This chapter looks at the audit of not-for-profit organizations. Such entities may or may not be required to have a statutory audit under legislation. They may choose to have a non-statutory audit under the terms of a charitable deed or as part of good practice.
The points made in this chapter about the issues inherent in these entities are relevant for any kind of assurance work in not-for-profit organizations. These entities will have particular features, the most obvious being the difference in objectives of the entity, which will affect the way the work is carried out.
In this chapter, we look specifically at the aspects of audit planning, evidence and reporting in not-for-profit organization and how this differ from for-profit organizations.
An exam question on not-for-profit organizations may come up as a scenario-based question on audit planning or evidence. In this case, use your knowledge of not-for-profit organizations as well as the clues given in the scenario to generate ideas for your answer.
Previous exams have included written requirements relating to audit planning and the system of internal control (such as the control environment) relating specifically to not-for-profit organizations. This topic can equally be examined in the form of OT questions in section A.
Remember the issues relating to small companies that we have discussed in this book may also apply to small not-forprofit organizations as well.
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