Exam 13: Auditing, Tax-exempt Organizations, and Evaluating Performance

Form 990, Return of Organization Exempt From Income Tax, requires all of the following except:

The document often relied on for financial analysis by investors and creditors for bonds in the secondary market is:

Governmental attestation engagements must comply with both the Government Auditing Standards and with the AICPA's attestation standards.

While the principal users of corporate audit reports are investors and creditors, the main user of Single Audit reports is the federal government.

Assuming an auditee is not considered low-risk, the auditor is required to express an opinion on compliance on major programs, which must add up to 90 percent of federal funds expended by the auditee.

Reporting requirements are a combination of requirements of the Government Auditing Standards and the single audit requirements. The auditor is required to prepare up to five reports. Which of the following is not one of the reports?

Unrelated Business Income Tax is an excise tax, applied to the gross receipts of a business activity. Therefore allocations of expenses incurred in generating the income are irrelevant.

The program expense ratio is calculated as Program service expenses / Total expenses.

Service Efforts and Accomplishments Reporting includes measures of service inputs, outputs and outcomes.

The program expense ratio for a not-for-profit organization will improve if the organization shifts costs from fund-raising to program expenses.

A ratio that measures a not-for-profit organization's solvency is:

The single audit requirements apply only to state and local governments. Private not-for-profits do not have to comply with these requirements, even if they receive federal grants.

Service Efforts and Accomplishments Reporting is voluntary for not-for-profit organizations.

Unreasonable executive compensation paid to executives of 501c3 organizations is an area of concern for the IRS. Which of the following is a sanction available to the IRS?

The Museum of Creative Arts had the following expenses: $4,000 of membership development expense, $2,000 of Fund-raising expense, $5,000 of Instructional Classes expense, and $1,000 of general and administrative expense. What is the program expense ratio rounded?

The program expense ratio is calculated as follows:

Tax Code Section 501 provides that nonprofit organizations organized for charitable purposes may be exempt from federal income taxes.

Assuming an auditee is considered low-risk, the auditor is required to express an opinion on compliance on major programs, which must add up to 50 percent of federal funds expended by the auditee.

To compute the net debt per capita, a user of financial statements would need to look at in the CAFR:

Which of the following is true regarding the Single Audit Act and its amendments?