NFP CPE Jeopardy

Fair Value

100

Nonprofit entities should consider an asset's best use based on the donor restrictions and a sale to another nonprofit organization who would likely consider the same use.

False. Fair value measurements are based on market participant assumptions and the attributes specific to that asset or liability. In addition, the valuation should consider the highest and best use of the property.

200

SFAS No. 157 requires fair value mearsurement based on exit price, not an entry price to acquire or replace an asset.

True.

300

Level 3 inputs are unobservable, but may be based on the reporting entity's historical acquisition costs.

False. Level 3 inputs should be viewed from the exit price perspective, a basic premise in SFAS No. 157.

400

SFAS No. 159 requires nonprofits to present disclosures related to the statement of activities, but only to explain the effect on performance indicators.

False. Nonprofit disclosures should also outline the changes in each of the net asset classes (unrestricted, temporarily restricted, and permanently restricted), as applicable.

500

Proposed revisions to ASC 820 would eliminate the assessment of highest and best use valuation premise when a donor restricts asset use.

False. Proposed revisions to the fair value measurement principles would restrict the application of highest and best use valuation assessments to only nonfinancial assets. Nonprofits will need to evaluate how donor restrictions might impact market participant assumptions.

Supplemental Information

100

Under SAS No. 118, other information includes financial and nonfinancial information required by a designated accounting standard setter.

False. Other information includes financial and nonfinancial information (other than the financial statements and the auditor's report) that is not required by a designated accounting setter but is included in a document containing audited financial statements and the auditor's report thereon.

200

Under SAS No. 118, if, prior to the report release date, management refuses to make revisions to material inconsistencies identified in the other information, the auditor should modify the auditor's report, communicate with those charged with governance, and either withhold the report or withdraw from the engagement where legally permitted.

True.

300

According to the provisions of SAS No. 119, in order for an auditor to express and in-relation-to opinion on other information, the other information must be presented with the financial statements.

False. SAS No. 119 does not require that the other information be presented with the financial statements (it may be presented separate from the financial statements) in order for the auditor to express an opinion on whether such other information is fairly stated, in all material respects, in-relation-to the financial statements as a whole.

400

The objective of SAS No. 120 is to require auditors to communicate in writing whether any material modifications should be made to required supplementary information in order to conform to guidelines established by the accounting standard setter.

True.

500

Under SAS No. 120, auditors are not required to compare required supplementary information for consistency with management's responses to inquiries, audited financial statements, and other knowledge acquired during the course of the audit.

False. Auditors are presumptively required to compare required supplementary information for consistency with management's responses to inquiries, audited financial statements, and other knowledge acquired during the course of the audit.