Question 1 :

On the analytics dashboard for Crescent Legal Advocacy, a nonprofit, Allison Hart at Parkside Audit Partners LLP sees unrestricted contributions down 33%, grant receivables up 89%, and days cash on hand down from 74 to 29. Which risk linkage should the team lead most likely emphasize?

Fixed asset valuation risk, because falling liquidity often signals impairment pressure on long-lived assets used in operations.

Fraud or management bias in grant receivable classification and year-end presentation, because funding pressure aligns with a sharp receivable increase.

Payroll completeness risk, because cash declines usually indicate year-end compensation accruals were deferred or omitted.

Pledge existence risk, because reduced unrestricted giving commonly leads nonprofits to overstate donor promises near year-end.

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Question 2 :

While reviewing grant inflows at National Hunger Relief Network, a nonprofit corporation, Allison Reed at Fairmont Doyle LLP notes award memo AM-41 states a private foundation will provide $300,000 to support hunger-relief operations and requires quarterly narrative and spending reports, but gives the foundation no direct services or deliverables of commensurate value; management classified the award as exchange revenue because reporting is required. What is the best review conclusion?

Keep exchange revenue because any required reporting means the funder is purchasing a service.

Defer recognition until all quarterly reports are submitted because reporting conditions must be satisfied first.

Reclassify the inflow as contribution revenue because required reporting alone does not make the arrangement reciprocal.

Record the award as deferred revenue because foundation awards cannot be recognized until cash is fully received.

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Question 3 :

While tracing Fox Hollow Shelter, a nonprofit client of Mercer Sloan CPAs, Ian Foster compares account 6425 Donor Database on shared-services worksheet tab SS-4 to the draft statement of functional expenses dated 12/31/2025 and sees the same account mapped directly to fundraising; what is the clearest issue?

The donor database cost is omitted from program expense because software should always support client services first.

The donor database cost is double-counted because it is both allocated in the pool and mapped directly to a function.

The donor database cost belongs entirely in management and general because software is an administrative resource.

The donor database cost should be removed from the shared-services pool because software cannot be allocated by function.

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Question 4 :

While reviewing the Q1 2026 reporting file for Meadow Lane Animal Rescue, a nonprofit, Nora Blake at Hensley Carr LLP sees Portal Confirmation PC-19 dated April 18, 2026 for a report due April 15, 2026, and the file also includes an April 10, 2026 email from the funder extending Q1 reporting to April 20, 2026; what is the best conclusion?

Conclude late reporting because the original due date in the grant agreement controls absent a formal amendment.

Conclude timely reporting only if the board secretary also approved the revised reporting calendar in writing.

Conclude the timing is unresolved until the client proves the portal clock uses the same time zone as the funder.

Conclude the report appears timely if the extension email is authentic, grant-specific, and retained with the submission support.

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Question 5 :

On the Silver Birch Youth Orchestra gift-entry report dated December 31, 2025, Lauren Bishop sees on the Orchard Field CPAs LLP engagement a policy requiring review of all gifts above $5,000 against donor letters for restriction coding. Which test approach best matches that control objective?

Select gifts above $5,000 from the report and inspect donor support plus review evidence.

Select all December deposits and recalculate the annual budget variance for contributions.

Select restricted net asset balances and confirm them directly with major donors.

Select pledge receivables and trace them to year-end disclosure support.

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NPO Audit

On the analytics dashboard for Crescent Legal Advocacy, a nonprofit, Allison Hart at Parkside Audit Partners LLP sees unrestricted contributions down 33%, grant receivables up 89%, and days cash on hand down from 74 to 29. Which risk linkage should the team lead most likely emphasize?

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On the Silver Birch Youth Orchestra gift-entry report dated December 31, 2025, Lauren Bishop sees on the Orchard Field CPAs LLP engagement a policy requiring review of all gifts above $5,000 against donor letters for restriction coding. Which test approach best matches that control objective?

MCQ

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5