This document summarizes key points from a presentation on auditing not-for-profit organizations. It discusses the current economic environment, trends in the not-for-profit sector including increased online fundraising, and new auditing standards. It outlines management's responsibilities to establish controls and documentation for alternative investments and define roles and responsibilities of auditors. The presentation also covers new accounting standards, IRS activities, and resources from the AICPA Governmental Audit Quality Center.

1. AICPA National Governmental and Not-for-Profit Training Program NPO ADVANCED AUDITING October 23, 2007 Presented by: Flo Ostrum, Grant Thornton LLP

26. Applying lessons learned… Management can never, ever prepare TOO much documentation for its alternatives 1 2 3 4 5 6 7 8 9 10

27. Applying lessons learned… Good internal controls include having STRONG documentation 1 2 3 4 5 6 7 8 9 10

28. Applying lessons learned… If management uses 3rd party investment managers, they must develop appropriate monitoring controls over them 1 2 3 4 5 6 7 8 9 10

29. Applying lessons learned… Management must have a sufficient complement of personnel---investment, accounting, finance 1 2 3 4 5 6 7 8 9 10

30. Applying lessons learned… Transparency means more than seeing the underlyings 1 2 3 4 5 6 7 8 9 10

31. Applying lessons learned… Excerpt from investee's fund's offering document does NOT constitute adequate valuation policies and procedures 1 2 3 4 5 6 7 8 9 10

32. Applying lessons learned… Cannot ignore controls when auditing alternatives 1 2 3 4 5 6 7 8 9 10

33. Applying lessons learned… 'One-size-fits-all' audit approach may not be appropriate or even possible 1 2 3 4 5 6 7 8 9 10

34. Applying lessons learned… Auditing alternatives is like auditing AIR …you know it's there, you just can't see or get your hands around it 1 2 3 4 5 6 7 8 9 10

36. Management and auditor roles Auditor Management

47. Applying Statement 158 Primary changes Recognized net of deferred tax impact (and any allowance) No consideration of deferred taxes for "unrecognized" effects No minimum liability required Recognition of a minimum liability for pensions Immediate recognition of the funded status with offsetting entry to equity through other comprehensive income Deferred recognition of prior service costs, gains and losses and transition amounts Statements 158 Statements 87, 88, 106

48. Applying Statement 158 Primary changes, continued New disclosure requirements based on recycling Reconciliation of the funded status to the amounts recognized Measurement date and the balance sheet date will be the same Measurement date up to 90 days prior to the balance sheet date allowed Recycling of certain amounts recognized in comprehensive income into earnings Amortization of certain "unrecognized amounts" into earnings Statement 158 Statements 87, 88, 106

71. AICPA GAQC Home Page

78. Any questions?

79. Head to your next destination