Notes to the combining financial statements (dollars in thousands).

1. ORGANIZATION & SIGNIFICANT ACCOUNTING POLICIES

The California Society of Certified Public Accountants (Society) is a nonprofit incorporated membership organization whose purpose is to advance the profession of accountancy in the State of California. The Society 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 the Society and the Foundation are derived primarily from CPAs in California. The Society and the Foundation share some administrative functions. Such costs are allocated between the entities based on their estimated share. The California CPA Institute (the Institute), a nonprofit organization under Internal Revenue Code Section 501(c)(3), was formed in October 2004 to account for scholarship activities and financial literacy program. The activities of the Institute are included in the Society.

PRINCIPLES OF COMBINATION

The Board of Trustees of the Foundation consists of members of the Society who are elected by the governing Council of the Society. Because of common control, the accompanying financial statements reflect the combining of the Society and the Foundation.

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 over the membership period. Peer review registration fees are recognized over the calendar year. Peer review processing and review fees are recognized when review engagements are completed. Revenues from professional education programs are recognized in the periods the programs are held. Revenues collected in advance are deferred until earned.

CASH AND EQUIVALENTS

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

ALLOWANCE FOR DOUBTFUL ACCOUNTS

Allowance for doubtful accounts totaled $11 and $13 for the Society at April 30, 2007 and 2006, respectively, and totaled $6 at April 30, 2007 and 2006 for the Foundation.

INVESTMENTS

Investments are stated at fair value. Unrealized and realized gains and losses are included in investment income reported on the combining statements of activities.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost and depreciated or amortized 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 lives of the leases. Deferred lease costs represent rent expense recognized in excess of rental payments made.

OTHER INCOME

Other income includes event sponsorships for various state committee meetings and conferences.

ADVERTISING COSTS

Advertising costs consist primarily of catalogs and brochures for educational seminars and other events. 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.

DONATED SERVICES

Members of the Society donate their time to various activities of the Society 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 as a contribution.

INCOME TAXES

The Society is exempt from income taxes under Internal Revenue Code (IRC) Section 501(c)(6) and related California code sections. The Institute and the Foundation are both exempt from income taxes under Internal Revenue Code (IRC) Section 501(c)(3) 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 accounting principles generally accepted in the United States of America 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

The Society shares certain administrative functions with CAMICO Mutual Insurance Company (CAMICO) and Group Insurance Trust (GIT). The Society charges GIT and is charged by CAMICO for estimated shares of related expenses. The Society also sells services to CAMICO and GIT.

CAMICO provides professional liability insurance for Society members and is endorsed by the Society. Since CAMICO is not under common control with the Society and the Foundation, the financial statements do not reflect consolidation of CAMICO. Balances of $41 and $37 due from CAMICO as of April 30, 2007 and 2006, respectively, are included in the Society's other accounts receivable. Services purchased by CAMICO, net of expenses allocated from CAMICO, totaled $181 for 2007 and $176 for 2006.

GIT is a multiple-employer welfare arrangement formed to provide health and welfare insurance plans to Society members at favorable group rates. The Society's Council exerts control over the nomination process for the Board of Trustees of GIT. However, since regulatory agencies limit the Society's control of GIT's activities, the financial statements do not reflect consolidation of GIT. Balances of $45 and $48 due from GIT are included in the Society's other accounts receivable as of April 30, 2007 and 2006, respectively. Services purchased and expenses allocated for GIT totaled $277 for 2007 and $228 for 2006.

3. THE INSTITUTE

The activities of CalCPA Institute are reflected in the financial statements of the Society. This entity was formed to account for scholarship activities and financial literacy programs. Its revenues, expenses, and net assets for 2007 and 2006 are as follows:

2007 2006 Current assets $290 $488 Noncurrent assets 1,262 873 Total Assets 1,552 1,361 Current Liabilities 44 189 Net Assets 1,508 1,172 Total Net Assets and Liabilities 1,552 1,361 Revenue:

Scholarship donations 378 409

Financial literacy donations 116 178

Investment and other income 211 112 Total Revenue 705 699 Expenses:

Administration expenses 64 153

Scholarship distributions 305 247 Change in net assets 336 299 Net assets, beginning of year 1,172 873 Net assets, end of year $1,508 $1,172

4. PEER REVIEW PROGRAM

The financial statements of the Society include the operations of the Peer Review Program, which administers the American Institute of Certified Public Accountants' Peer Review Program in California, Arizona, and Alaska. Peer review expenses are included in other activities in the statements of activities and the statements of functional expenses. Revenues, expenses, and net assets for the program are summarized as follows:

2007 2006 Revenues:

Registration fees $719 $702

Processing and review fees 223 167 Total peer review fees 942 869

Interest income 49 31

Other income 15 13 Total revenue 1,006 913 Expenses:

Reviewer costs and operating expenses 949 929 Change in net assets 57 (16) Net assets, beginning of year 490 506 Net assets, end of year $547 $490

5. INVESTMENTS

Investments consist of the following:

Society Foundation Combined 2007 Debt securities $4,505 1,337 5,842 Equity securities 7,906 6,190 14,096 Total $12,411 $7,527 $19,938 2006 Debt securities 4,148 1,268 5,416 Equity securities 6,680 6,245 12,925 Total $10,828 $7,513 $18,341

Investment income consists of the following: