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Audit Risk Alert: Not-for-Profit Entities Industry Developments, 2018

Audit Risk Alert: Not-for-Profit Entities Industry Developments, 2018


ISBN: 978-1-119-53379-5 May 2018 128 Pages


New standards for financial statement presentation and revenue recognition have created many not-for-profit financial reporting changes. Combine those with today's technology-centered environment and the ever-present scrutiny of exempt organizations by the IRS and watchdog and rating agencies, and accountants, auditors, and financial managers may wonder how they'll ever tackle all the associated risks.

This alert takes discusses the important developments affecting not-for-profit entities in 2018, and the issues auditors may face. It's jam-packed with targeted discussions of current economic, accounting, and auditing issues affecting nonprofits, as well as changes on the horizon. Topics range from business environment issues like cybersecurity to accounting and auditing challenges like implementation of FASB's new financial statement standard (ASU No. 2016-14) and valuation of gifts-in-kind. This alert also covers legislative and regulatory issues like UBIT, debt-financed property rules, and tax reform provisions of interest to exempt organizations, as well as the new auditing standard on auditor involvement with exempt offering documents. 

Among other topics, this alert focuses on risks related to recent nonprofit industry trends, financial statement presentation changes, revenue recognition, and fair value issues. A discussion of tax reform provisions affecting exempt organizations is also included as well as information on emerging issues such as:

  • Revenue recognition for grants and contracts
  • Phase 2 of FASB's not-for-profit financial statement presentation project
  • Changes to the auditor's report
  • Cybersecurity
  • Blockchain and other transformative technology

Awareness of key trends affecting the nonprofit environment informs audit planning, risk management, strategic planning, and oversight, thereby promoting greater success and sustainability of not-for-profit entities.

Not-for-Profit Entities Industry Developments—2018 .01-.471

How This Alert Helps You .01-.03

Economic and Industry Developments .04-.64

The Current Economy .04-.09

The State of NFPs .10-.64

Legislative and Regulatory Developments .65-.121

IRS Exempt Organization Function .65-.69

IRS Issue Snapshots .70-.71

Department of the Treasury and the IRS Issue Priority Guidance Plan for 2017–2018 .72-.74

Listing of Published Guidance—2017 .75

Unrelated Business Taxable Income Issues .76-.86

Functional Expenses .87-.88

Discrepancies between FASB ASU No. 2016-14 and Form .990 .89-.97

Tax Cuts and Jobs Act .98-.103

Matters Affecting Higher Education .104-.106

Matters Affecting Religious Organizations .107-.113

Impact of Rising Minimum Wage Law on NFPs .114-.116

General Data Protection Regulation .117-.121

Audit and Attestation Issues and Developments .122-.188

Audit Risks for NFPs .122-.123

New Auditing Standard on Going Concern .124-.129

New Auditing Standard on Auditor Involvement with Exempt Offering Documents .130-.143

Recent Changes to SOC 1 Service Auditor Reports .144-.149

Auditing Functional Expense Classifications .150-.156

Confirmations .157-.162

Auditing Funds Held at Nonfinancial Institutions .163-.171

Challenges in Auditing GIK .172-.181

Transformative Technology on the Horizon .182-.188

Accounting Issues and Developments .189-.353

Revenue from Contracts with Customers .189-.219

Accounting Standards Updates Effective in 2017 .220-.305

The Net Asset Value Practical Expedient and Readily Determinable Fair Value .306-.311

Clarification of Key Terms in the Definition of Public Business Entity .312-.330

Expiration of the Perkins Loan Program.331-.335

Leases .336-.353

Not-for-Profit Entities Industry Developments—2018—continued Recent Pronouncements .354-.357

Recent Auditing and Attestation Pronouncements and Related Guidance .355

Recent ASUs .356

Recently Issued Technical Questions and Answers .357

Recent AICPA Independence and Ethics Developments .358-.399

Proposed Interpretations Responding to Non-Compliance with Laws and Regulations .358-.370

Conceptual Framework Implementation Tools and Resources .371-.372

Definition of a Client 373

New Independence Interpretation—Hosting Services .374-.380

Knowing Misrepresentations in the Preparation and Presentation of Information .381-.389

Pressure to Breach the Rules .390-.399

AICPA NFP Initiatives .400-.410

Not-for-Profit Member Section .401-.406

Not-for-Profit Certificate Program .407-.410

On the Horizon .411-.448

Auditing Pipeline .413-.439

Accounting Pipeline .440-.448

Resource Central .449-.470

Publications 450

Continuing Professional Education .451-.454

Webcasts .455-.456

Member Service Center .457

Hotlines .458-.459

AICPA Online Professional Library: Accounting and Auditing Literature .460

Industry Conference .461-.462

AICPA Government Audit Quality Center .463-.466

AICPA Industry Expert Panel—Not-for-Profit Entities .467 Not-for-Profit Interest Area .468

Industry Websites .469-.470

Appendix—Additional Internet Resources .471