Did I miss anything? Am I ever going to find the time to research and understand this? These are the questions that commonly haunt professionals who work in a sector with five active standard setters: the GASB, FASB, AICPA, GAO, and OMB. Whether it’s preparing for the changes coming to not-for-profit financial reporting, implementing the new single audit requirements, or auditing a government’s GASB No. 68 pension information, professionals working with governments and not-for-profits will find 2016 to be a transitional year.

Preparing for the Changes Coming to Not-for-Profit Financial Reporting
In 2016, not-for-profits will begin preparing for changes coming from the FASB’s Financial Statements of Not-for-Profit Entitiesproject. While they will have a few years to implement the standards, not-for-profits will want to begin getting ready for the changes coming to the following:

  • Net assets
  • Liquidity information
  • Statement of cash flows
  • Use of operating measures
  • Reporting of expenses

Implementing the New Single Audit Requirements

Auditees and auditors will be applying the new single audit requirements contained in the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. The new requirements contain key changes to the following:

  • Single audit threshold
  • Major program determination process
  • Schedule of expenditures of federal awards
  • Reporting of audit findings
  • Follow-up and corrective action on audit findings
  • Report submission process

As auditors implement the new single audit requirements they need to ensure that they fully understand these four important points about the changes to the major program determination process:

  1. The traditional four-step major program determination process is staying. However, key changes are occurring to each of the four steps.
  2. Smaller entities may have fewer “type A” programs than they have had in the past.
  3. Auditors will likely be performing fewer risk assessments on “type B” programs.
  4. The changes in the major program determination process will result in fewer major programs for some audits. However, other audits will be largely unaffected.

Auditing a Government’s GASB No. 68 Pension Information
Throughout 2016, governments and their auditors will still be getting comfortable with the GASB No. 68 pension standard. Of particular interest is how an auditor can become comfortable with the census data used in the actuarial valuation process and the amounts reported in the financial statements. They will also be preparing for the changes coming from GASB No. 74 and No. 75 related to other post-employment benefits.

This post originally appeared on the PICPA blog.

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