Well, maybe the release of the draft Not-for-Profit Entities Audit and Accounting Guide isn’t quite as exciting as those ancient commercials announcing the release of the new phone book by showing people running around celebrating that it arrived. (The line was also in the movie The Jerk, starring Steve Martin.) For auditors of NPOs, the arrival of the long-expected audit guide is far better than what the old commercials would have you think about a new phone book.
The draft guide can be found here. The AICPA’s page for the draft is at Overhaul of the Not For Profit Entities Audit and Accounting Guide.
The AICPA’s announcement can be downloaded here. Some highlights, as described in their announcement:
- A greatly expanded section about reporting relationships with other entities. The guide provides guidance and examples for reporting relationships with not-for-profit and for-profit corporations, limited liability partnerships, general partnerships, and financially interrelated entities.
- New sections about reporting and measuring noncash gifts, including gifts in kind; contributions of fundraising materials, informational materials, advertising, and media time or space; below-market interest rate loans; and bargain purchases.
- A greatly expanded section about municipal bond debt, including IRS considerations, third-party credit enhancements, capitalization of interest, extinguishments and debt modifications, and the effects of terms such as subjective acceleration clauses on the classification of debt.
- New guidance for reporting the expiration of donor-imposed restrictions.
- Greatly expanded discussion about the legal and regulatory environment in which not-for-profit entities operate.
The guide is 476 pages long, so it is about the size of phone book from a modest size city. It might be a while before I can get through it to have any considered comments.
A few thoughts based on a first glance at the draft.
There is an 11 page glossary, which should be helpful.
Chapter 14 on auditor’s reports is only one page, which says ‘reserved’. That makes sense since there will be major changes from the clarified audit standards.
The GIK section is about 8 pages long. It will take some time to absorb the guidance. The section directly address the issues in the NPO community regarding donated pharmaceuticals. After browsing the section for a few minutes, I’m guessing there may be some, ah, conversation in the NPO world about the guidance.
I was a bit surprised there is no summary of changes as happens in FASB documents. Also no list of main questions for which comments are requested.
Comments are due to the AICPA by October 15. That is only a 60 day comment window.
Like I said, it will take some time to go through the guide. Guess we had all better get started.