Case Studies in Not-for-Profit Accounting and Auditing

Chapter 6 AUDITING CONTRIBUTIONS

LEARNING OBJECTIVES

After completing this chapter, you should be able to do the following:

• Identify critical concepts involved in auditing contributions.
• Identify the purpose of audit plans and how they are developed.
• Identify how the auditor's understanding of the client and its internal control affects the audit plan.
• Identify how the auditor's assessment of the risk of material misstatement affects the audit plan.
• Identify how to develop audit procedures to obtain sufficient, appropriate evidential matter to support contribution revenue.

TECHNICAL BACKGROUND INFORMATION

Audit plans detail the procedures an audit team will perform to obtain sufficient, appropriate evidence regarding a particular account balance or class of transactions. Although audit plans need to be comprehensive to allow the owner or audit partner to sign an audit opinion, audit plans also need to be efficient so that the audit firm's resources are well managed. Audit plans are not the starting place, however. Audit plans are the result of other activities and procedures performed by the audit team. Let us look at how we get to the place of developing audit plans.

The audit team, the owner, or audit partner will perform preliminary engagement activities (client acceptance, engagement acceptance, ethical considerations, use of specialists and establishing an understanding with the client). The audit team then gains an understanding of the entity and its environment. ...