Changes in Audit Guidelines for Alternative Investments Held by Higher Education and Not-for-Profits

Special CommentMarch 2006 Contact PhoneNew YorkRoger Goodman 1.212.553.3842Susan Fitzgerald 1.212.553.7762Karen Dulitz 1.212.553.3614Dennis Gephardt 1.212.553.7209Travis Lovell 1.212.553.4902Kim Tuby 1.212.553.7738Elizabeth Veasey 1.212.553.1027Diane Viacava 1.212.553.4734Heather Willis 1.212.553.7106John Nelson 1.212.553.4096San FranciscoMarianna Pisano 1.415.274.1726BostonRoger Goodman 1.212.553.3842Changes in Audit Guidelines for Alternative Investments Held by Higher Education and Not-for-Profits Highlight Risks of These StrategiesMoody’s Emphasizes Strength of Management and Governance PracticesSummaryAs higher education and other not-for-profit organizations have continued to shift increasingly large shares of their1investment portfolios into alternative investments , Moody’s has highlighted regularly the risks and opportunities2associated with these strategies . Recently, the American Institute of Certified Public Accountants (AICPA) publisheda new interpretation of SAS 101, the primary guideline for auditing investment fair value measurements and disclo-sures. Based on this new interpretation of existing audit standards and accounting practices, several changes to finan-cial reporting are possible for higher education institutions, including, in certain circumstances restating investmentsat cost rather than market value, or requiring the consolidation of previously distinct corporate entities. Under certaincircumstances, qualified ...