AICPA releases draft of proposed not-for-profit guide

A working draft of a proposed Audit and Accounting Guide, Not-for-Profit Entities, released Wednesday offers updates on many new accounting issues that have emerged in recent years.

The proposed guide, released by the AICPA Financial Reporting Executive Committee (FinREC) and designed for CPAs performing work for not-for-profits, provides direction that includes:

• 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 draft is available on the AICPA website, and the AICPA requests comments on the proposed guide by Oct. 15. FinREC will consider those comments before issuing a final version of the guide.

The working draft does not include general and specific auditing considerations, analytical procedures, or reporting or considerations of internal control.

—Ken Tysiac (ktysiac@aicpa.org) is a JofA senior editor.