Nonprofit Auditing and Accounting Update (2009–2010 Edition)

• Chapter 1 - Federal Government Activities
  • Introduction
  • The Report on National Single Audit Sampling Project
    • Misreporting of Audit Coverage of Major Federal Programs
    • Unreported Audit Findings
    • Compliance Testing Not Documented as Performed or Not Applicable
    • Deficiencies in Understanding\Testing Compliance Internal Controls
    • Deficiencies in Risk Assessments as Part of Major Program Determination
    • Missing Audit Finding Information
    • Deficiencies in Presentation and Auditing of the SEFA
    • Errors in Management Representations Related to Federal Awards
    • Audit Materiality at the Major Federal Program Level Not Documented
    • Other Kinds of Deficiencies
    • A Discussion Related to Audit Sampling
  • National Single Audit Sampling Project Responses
    • AICPA Responses
    • OIG & OMB Responses
    • GAO Responses
  • Tools to Avoid Single Audit Quality Problems
  • Federal Audit Clearinghouse Activities
    • The Role of the Federal Audit Clearinghouse
    • Important Data Collection Form Developments
  • Revisions to the OMB Compliance Supplement for Single Audits
    • The 2009 Compliance Supplement
    • The American Recovery and Reinvestment Act of 2009
  • HUD Developments
    • HUD Consolidated Audit Guide for Audits of HUD Programs
    • HUD Proposes an Independent Public Accountant Roster
  • The 2007 Revised Yellow Book
    • Purpose of the Yellow Book
    • 2007 Revised Yellow Book
    • GAO Tools Available Related to the Yellow Book
  • Yellow Book CPE Requirements
  • Summary
  • Exercise 1-1 Must I? Should I?
  • Exercise 1-2 SEFA Presentation
    • Directions
• Chapter 2 - AICPA Activities
  • Introduction
  • Additional Risks Auditors Face in 2009-2010
    • AICPA Risk Alert on the Current Economic Crisis
    • AICPA Launches an Economic Crisis Resource Center
    • AICPA Governmental Audit Quality Center
  • Auditing Standards Board Clarity Project
  • SAS No. 115
  • SAS No. 116
  • SAS No. 74 Revision
  • Risk Assessment Standards Questions & Answers
  • Summary
  • Exercise 2-1 Assessing Control Deficiencies When Compensating Controls Exist
  • Exercise 2-2 So what changed?
• Chapter 3 - FASB Activities
  • Introduction
  • The FASB Accounting Standards Codification™
  • International Financial Reporting Standards (IFRS)
  • FASB Activities Related to Not-for-Profit Organizations
    • FASB No. 160
    • FASB No. 161
    • FASB No. 162 and Its Successor
    • FASB Staff Positions on Fair Value Measurements and Impairments
    • FASB Issues Staff Position FAS 117-1
    • FASB Mergers and Acquisitions Project
  • Summary
  • Exercise 3-1 Can I count you in?
• Chapter 4 - Accounting, Reporting, and Governance Issues for Not-for-Profit Organizations
  • Introduction
  • Project to Revise AICPA Not-for-Profit Audit and Accounting Guide
  • Goal of Guide Revision Project
  • The Panel on the Nonprofit Sector Principles for Good Governance and Ethical Practice
    • Legal Compliance and Public Disclosure
    • Effective Governance
    • Strong Financial Oversight
    • Responsible Fundraising
    • For Further Details
  • Self-Regulation in the Nonprofit Sector
  • IRS Activities
    • E-Postcard Required for Small Exempt Organizations
    • The Redesigned Form 990
  • Summary
  • Exercise 4-1 Principles for Good Governance and Ethical Practice
• Chapter 5 - Latest Developments
• Appendix A - National Single Audit Sampling Project
• Appendix B - Compliance Supplement Excerpts
• Appendix C - GAO CPE Guidance
• Appendix D - Illustrative Reports
• Appendix E - 2007 Yellow Book
• Appendix F - Additional Materials

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Please note: The following content is from the previous edition and will be updated shortly. Please check back at a later date.

Chapter 2 - AICPA Activities

Learning Objectives

Gain additional insight into the implementation of the risk assessment SASs.

• Review the technical and miscellaneous activities of the AICPA.
• Understand key documentation dates in SAS No. 103.
• Obtain a more solid understanding of SAS No. 112 by working through an exercise involving the assessment of control deficiencies when compensating controls exist.

Introduction
This chapter will provide a wide range of updates on the areas listed above.

Implementation of the Risk Assessment SASs

Where are we now?
In March 2006, the Auditing Standards Board (ASB) of the AICPA issued eight new statements
on auditing standards (SAS) related to risk assessment. The SASs are as follows:

• SAS No. 104, Amendment to Statement on Auditing Standards No. 1, Codification of
Auditing Standards and Procedures (“Due Professional Care in the Performance of Work”)
• SAS No. 105, Amendment to Statement on Auditing Standards No. 95, Generally Accepted Auditing Standards
• SAS No. 106, Audit Evidence
• SAS No. 107, Audit Risk and Materiality in Conducting an Audit
• SAS No. 108, Planning and Supervision
• SAS No. 109, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement
• SAS No. 110, Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained
• SAS No. 111, Amendment to Statement on Auditing Standards No. 39, Audit Sampling

The primary objective of these standards is to enhance auditors’ application of the audit risk model in practice by specifying, among other things:

Since the risk assessment standards (SAS No. 104 to SAS No. 111) are interrelated they all become effective for audits of financial statements for periods beginning on or after December 15, 2006.

Developed in Concert
In developing the risk assessment standards the ASB worked in concert with the International Auditing and Assurance Standards Board of the International Federation of Accountants and, therefore, the project was representative of the effort among standard-setters to promote the convergence and acceptance of an international set of auditing standards. Finally, the standards represent part of the ASB’s ongoing effort to develop stronger and more definitive auditing standards that are intended to enhance auditor performance and thereby improve audit effectiveness.

Synopsis of the Risk Assessment Standards
See Appendix 2A for a synopsis of the risk assessment standards.

Implementation Tools Available
With the issuance of the standards, the AICPA undertook a comprehensive campaign to provide implementation guidance to assist the audit profession. These efforts include the issuance of:

• An audit risk alert entitled Understanding the New Auditing Standards Related to Risk Assessment (available at www.cpa2biz.com). This document is intended to provide auditors with an overview of the risk assessment standards to be used in the planning and performance of a financial statement audit.
• The audit guide entitled Assessing and Responding to Audit Risk in a Financial Statement Audit (available at www.cpa2biz.com). The purpose of the guide is to help auditors fulfill their responsibilities for assessing risk in a financial statement audit that is performed in accordance with GAAS.
• Two articles in the Journal of Accountancy in 2006 and 2007. These articles are entitled Assessing and Responding to Risks in a Financial Statement Audit parts I and II.
• Three risk assessment CPE courses (available at www.aicpalearning.org). These courses are entitled Auditor’s Risk Assessment Process: Tackling the New Risk Assessment SASs, Risk Assessment Standards - Understanding the Entity and Assessing Risk, and Detecting Misstatements: Integrating SAS 99 and the Risk Assessment Standards.

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