1 Introduction .01-.27 Scope .01-.12 GAAP for NFPs .13-.19 Fund Accounting and Net Asset Classes .20-.25 Other Resources for Financial Reporting by NFPs .26-.27 2 General Auditing Considerations .01-.150 Overview .01-.02 Purpose of an Audit of Financial Statements .03-.08 Terms of Engagement .09-.11 Audit Planning Considerations .12-.59 Use of Assertions in Assessment of Risks of Material Misstatement .60-.64 Risk Assessment Procedures .65-.88 Using Risk Assessment to Design Further Audit Procedures .89-.111 Evaluation of Misstatements Identified During the Audit .112-.114 Communication With Those Charged With Governance .115-.121 Completing the Audit .122-.149 Appendix A - Consideration of Fraud in a Financial Statement Audit .150 3 Financial Statements, the Reporting Entity, and General Financial Reporting Matters .01-.197 Introduction .01-.05 Statement of Financial Position .06-.28 Statement of Activities .29-.45 Statement of Cash Flows .46-.58 Comparative Financial Information .59-.61 Reporting of Related Entities, Including Consolidation .62-.125 Mergers and Acquisitions .126-.139 Collaborative Arrangements .140-.141 The Use of Fair Value Measures .142-.175 Financial Statement Disclosures Not Considered Elsewhere .176-.188 Auditing .189-.196 Supplement A - Flowcharts .197 4 Cash, Cash Equivalents, and Investments .01-.110 Cash and Cash Equivalents .01-.04 Investments Discussed in This Chapter .05-.10 Initial Recognition and Measurement of Investments .11-.12 Valuation of Investments Subsequent to Acquisition .13-.44 Investment Income and Expenses .45-.49 Unrealized and Realized Gains and Losses .50-.53 Investments Held as an Agent .54 Investment Pools .55-.61 Endowment Funds .62-.73 Financial Statement Presentation .74-.82 Disclosures .83-.94 Auditing .95-.109 Appendix A - Determining Fair Value of Alternative Investments .110 5 Contributions Received and Agency Transactions 01-.234 Introduction .01-.04 Distinguishing Contributions From Other Transactions .05-.57 Core Recognition and Measurement Principles for Contributions .58-.81 Additional Accounting Considerations for Certain Contributions .82-.171 Measurement Principles for Contributions Receivable .172-.204 Financial Statement Presentation .205-.207 Disclosures .208-.214 Auditing .215-.232 Appendix A - Excerpt From AICPA Financial Reporting White Paper Measurement of Fair Value for Certain Transactions of Not-for-Profit Entities .233 Appendix B - Technical Questions and Answers About Financially Interrelated Entities .234 6 Split-Interest Agreements and Beneficial Interests in Trusts .01-.95 Introduction .01 Types of Split-Interest Agreements .02-.03 Recognition and Measurement Principles .04-.45 Financial Statement Presentation .46-.53 Examples of Split-Interest Agreements .54-.87 Auditing .88-.93 Appendix A - Excerpt From AICPA White Paper Measurement of Fair Value for Certain Transactions of Not-for-Profit Entities .94 Appendix B - Journal Entries .95 7 Other Assets .01-.47 Introduction .01 Inventory .02-.11 Prepaid Expenses, Deferred Costs, and Similar Items .12-.16 Collections and Works of Art, Historical Treasures, or Similar Assets .17-.29 Goodwill .30-.32 Intangible Assets Other Than Goodwill .33-.37 Auditing .38-.47 8 Programmatic Investments .01-.71 Introduction .01-.07 Core Considerations for Accounting and Reporting .08 Loans .09-.52 Equity Instruments .53-.61 Programmatic Equity Investments That Are Consolidated .55 Programmatic Equity Investments Reported Using the Equity Method .56-.58 Guarantees .62 Concentrations of Risk .63 Presentation of Programmatic Investments .64-.69 Program-Related Investments of Private Foundations .70 Auditing .71 9 Property and Equipment .01-.47 Introduction .01-.02 Recognition and Measurement Principles .03-.32 Financial Statement Presentation .33-.38 Auditing .39-.47 10 Debt and Other Liabilities .01-.117 Introduction .01 Fair Value Measurement .02-.08 Municipal Bond Financing and Other Long-Term Debt .09-.87 Tax Liabilities .88 Deferred Revenue .89 Refunds Due to and Advances from Third Parties .90 Promises to Give .91-.95 Split-Interest Obligations .96 Amounts Held for Others under Agency Transactions .97 Revenue Sharing and Other Agreements .98 Exit or Disposal Activities .99 Guarantees .100-.101 Contingencies .102 Pension and Other Defined Benefit Postretirement Auditing .111-.115 Appendix A - Municipal Securities Regulation .116 Appendix B - Auditor Involvement with Municipal Securities Filings .117 11 Net Assets and Reclassifications of Net Assets .01-.58 Introduction .01-.02 Fiduciary Responsibilities to Meet Donor Restrictions .03-.08 Net Asset Classes .09-.11 Net Assets with Donor Restrictions .12-.22 Noncontrolling Interests .23-.25 Reclassifications of Net Assets .26 Expiration of Donor-Imposed Restrictions .27-.47 Disclosures .48-.54 Changing Net Asset Classifications Reported in a Prior Year .55 Auditing .56-.58 12 Revenues and Receivables from Exchange Transactions .01-.25 Introduction .01-.02 Difference between Revenues and Gains .03-.05 Recognition, Measurement, and Display of Revenue .06-.14 Receivables from Exchange Transactions .15-.17 Auditing .18-.24 Appendix A - Implementation Guidance for FASB Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) .25 13 Expenses, Gains, and Losses .01-.142 Introduction .01 Expenses .02-.06 Expense Recognition Issues .07-.34 Gains and Losses .35-.50 Functional Reporting of Expenses .51-.132 Income Taxes .133 Auditing .134-.139 Supplement A - Accounting for Joint Activities .139 Supplement B - Examples of Applying the Criteria of Purpose, Audience, and Content to Determine Whether a Program or Management and General Activity Has Been Conducted .140 Supplement C - Allocation Methods for Joint Costs .141 Supplement D - Examples of Disclosures .142 14 Reports of Independent Auditors .01-.30 Reports on Financial Statements .01-.02 Reports on Comparative Financial Statements and Presentation of Comparative Information .03-.08 Unmodified Opinions .09 Modified Reports and Departures from Unmodified Opinions .10 Going Concern .11 Reporting on Supplementary Information .12-.14 Special Considerations .15-.16 Reporting Under Other Technical Standards .17-.21 Reporting on Prescribed Forms .22-.25 Reports Required by Government Auditing Standards, the Single Audit Act Amendments of 1996, and the Uniform Guidance .26-.30 15 Tax and Regulatory Considerations .01-.74 Introduction .01-.03 Internal Revenue Service .04-.38 Income Tax Positions .39-.43 Deferred Tax Assets and Liabilities .44-.45 State and Local Regulations .46-.56 Securities Regulation .57-.60 Sarbanes Oxley and Governance Policies .61-.63 Executive Compensation .64-.67 Other Regulatory Activities .68-.70 Auditing .71-.74 16 Fund Accounting .01-.23 Introduction .01 Fund Accounting and External Financial Reporting .02-.05 Unrestricted Current (or Unrestricted Operating or General) Funds .06-.07 Restricted Current (or Restricted Operating or Specific-Purpose) Funds .08-.09 Plant (or Land, Building, and Equipment) Funds .10-.14 Loan Funds .15-.16 Endowment Funds .17-.19 Annuity and Life-Income (Split-Interest) Funds .20-.21 Agency (Or Custodian) Funds .22 Summary .23 Appendix A FASB Accounting Standards Codification 958, Not-For-Profit Entities, Topic Hierarchy B The New Revenue Recognition Standard: FASB ASC 606 C The New Leases Standard: FASB ASC 842 D Information Sources E Overview of Statements on Quality Control Standards F Schedule of Changes Made to the Text From the Previous Edition Glossary Index of Pronouncements and Other Technical Guidance Subject Index
