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Weekly Updates1. ORGANIZATION AND 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 programs. The activities of the Institute are included in the Society. The Institute is governed by the Society's Board of Directors.
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. Advertising revenues are recognized when the services are rendered. 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--Management periodically reviews the collectability of its accounts receivable and establishes an allowance for doubtful accounts as necessary. Management considers factors such as historical experience, credit quality, the age of the accounts receivable balances in determining the appropriate allowance. The allowance totaled $11 for the Society at April 30, 2009 and 2008, and totaled $6 for the Foundation at April 30, 2009 and 2008.
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. Investment income (loss) is reported net of related investment expenses.
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. Leasehold improvements are amortized over the lease term.
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--Includes event sponsorships for various state committee meetings and conferences.
ADVERTISING COSTS--Advertising costs consist primarily of radio advertisements, 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 combining 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 functional expenses. Accordingly, certain costs are for services shared between the Society and Foundation.
COMPENSATED ABSENCES -Accumulated paid time off is accrued when incurred.
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.
RECENT ACCOUNTING PRONOUNCEMENTS--In June 2006, the Financial Accounting Standards Board (FASB) issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes--an interpretation of FASB Statement No. 109, (FIN 48). FIN 48 provides guidance on recognition and measurement of uncertainties in income taxes recognized in financial statements by prescribing a more-likely-than-not recognition threshold and measurement attribute of tax positions taken or expected to be taken on a tax return. On December 30, 2008 FASB Staff Position (FSP) FIN 48-3 was issued and allows for the deferral of FIN 48 for fiscal years beginning after December 15,2008.
In accordance with this provision, the Society and Foundation elected to defer the application of FIN 48. Based on management's analysis of the Society's and Foundation's tax positions, the accounting for any uncertainty in its tax positions is not expected to have a material impact on the financial statements.
In September 2006, FASB issued SFAS No. 157, Fair Value Measurements (SFAS No. 157) which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements. FASB previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, SFAS No. 157 does not require any new fair value measurements. However, for some entities, application of SFAS No. 157 will change current practice. In February 2008, FASB issued Staff Position No. 157-2 that defers the effective date of SFAS No. 157 for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in financial statements on a recurring basis for fiscal years beginning after November 15,2008. In addition, FASB also agreed to exclude from scope of SFAS No. 157 fair value measurements made for purposes of applying SFAS No. 13, Accounting for Leases, and related interpretive accounting pronouncements. The adoption of SFAS No. 157 for financial assets and liabilities did not have a significant impact on the Society's and Foundation's results of operations, cash flows or financial position. The Society and Foundation are assessing the impact of adopting SFAS No. 157 on non-financial assets and liabilities, but do not expect it to have a material impact on its results of operations, cash flows or financial position.
In February 2007, FASB issued SFAS No. 159 The Fair Value Option for Financial Assets and Financial Liabilities (SFAS No. 159) which permits entities to choose to measure many financial instruments and certain other items at fair value. The objective of SFAS No, 159 is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 is effective for an entity's first fiscal year that begins after November 15, 2007. The Society and Foundation have adopted SFAS No. 159 but did not elect to measure any eligible financial instruments at fair value under this guidance.
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 provides 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 $29 and S39 due from CAMICO as of April 30, 2009 and 2008, respectively, are included in the Society's other accounts receivable. Services purchased by CAMICO, net of expenses allocated from CAMICO, totaled $191 for 2009 and $179 for 2008.
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 $60 and $14 due from GIT are included in the Society's other accounts receivable as of April 30, 2009 and 2008, respectively. Services purchased and expenses allocated for GIT totaled $311 for 2009 and $273 for 2008.
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