With the audit implosion at the Roslyn, N.Y., school district still reverberating in the profession's ears, American Institute of CPAs president and chief executive Barry Melancon warned some 400 attendees at a conference here that the resulting backlash of a nonprofit scandal could be as devastating to the profession as the ruins left by Enron and WorldCom.

"Nonprofit is an area where we could look back in two or three years and say, 'Look how far we've come.' But we must be mindful as a profession that the PR risk of not being diligent [in the nonprofit arena] is tremendous," said Melancon. "Look what happened at the school district here in New York."

Melancon's reference was to the highly publicized audit failure at the Roslyn school district, where three former school officials were charged with stealing some $2.3 million from the district, while its audit firm, Miller, Lilly & Pearce, has reportedly said that it will close down.

In his keynote address at the New York State Society of CPAs' Annual Nonprofit Conference, sponsored by the Foundation for Accounting Education, Melancon advised attendees of "political pressure" on potential reform legislation that would affect nonprofits, including mandatory audits of exempt organizations above a certain revenue level, auditor rotation, and penalties for incomplete 990 forms.

Melancon posed a scenario where chief executives of nonprofits were suddenly required to provide controls certification. "What would a CEO of a museum know about controls certification?"

Melancon also updated attendees on the institute's ongoing initiatives, including its 360 Degree of Financial Literacy, the trio of Audit Quality Centers, the private company financial reporting surveys and task force, and the reconfigured Auditing Standards Board.

Meanwhile, the NYSSCPA is forging ahead with its "Get on Board," program where the society and several NFP partner organizations are working to match CPAs with nonprofits to provide technical and financial assistance as board members.

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