Notes To Financial Statements - California Society of Certified Public Accountants - Statistical Data Included

California CPA, Sept, 2001

1. Organization and Significant Accounting Policies

The California Society of Certified Public Accountants (CalCPA) is a nonprofit incorporated membership organization whose purpose is to advance the profession of accountancy in the State of California CalCPA provides its members with general and technical resources through its chapters and committees. California Certified Public Accountants Education Foundation (Foundation) is a nonprofit public benefit corporation organized to provide continuing professional education to Certified Public Accountants (CPAs) and other interested parties. Revenues for both CalCPA and the Foundation are derived primarily from CPAs in California. CalCPA and the Foundation share some administrative functions. Such costs are incurred by CalCPA, who charges the Foundation for its estimated share.

PRINCIPLES OF CONSOLIDATION

The Board of Trustees of the Foundation consists of members of CalCPA who are elected by the governing Board of Directors of CalCPA. Because of common control, the accompanying financial statements reflect the consolidation of CalCPA and the Foundation. Material transactions between the entities have been eliminated in consolidation.

BASIS OF PRESENTATION

The financial statements are presented in conformity with Statement of Financial Accounting Standards (SFAS) No. 117, Financial Statements of Not-For-Profit Organizations.

REVENUE RECOGNITION

Membership dues are recognized as revenue in the membership period. Dues collected in advance of the membership period are recorded as deferred revenue until earned. Peer review registration fees are recognized over the calendar year. Peer review processing and review fees are recognized as review engagements are completed. Revenue from professional education programs is recognized in the periods the programs are held.

CASH AND EQUIVALENTS

For financial statement purposes, CalCPA and the Foundation consider all investments with a maturity at purchase of three months or less to be cash equivalents.

ADVERTISING COSTS

Direct response advertising consists primarily of catalogs and brochures for educational seminars and other events. Direct response advertising costs are capitalized as other current assets and charged to expense in the period the events occur. Other advertising costs are expensed as incurred.

INVESTMENTS

Investments are stated at market value.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost and depreciated using the straight-line method over estimated useful lives of 3 to 10 years.

DEFERRED LEASE COSTS

Rent expense is recognized on a straight-line basis over the life of the lease. Deferred lease costs represent rent expense recognized in excess of rental payments made.

DONATED SERVICES

Members of CalCPA donate their time to various activities of CalCPA and the Foundation, including the leadership of the organizations, committees, chapters, and member events. The value of this donated time is not reflected in the accompanying financial statements since it does not meet the criteria for recognition.

INCOME TAXES

CalCPA and the Foundation are exempt from income taxes under Internal Revenue Code (IRC) Sections 501(c)(6) and 501(c)(3), respectively, and related California code sections. However, the organizations are subject to income taxes from activities unrelated to their tax-exempt purposes. The Foundation is considered a publicly supported organization.

FUNCTIONAL EXPENSES

The costs of providing the program services and supporting services have been summarized on a functional basis in the statements of activities and of functional expenses. Accordingly, certain costs have been allocated among the program services and supporting services based on estimates of employees' time incurred and on usage of resources.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

2. Related Parties

CalCPA shares certain administrative functions with CAMICO Mutual Insurance Company (CAMICO) and Group Insurance Trust (GIT). CalCPA charges CAMICO and GIT for their estimated shares of related expenses. In addition, CAMICO and GIT purchase services from CalCPA

CAMICO provides professional liability insurance for CalCPA members and is endorsed by CalCPA. Since CAMICO is not under common control with CalCPA and the Foundation, the financial statements do not reflect consolidation of CAMICO. Balances of $73,000 and $126,000 due from CAMICO as of April 30, 2001 and 2000, respectively, are included in CalCPAs other accounts receivable. Services purchased and expenses allocated for CAMICO totaled $191,000 for 2001 and $353,000 for 2000.

GIT is a multiple employer welfare arrangement formed to provide health and welfare insurance plans to CalCPA members at favorable group rates. The CalCPA Board of Directors exerts control over the nomination process for the Board of Trustees of GIT. However, since regulatory agencies limit CalCPAs control of GIT's activities, the financial statements do not reflect consolidation of GIT. A balance of $105,000 due from GIT as of April 30,2001, is included in CalCPA's other accounts receivable. A balance of $136,000 due to GIT as of April 30,2000, is included in CalCPAs accrued expenses. Services purchased and expenses allocated for GIT totaled $233,000 for 2001 and $256,000 for 2000.