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MikeWolfe,CPAPartnerBKD,LLP

mwolfe@bkd.com

Wednesday,January15,2014|10 11a.m.CentralTime

2013AICPANotforProfitA&AGuide

TORECEIVECPECREDIT

IndividualAttendeeo Participateinentirewebinaro Answerpollswhentheyareprovided

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Title&dateoflivewebinar Yourcompanyname Yourprintedname,signature&emailaddress

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emailedaCPEcertificatewithin15businessdaysoflivewebinar

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OverhaulofAICPAAudit&AccountingGuideTitledNotforProfitEntities

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BACKGROUND

FocusofNFPGuide Notforprofitentities GAAPbasisfinancialstatements Auditedfinancialstatements

Firstrevision,otherthanannualconformingchanges,sinceGuidewasreleasedin1996

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SOURCEOFNEWGUIDECONTENT

Questionsidentifiedinpractice AuthoritativeguidancefromFASBCodification NonauthoritativeguidancefromFinRECconclusions IncorporatedrelevantnonauthoritativeAICPAliterature

NFPrelatedTechnicalQuestions&Answers(TIS) AICPAWhitePaperonFairValueMeasurement AlternativeInvestmentsTIS

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AUTHORITATIVESTATUSOFAICPAGUIDES

Accounting&financialreporting BasisofaccountingcontentisfromGAAP,butGuidesprovideadditionalexplanation&practicalguidance

Auditing Auditingguidanceconsideredinterpretivepublication

underAUCsection200,OverallObjectivesoftheIndependentAuditor&theConductofanAuditinAccordancewithGenerallyAcceptedAuditingStandards

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TABLEOFCONTENTS

Chapter1 Introduction Chapter2 Generalauditingconsiderations Chapter3 Financialstatements,reportingentity &generalfinancialreportingmatters Chapter4 Cash,cashequivalents &investments Chapter5 Contributionsreceived&agencytransactions Chapter6 Splitinterestagreements&beneficialinterestsintrusts Chapter7 Otherassets Chapter8 Programmaticinvestments Chapter9 Property&equipment Chapter10 Debt&otherliabilities Chapter11 Netassets&reclassificationsofnetassets Chapter12 Revenues&receivablesfromexchangetransactions Chapter13 Expenses,gains &losses Chapter14 Reportsofindependentauditors Chapter15 Tax&regulatoryconsiderations Chapter16 Fundaccounting Appendices

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CHAPTER3 FINANCIALSTATEMENTS,REPORTINGENTITY&GENERALFINANCIALREPORTINGMATTERS

Significantly expandedguidanceoninterestsinrelatedentities Summarychartofexamplesthatreferencetosections

ofbothGuide&FASBASCo NFPentitieso Forprofitentitieso Specialpurposeleasingentities

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EXCERPTFROMEXHIBIT3 2

Relationship FinancialAccountingStandardsBoard(FASB)AccountingStandardsCodification(ASC)Reference

DiscussioninThisChapter

ReportingentitycontrolsanotherNFPthroughmajorityvotinginterestinitsboard&haseconomicinterestinthatotherentity

UseguidanceinFASBASC958810253

Paragraphs3.67.69

ReportingentitycontrolsNFPthroughformotherthanmajority ownership,solecorporatemembershipormajorityvotinginterestinboardofotherentity&haseconomicinterestinthatotherentity

UseguidanceinFASBASC958810254

Paragraph3.70

ReportingentityhascontroloveranotherNFPoreconomicinterest intheother,butnotboth

UseguidanceinFASB ASC958810255

Paragraph3.71

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CHAPTER3 FINANCIALSTATEMENTS,REPORTINGENTITY&GENERALFINANCIALREPORTINGMATTERS

Statementoffunctionalexpenses Required asbasicfinancialstatementforvoluntary

health&welfareentities FinRECencourages presentationbyallNFPsthatare

supportedbygeneralpublico NFPwithcontributionsof20 30percentoftotal

revenuepresumedtobesupportedbygeneralpublic(excludinggovernmentsupport)

o Considerfacts&circumstances&usejudgment

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CHAPTER4 CASH,CASHEQUIVALENTS&INVESTMENTS

Significantly expandedguidanceoncommoninvestmentsbyNFPs Summarychartofexamplesthatreferencesections

ofbothGuide&FASBASC

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EXCERPTFROMEXHIBIT4 1

Relationship FinancialAccountingStandardsBoard(FASB)AccountingStandardsCodification(ASC)Reference

DiscussioninThisChapter

RelationshipswithEntitiesHeldforInvestmentReportingentityowns50percentorlessofcommonvotingstockofinvestee,&reportingentityneither controlsnorcanexercisesignificantinfluenceoverinvesteesoperating&financialpolicies.Stockisequitysecuritythathasreadilydeterminablefairvalue

FASCASC958320351 Paragraph4.17

Reportingentityowns50percentorlessofcommonvotingstockofinvestee,&reportingentityneithercontrolsnorcanexercisesignificantinfluenceoverinvesteesoperating&financialpolicies.Stockdoesnothavereadilydeterminablefairvalue.

FASB ASC95832535 Paragraph4.37

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CHAPTER5 CONTRIBUTIONSRECEIVED&AGENCYTRANSACTIONS

ReceiptofresourcesbyNFPcontributionorexchangetransaction? Flowchart(Table5 1) Whenelementsofbotharepresent,divide

transactionintwo,measuringexchangefirst Examples

Membershipdues Grants

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CHAPTER5 CONTRIBUTIONSRECEIVED&AGENCYTRANSACTIONS

Membershipdues Isvaluereceivedbymembercommensuratewithduespaid? Oftenelementsofbothcontribution&exchange

o Measureexchange portionfirst&recognizeasrevenueastheearningsprocessiscompleted

o Remainderiscontribution,recognizeasrevenueuponreceipt Example Aquariumoffersvaryinglevelsofmembership;eachlevelreceivesannualadmission;varyingotherbenefitsdependingonlevel

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CHAPTER5 CONTRIBUTIONSRECEIVED&AGENCYTRANSACTIONS

Grants UseTable5 1todetermineifgrantiscontributionor

exchangebasedonfacts&circumstances Ifcontribution Considerifanyconditionsexist,

considerdonorrestrictions Ifexchange Determinerevenuerecognition NFPshouldestablishaccountingpolicyforgrantssothey

areaccountedforconsistently Governmentgrants

o Applyaboveguidanceo FASBcontinuingtoevaluate

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CHAPTER5 CONTRIBUTIONSRECEIVED&AGENCYTRANSACTIONS

Recognition &measurement ofcontributions Contributedfundraisingmaterial,informational

materialoradvertising,includingmediatimeorspace Belowmarketinterestrateloans Administrativecostsofrestrictedcontributions

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CHAPTER5 CONTRIBUTIONSRECEIVED&AGENCYTRANSACTIONS

Contributedfundraisingmaterial,informationalmaterialoradvertising,includingmediatimeorspace Examples Publicserviceannouncements,radioadvertisingtime,newspaperprintspace

Donatedasset,notdonatedserviceo Recordcontributionevenifassetwouldnottypicallyneedto

bepurchasedifnotprovidedbydonation FinRECrecommends:RecognizecontributionifNFPhasactiveinvolvementindetermining&managingmessage&useofmaterials;otherwisenotcontribution

Applicationexample

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CHAPTER5 CONTRIBUTIONSRECEIVED&AGENCYTRANSACTIONS

Belowmarketinterestrateloans No orlowinterestloanoffundsiscontribution toNFP Recordcontributionrevenue&interestexpenseforfair

valueofcontributiono Fairvaluetypicallyestimatedatdifferencebetween

marketrateinterest&actualinterest Relatedpartystatusdoesntimpactrecording Recognitionofcontribution/interestdifferentforlong

termloanvs.dueondemandloan

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LOANS OTHERISSUES

Governmentloansatbelowmarketinterestrates Firstconsiderwhetherloanhascontributoryintent

(contributionvs.exchangetransaction) Followingtypesofloansareexempt frominterest

imputationruleso Transactionswhereinterestratesareaffectedbytaxattributesorlegalrestrictionsprescribedbygovernmentalagency,forexample: Industrialrevenuebonds Taxexemptobligations Governmentguaranteedobligations Incometaxsettlements

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LOANS OTHERISSUES

Forgivableloans Determineifthereiscontributoryintent Determineifconditions oncontributionexist Isforgivenessautomatic,isitdependentonlenders

actionorisitdependentonborrowersactions?

**Seechapter8forcorrespondingaccountingbylenderformakingthiscontribution

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CHAPTER5 CONTRIBUTIONSRECEIVED&AGENCYTRANSACTIONS

Administrativecostsofrestrictedcontributions Policyofdesignatedcertainpercentageofrestrictedgiftstooffsetcostsofraising&administeringthosegiftso Example Policythat5percentofcontributionsto

scholarshipfundgotopayadministrativecosts;so$95of$100giftisrestrictedforscholarshipfund

Policyneedstobeeffectivelycommunicatedtoorfromdonorprior toreceiptofcontributiono Ifnot,then100percentofgiftshouldbedonorrestricted

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CHAPTER6 SPLITINTERESTAGREEMENTS&BENEFICIALINTERESTINTRUST

BeneficialinterestintrustheldbyanotherentityQuestions WhatifNFPisntnotifiedabouttrustuntilyearsafter

itiscreated? WhatifNFPisunabletoobtaininformationtoverifyit

isnamedasirrevocablebeneficiary? WhatifNFPisunabletoobtaininformationto

measurebeneficialinterest?

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CHAPTER6 SPLITINTERESTAGREEMENTS&BENEFICIALINTERESTINTRUST

Answers NFPgenerallyneedsthefollowinginformationinorder

torecordbeneficialinterestintrusto Copyofexecutedtrustdocument,statementfrom

trusteeorotherinformationtoverifyexistenceo Sufficientinformationabouttrustinordertovalueit,

e.g.,trustassets,payoutrate/amount,ageoflifebeneficiaries

Makereasonableefforts toobtainnecessaryinformation

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CHAPTER6 SPLITINTERESTAGREEMENTS&BENEFICIALINTERESTINTRUST

Answers Recognizebeneficialinterestintrust&contribution

revenueinthefirstyearnecessaryinformationbecomesavailable