The American Institute of CPAs has released guidance to help CPAs deal with accounting issues related to two separate issues: going concern, and not-for-profit entities with for-profit subsidiaries.

The AICPA’s Auditing Standards Board issued four new auditing interpretations as a result of recent standards from the Financial Accounting Standards Board and the Governmental Accounting Standards Board. FASB Accounting Standards Update (ASU) No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, and GASB Statement No. 56, Codification of Accounting and Financial Reporting Guidance Contained in the AICPA Statements on Auditing Standards, provide guidance in U.S. GAAP about management’s responsibility to evaluate an entity’s ability to continue as a going concern and to provide related footnote disclosures.

In response, the AICPA’s Auditing Standards Board has issued new auditing interpretations to SAS No. 126, The Auditor’s Consideration of an Entity’s Ability to Continue as a Going Concern (Redrafted) (AICPA, Professional Standards, AU-C sec. 570).

The issuance of these interpretations represents a short-term initiative by the ASB to address some consequences of the new accounting standards. In the long term, the ASB plans to undertake a more comprehensive project to align AU-C section 570 with the various accounting and auditing standards.

Not-for-Profits with For-Profit Subsidiaries
Separately, to help accountants deal with not-for-profits with for-profit subsidiaries, the AICPA’s Not-for-Profit Entities Expert Panel has also developed Question and Answer (Q&A) section 6140.26 (AICPA Technical Questions and Answers) has been issued to provide nonauthoritative guidance about a not-for-profit entity that has a for-profit subsidiary that it consolidates under GAAP.

Because the reporting entity is the consolidated not-for-profit entity, which is not permitted to adopt the accounting alternative in ASU No. 2014-02, Intangibles—Goodwill and Other (Topic 350): Accounting for Goodwill (a consensus of the Private Company Council), the for-profit subsidiary that is part of that consolidated reporting entity is not permitted to use the amortization accounting alternative in the consolidated financial statements. The for-profit subsidiary could adopt the accounting alternative in ASU No. 2014-02 in its standalone financial statements, however, the AICPA noted.

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