Procedures
  • NPO-CX-8.3: Sampling Worksheet for Testing Account Coding and Classifications
  • NPO-CX-8.4: Planning Worksheet to Determine Extent of Substantive Procedures--Federal Award Programs
  • NPO-CX-8.5: Tests of Compliance--Sampling Planning and Evaluation Form for Federal Award Programs
• NPO-CX-9: Analytical Procedures
  • NPO-CX-9.1: Substantive Analytical Procedures Worksheet
  • NPO-CX-9.2: Ratio Analysis Worksheet
• NPO-CX-10: Tests of Controls
  • NPO-CX-10.1: Test of Controls Form
  • NPO-CX-10.2: Tests of Controls Sampling Planning and Evaluation Form
  • NPO-CX-10.3: Tests of Controls--Sampling Form for Federal Award Programs
• NPO-CX-11: Other Checklists for Performing Further Audit Procedures
  • NPO-CX-11.1: Not Used
  • NPO-CX-11.2: Confirmation Summary Form
  • NPO-CX-11.3: Accounts Receivable or Promises to Give Statistics Form
  • NPO-CX-11.4: Not Used
  • NPO-CX-11.5: Not Used
  • NPO-CX-11.6: Documentation and Analysis of Group Components
  • NPO-CX-11.7: Worksheet--Accounting for Costs of Activities That Include Fund-raising
  • NPO-CX-11.8: Checklist of Tax-related Considerations in a Nonprofit Organization Audit
• NPO-CX-12: Evaluating Audit Differences
  • NPO-CX-12.1: Closing Entry and Audit Adjustment Form
  • NPO-CX-12.2: Audit Difference Evaluation Form
  • NPO-CX-12.3: Noncompliance Evaluation Form--Federal Award Programs
• NPO-CX-13: Nonprofit Organization Disclosure Checklist
• NPO-CX-14: Audit Supervision, Review, and Approval Form
• NPO-CX-15: Control Deficiency Worksheets
  • NPO-CX-15.1: Control Deficiency Evaluation Worksheet
  • NPO-CX-15.2: Control Deficiency Comment and Management Point Development Worksheet
  • NPO-CX-15.3: Audit Finding Development Worksheet--Federal Award Programs
• NPO-CX-16: Other Checklists for Concluding the Audit
  • NPO-CX-16.1: Going Concern Checklist
  • NPO-CX-16.2: Significant Estimates Identification Checklist
  • NPO-CX-16.3: Concentrations Identification Checklist
  • NPO-CX-16.4: Accounting and Engagement Issues
  • NPO-CX-16.5: Data Collection Form and Single Audit Reporting Package Worksheet--Periods Ending 2010-2012
  • NPO-CX-16.6: Data Collection Form and Single Audit Reporting Package Worksheet--Periods Ending 2013-2015
  • NPO-CX-16.7: Disclosure Checklist for the Schedule of Expenditures of Federal Awards
• NPO-CX-17: Engagement Administration
  • NPO-CX-17.1: Client Billing Information
  • NPO-CX-17.2: Engagement Status Report
  • NPO-CX-17.3: Audit Time Summary
  • NPO-CX-17.4: Confirmation and Correspondence Control

AUDIT PROGRAMS--CORE (NPO-AP)

• NPO-AP-1: Audit Program for General Planning Procedures
  • Other General Planning Procedures
• NPO-AP-2: Audit Program for General Auditing and Completion Procedures
  • Other General Auditing and Completion Procedures
• NPO-AP-3: Audit Program for Federal Award Programs--General Procedures
• NPO-AP-4: Audit Program for Minutes, Contracts, and Funding Source Agreements
• NPO-AP-5: Audit Program for Cash
• NPO-AP-6: Audit Program for Investments and Derivatives
  • Other Audit Procedures for Investments and Derivatives
• NPO-AP-7: Audit Program for Support, Receivables, and Receipts
  • Other Audit Procedures for Support, Receivables, and Receipts
• NPO-AP-8: Audit Program for Program Service Fees, Revenue, and Receivables
  • Other Audit Procedures for Program Service Fees, Revenue, and Receivables
• NPO-AP-9: Audit Program for Donated Materials, Facilities, and Services
• NPO-AP-10: Audit Program for Expenses for Program and Supporting Services and Accounts Payable and Other Liabilities
  • Other Audit Procedures for Expenses for Program and Supporting Services and Accounts Payable and Other Liabilities
• NPO-AP-11: Audit Program for Payroll and Related Liabilities
  • Other Audit Procedures for Payroll and Related Liabilities
• NPO-AP-12: Audit Program for Inventories
  • Other Audit Procedures for Inventories
• NPO-AP-13: Audit Program for Property and Equipment
  • Other Audit Procedures for Property and Equipment
• NPO-AP-14: Audit Program for Other Assets
  • Other Audit Procedures for Other Assets
• NPO-AP-15: Audit Program for Debt and Other Liabilities
  • Other Audit Procedures for Debt and Other Liabilities
• NPO-AP-16: Audit Program for Net Assets
• NPO-AP-17: Audit Program for Grant and Similar Programs
  • Other Audit Procedures for Grant and Similar Programs
• NPO-AP-18: Audit Program for the Schedule of Expenditures of Federal Awards
• NPO-AP-19: Audit Program for Federal Award Programs Not Included in the Compliance Supplement

AUDIT PROGRAMS--SPECIFIED RISK (NPO-AP-S)

• NPO-AP-1-S: Audit Program for General Planning Procedures--Specified Risk
• NPO-AP-2-S: Audit Program for General Auditing and Completion Procedures--Specified Risk
• NPO-AP-3-S: Not Used
• NPO-AP-4-S: Audit Program for Minutes, Contracts, and Funding Source Agreements--Specified Risk
• NPO-AP-5-S: Audit Program for Cash--Specified Risk
• NPO-AP-6-S: Audit Program for Investments and Derivatives--Specified Risk
• NPO-AP-7-S: Audit Program for Support, Receivables, and Receipts--Specified Risk
• NPO-AP-8-S: Audit Program for Program Service Fees, Revenue, and Receivables--Specified Risk
• NPO-AP-9-S: Audit Program for Donated Materials, Facilities, and Services--Specified Risk
• NPO-AP-10-S: Audit Program for Expenses for Program and Supporting Services and Accounts Payable and Liabilities--Specified Risk
• NPO-AP-11-S: Audit Program for Payroll and Related Liabilities--Specified Risk
• NPO-AP-12-S: Not Used
• NPO-AP-13-S: Audit Program for Property and Equipment--Specified Risk
• NPO-AP-14-S: Audit Program for Other Assets--Specified Risk
• NPO-AP-15-S: Audit Program for Debt and Other Liabilities--Specified Risk
• NPO-AP-16-S: Audit Program for Net Assets--Specified Risk
• NPO-AP-17-S: Not Used
• NPO-AP-18-S: Not Used
• NPO-AP-19-S: Not Used

INITIAL AUDIT PROGRAMS (NPO-IA)

• NPO-IA-1: Additional General Planning Procedures for an Initial Audit
• NPO-IA-2: Additional General Auditing and Completion Procedures for an Initial Audit
• NPO-IA-3: Not Used
• NPO-IA-4: Not Used
• NPO-IA-5: Additional Audit Procedures for Cash Beginning Balance in Initial Audit
• NPO-IA-6: Additional Audit Procedures for Investments and Derivatives Beginning Balance in Initial Audit
• NPO-IA-7: Additional Audit Procedures for Support, Receivables, and Receipts Beginning Balance in Initial Audit
• NPO-IA-8: Additional Audit Procedures for Service Fees, Revenue, and Receivables Beginning Balance in Initial Audit
• NPO-IA-9: Not Used
• NPO-IA-10: Additional Audit Procedures for Accounts Payable and Other Liabilities Beginning Balance in Initial Audit
• NPO-IA-11: Not Used
• NPO-IA-12: Additional Audit Procedures for Inventory Beginning Balance in Initial Audit
• NPO-IA-13: Additional Audit Procedures for Property Beginning Balance in Initial Audit
• NPO-IA-14: Additional Audit Procedures for Other Assets Beginning Balance in Initial Audit
• NPO-IA-15: Additional Audit Procedures for Debt and Other Liabilities Beginning Balance in Initial Audit
• NPO-IA-16: Additional Audit Procedures for Net Assets Beginning Balance in Initial Audit

COMPILATION AND REVIEW PRACTICE AIDS (NPO-CR)

• NPO-CR-1: Engagement Acceptance Form
• NPO-CR-2: Checklist for a Step-down Engagement (Audit to Review or Compilation/Review to Compilation)
• NPO-CR-3: Illustrative Engagement Letters
  • NPO-CR-3.1: Illustrative Engagement Letter--Compilation
  • NPO-CR-3.2: Illustrative Engagement Letter--Review
• NPO-CR-4: Client Information Form
• NPO-CR-5: Procedures, Review, and Approval Forms
  • NPO-CR-5.1: Compilation Procedures, Review, and Approval Form
  • NPO-CR-5.2: Review Procedures, Review, and Approval Form
• NPO-CR-6: Trial Balance Preparation Checklist
• NPO-CR-7: Inquiry and Analytical Procedures Program
• NPO-CR-8: Reporting Checklists and Illustrative Reports
  • NPO-CR-8.1: Compilation Reporting Checklist
  • NPO-CR-8.2: Review Reporting Checklist
  • NPO-CR-8.3: Standard Nonprofit Organization Compilation Report
  • NPO-CR-8.4: Nonprofit Organization Compilation Report--Substantially All Disclosures Omitted
  • NPO-CR-8.5: Standard Nonprofit Organization Review Report
• NPO-CR-9: Illustrative Representation Letter--Review
• NPO-CR-10: Routing Instructions for Processing Financial Statements

Checkpoint Learning

INDEX