Castle Hall Academy: A Case Study In Non-Profit Accounting Mismanagement

Abstract

This case requires you to resolve financial reporting deficiencies that arise in the audit of a not-for-profit entity, a prestigious private high school. This case is based on the actual experience that an audit firm had with a not-for-profit client. The primary reporting issues in the case relate to investments, contributions, severance packages, and leases that arise due to school management’s failure to consider recent accounting pronouncements. By completing this case, you will learn about standards that affect not-for-profit entities and how auditors resolve differences with clients. The decisions that you make require an understanding of technical knowledge of topics covered in typical intermediate accounting courses. In addition, the case requires you to integrate accounting theory with the practice of auditing. The premise for the case is that in order to be a successful auditor, you will need a good understanding of your client’s business as well as technical accounting issues.