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Auditing Nonprofit Entities #376626

Course Overview

Credit

Amount

CPA

Course Author: Steven M. Bragg, CPA Field of Study (CPA): Auditing

Course Description

Course publication/revision date: This course was updated on 8/28/2026.

Nonprofit entities present significant auditing challenges, since their reported results are closely tied to the nature of the contributions they receive, donor restrictions on the use of those contributions, and the need to present a high level of program effectiveness to donors. In the Auditing Nonprofit Entities course, we examine how the auditor can navigate these challenges by delving into nonprofit controls, as well as audit procedures that are specific to the industry. Particular attention is paid to the auditing of contributions, donor restrictions, endowment funds, fund-raising expenses, and split-interest agreements.

Table of Contents

Auditing Nonprofit Entities1

Introduction	1
Areas of Audit Interest	1
Audit Planning	1
Understanding the Nonprofit and Its Environment	3
Understanding Audit Risk	6
Understanding Nonprofit Controls	7
Cash Controls	7
Contribution Valuation Controls	9
Donor Restriction Controls	10
Expense Allocations	10
Fixed Asset Controls	10
Payables Controls	12
Payroll Controls	15
Assessing the Risks of Material Misstatement	17
Materiality	21
Evaluating Identified Misstatements	22
Auditing Accounting Estimates	24
Audit Procedures Specific to Nonprofits	24
Accounts Receivable	24
Collection Items	26
Contributions	26
Donor Restrictions	27
Endowment Funds	27
Expenses	27
Fixed Assets	28
Fundraising Expenses	28
Investments	28
Liabilities	28
Net Assets	29
Revenue	29
Split-Interest Agreements	29
Tax Considerations	30
Write-Offs	31
Using the Work of an Auditor's Specialist	31
Consideration of Fraud in the Audit	32
Issues Impacting the Auditor's Report	36
Developing Audit Documentation	36
Summary	37
Review Questions	38
Answers to Review Questions	40

Glossary43

Index45

Course Details

Author: Steven M. Bragg, CPA

Steven Bragg, CPA, has been the chief financial officer or controller of four companies, as well as a consulting manager at Ernst & Young. He received a master’s degree in finance from Bentley College, an MBA from Babson College, and a Bachelor’s degree in Economics from the University of Maine. He has been a two-time president of the Colorado Mountain Club, and is an avid alpine skier, mountain biker, and certified master diver. Mr. Bragg resides in Centennial, Colorado. He has written more than 300 books and courses, including New Controller Guidebook, GAAP Guidebook, and Payroll Management.

Publication/Revision Date: 8/28/2026

Course Exam Questions (online): 15 (multiple-choice)

Program Delivery Method: NASBA QAS Self-Study

Available Formats of Course Text: PDF or PDF plus printed copy sent in the mail

Course Level, Prerequisites, and Advance Preparation Requirements

License	Course Level	Prerequisites	Advance Preparation Requirements
CPA	Basic	None	None

Sponsor ID Numbers

National Registry of CPE Sponsors ID: 107615

State CPA Board Sponsor ID Numbers (where applicable)

Florida Division of Certified Public Accounting: 0004761

Hawaii Board of Public Accountancy: 14003

New York State Board for Public Accountancy: 002146

Ohio Accountancy Board: CPE .51 PSR

Pennsylvania State Board of Accountancy: PX178025

Texas State Board of Public Accountancy: 009349

Learning Objectives

As a result of studying the course material, you should be able to meet the objectives listed below:

Recognize why an audit strategy is needed, and what it controls.
Identify the issues associated with the environment in which a nonprofit operates.
Specify the risk assessment steps associated with the audit of a nonprofit.
Recognize when a nonprofit's internal audit function can be used by the auditor.
Identify the cash controls that a nonprofit entity might use.
Specify the controls that a nonprofit entity might use over the valuation of contributions.
Recognize when a misstatement is considered to be material.
Identify the actions that can be taken to reduce detection risk.
Specify the events or conditions that indicate the presence of a risk of material misstatement.
Identify the areas in which an auditor may choose to hire a specialist when auditing a nonprofit entity.
Specify who is responsible for fraud prevention and detection.

Online Book, Online Exam

$35.00

Hardcopy Book, Online Exam

$47.00