Research Case—Governmental or Not-for-Profit Entity? In partnership with Jefferson County and the Mound City Visitor’s Bureau, Mound City recently established a Native American Heritage Center and Museum, organized as a tax-exempt not-for-profit organization. Although the facility does not charge admission, signs at the information desk in the entry lobby encourage gifts of $3.00 for adults and $1.00 for children, 12 and under. Many visitors make the recommended contribution, some contribute larger amounts, and some do not contribute at all. Such contributions comprise 40 percent of the museum’s total annual revenues, with net proceeds from fund-raising events and governmental grants comprising the remaining 60 percent. The center operates from a city-owned building for which it pays a nominal $1 per year in rent. Except for a full-time executive director and a part-time assistant, the center is staffed by unpaid volunteers. The center is governed by a seven-member board of directors, each appointed for a three-year term. Four of the directors are appointed by the Mound City Council, t by the Jefferson County Commission, and one by the Mound City Visitor’s Bureau. Should the center cease to operate, its charter pro- sides that 60 percent of its net assets will revert to the city, 25 percent to the county, and 15 percent to the Visitor’s Bureau.
At the end of its first year of operation, the board of directors decided to engage a local CPA to conduct an audit of the center’s financial statements. The board expects to receive an unqualified clean) audit opinion stating that its financial statements are presented fairly in conformity with generally accepted accounting principles.
Required
Assume you are the CPA who has been engaged to conduct this audit. To which standards-setting body for bodies) would you look for accounting and financial reporting standards to assist you in determining whether the center’s financial statements are in conformity with generally accepted accounting principles? Explain how you arrived at this conclusion.