AUDIT OF NOT-FOR-PROFIT ORG.

The only LO in the AA syllabus specific to NFP organisations is:

“a) Apply audit techniques to not-for-profit organisations.”

Here “audit” still means an audit of historic financial statements – and not, for example, a “value-for-money” audit.

Just because the SoPL for an NFP will be called something different (e.g. “income statement” – meaning net income or “statement of income and expense”) doesn’t change anything. And it’s still a SoFP regardless of whether it is called SoFP or “balance sheet” (as, indeed, many companies still refer to the SoFP as “balance sheet”).

Incurring expenses/liabilities, purchasing non-current assets, depreciation thereon, etc, etc none of these things are any different.

The only thing that will almost certainly be different, and for which audit procedures may need to be amended, is “income” – although there could still be revenue (e.g. think of a charity shop), a major source of income will be donations (for which there is no corresponding “sale”) and, perhaps, government grants. However, since government grants are NOT examinable in FA, they are not examinable in AA – so the only income you have to think about is donations. Essentially, you’d be looking for good controls – especially where donations are collected in cash (e.g. tamper-proof collection boxes/buckets are counted out and in again with suitably screened volunteers doing the collecting).

The other thing that MAY be different is that it might not be a company and so not have share capital – but I don’t think this has ever ever ever been examined (since assumed knowledge of LW might not include alternatives like “limited by guarantee” which might be specific only to LW-ENG and not the numerous variant exams).

You’re welcome – as always!