Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Reminders for your 12-11 audits – Part 1

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Here are a few reminders as you are auditing December 2011 financial statements.  These comments will be very summarized.  They’re in plain English instead of formal accountantese.  If you see something here that applies to your clients or is brand new information for you, check out the authoritative literature.

Disclosures about allowance for credit lossesASU 2010-20, Receivables (Topic 310): Disclosures About the Credit Quality of Financing Receivables and the Allowance for Credit Losses.  This expands disclosures for bad debt reserves.  In one sentence, this applies to entities that have financing receivables.  Examples are loans, trade receivables, and note receivables. 

In the nonprofit world this will be a huge deal for church development funds and the higher education community.  It will also apply if you’ve got some loans to pastors for housing. You can find the link to ASU 10-20 here. Have to accept the terms of use before you can click through to the document.

Donated fundraising materials or ads – TIS 6140.24 – “Contributions of Certain Nonfinancial Assets Such as Fund-Raising Material…” – Reminder that GIK of advertising space or material is a contribution.

‘Reclassify’ net assets – TIS 6140.23 – “Change of Net Asset Classifications Reported in a Prior Year” – reminder that if amounts are moved from one net asset classification to another, you are actually looking at an error correction.  For example, the organization realizes that one of those special project funds is actually board designated instead of donor restricted, in which case the balance should be moved from TR to UR. In such a case, that is a correction of an error.  That means the client needs to go the route of restating opening net assets instead of flowing the reclass through the current year.

Open tax years – TIS 5250.15 – application of FIN 48 for nonprofits that do not have uncertain tax positions – points out that the requirement to disclose open tax years still applies to nonprofits.  This may be down in the range of an inconsequential disclosure, but the requirement is still there.  If your client passes on the comment, you probably need a comment somewhere in the workpapers making note of the issue and explicitly passing on it.

Certificates of deposit not subject to FMV – TIS 2130.40, .39, .38 – several comments on certificates of deposit – pertinent point for me is that CDs are not subject to fair value disclosures and are classified as an ‘other investment’. Implication is that CDs go on the financial statement in a separate line of from investments and are not subject to the fair value accounting treatment.

Again, if any of these issues roll into your audits, check out the source documents.  This post is your first step of research!

Written by Jim Ulvog

November 3, 2011, 8:59 am at 8:59 am

Posted in Accounting

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