Audited consolidating financial statements.

Independent Auditor's Report

To the Board of Directors Tax Executives Institute, Inc. and TEI Education Fund

We have audited the accompanying consolidating statements of financial position of Tax Executives Institute, Inc. and TEI Education Fund (collectively, the Organization) as of June 30, 2009 and 2008, and the related consolidating statements of activities and cash flows for the years then ended. These consolidating financial statements are the responsibility of the Organization's management. Our responsibility is to express an opinion on these consolidating financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidating financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidating financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidating financial statements referred to above present fairly, in all material respects, the individual and consolidated financial positions of Tax Executives Institute, Inc. and TEI Education Fund as of June 30, 2009 and 2008, and the changes in their net assets and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Tate & Tryon

Washington, DC

July 21, 2009

Consolidating Statements of Financial Position Years Ended June 30, 2009 and 2008 See notes to the consolidating financial statements. 2009 TEI TEIF Total Assets Cash and cash equivalents-- $411,877 $112,496 $524,373 Note B Short-term investments-- 7,884,672 7,884,672 Notes B, C, & D Accounts receivable 90,712 90,712 Due (to) from affiliate (3,897) 3,897 -- Prepaid expenses 429,472 429,472 Long-term investments--Notes 3,504,675 3,504,675 B, C, & D Investments held for 39,124 39,124 deferred compensation-- Notes C & E Property and equipment-- 148,639 148,639 Note F Total assets $12,505,274 $116,393 $12,621,667 Liabilities and net assets Accounts payable 106,816 -- 106,816 Accrued liabilities 142,485 142,485 Due to brokers for 974,665 974,665 securities purchased Deferred revenue--Note G 2,722,204 2,722,204 Deferred rent--Note J 177,045 177,045 Deferred compensation-- 39,124 39,124 Note E Total liabilities 4,162,339 -- 4,162,339 Commitment and contingency-- -- Note J Net assets--unrestricted 8,342,935 116,393 8,459,328 Total net assets 8,342,935 116,393 8,459,328 Total liabilities and net $12,505,274 $116,393 $12,621,667 2008 TEI TEIF Total Assets Cash and cash equivalents-- $574,458 $115,439 $689,897 Note B Short-term investments-- 10,728,624 10,728,624 Notes B, C, & D Accounts receivable 48,595 48,595 Due (to) from affiliate -- Prepaid expenses 92,468 92,468 Long-term investments--Notes 1,820,982 1,820,982 B, C, & D Investments held for 55,838 55,838 deferred compensation-- Notes C & E Property and equipment-- 204,325 656 204,981 Note F Total assets $13,525,290 $116,095 $13,641,385 Liabilities and net assets Accounts payable 14,538 -- 14,538 Accrued liabilities 53,865 53,865 Due to brokers for 2,057,566 2,057,566 securities purchased Deferred revenue--Note G 3,199,178 3,199,178 Deferred rent--Note J 102,634 102,634 Deferred compensation-- 55,838 55,838 Note E Total liabilities 5,483,619 -- 5,483,619 Commitment and contingency-- -- Note J Net assets--unrestricted 8,041,671 116,095 8,157,766 Total net assets 8,041,671 116,095 8,157,766 Total liabilities and net $13,525,290 $116,095 $13,641,385 assets Consolidating Statements of Activities Years Ended June 30, 2009 and 2008 See notes to the consolidating financial statements. 2009 TEI TEIF Total Revenue Sponsorships $1,810,850 $ -- $1,810,850 Continuing education 1,565,810 1,565,810 Membership dues 1,403,514 1,403,514 Royalty 606,025 606,025 Investment income--Note D 277,583 46 277,629 Publications 407,337 407,337 Initiation Fees 107,800 107,800 Other 7,618 7,618 Management Fees--Note H (8,726) 8,726 -- Total revenue 6,177,811 8,772 6,186,583 Expense Program Services Continuing education 1,979,956 6,887 1,986,843 Committee and liaison 582,657 582,657 Publications 454,692 454,692 Membership services and 435,962 435,962 development Dues transferred to chapters 206,220 206,220 Total program services 3,659,487 6,887 3,666,374 Supporting services General and administrative 2,206,123 1,587 2,207,710 Total expense 5,865,610 8,474 5,874,084 Change in net assets before 312,201 298 312,499 special project expense Special project expense (10,937) (10,937) Change in net assets 301,264 298 301,562 Net assets, beginning of year 8,041,671 116,095 8,157,766 Net assets, end of year $8,342,935 $116,393 $8,459,328 2008 TEI TEIF Total Revenue Sponsorships $2,048,000 $ -- $2,048,000 Continuing education 1,821,665 1,821,665 Membership dues 1,387,568 1,387,568 Royalty 493,000 493,000 Investment income--Note D 429,700 37 429,737 Publications 422,137 422,137 Initiation Fees 144,000 144,000 Other 24,437 24,437 Management Fees--Note H (11,965) 11,965 -- Total revenue 6,758,542 12,002 6,770,544 Expense Program Services Continuing education 1,954,500 8,462 1,962,962 Committee and liaison 848,275 848,275 Publications 476,928 476,928 Membership services and 306,794 306,794 development Dues transferred to chapters 210,315 210,315 Total program services 3,796,812 8,462 3,805,274 Supporting services General and administrative 1,998,501 1,294 1,999,795 Total expense 5,795,313 9,756 5,805,069 Change in net assets before 963,229 2,246 965,475 special project expense Special project expense (42,801) (42,801) Change in net assets 920,428 2,246 922,674 Net assets, beginning of year 7,121,243 113,849 7,235,092 Net assets, end of year $8,041,671 $116,095 $8,157,766 Consolidating Statements of Cash Flows Years Ended June 30, 2009 and 2008 See notes to the consolidating financial statements. 2009 TEI TEIF Total Cash flows from operating activities Change in net assets $301,264 $298 $301,562 Adjustments to reconcile change in net assets to net cash (used in) provided by operating activites Depreciation and 74,345 656 75,001 amortization Loss on disposal of 2,846 2,846 property and equipment Net loss (gain) on 37,726 37,726 investments Changes in assets and liabilities: Accounts receivable (42,117) (42,117) Due (to) from affiliate 3,897 (3,897) -- Prepaid expenses (337,004) (337,004) Security deposit Accounts payable 92,278 92,278 Accrued liabilities 88,620 88,620 Deferred revenue (476,974) (476,974) Deferred rent 74,411 74,411 Total adjustments (481,972) (3,241) (485,213) Net cash (used in) provided by operating activities (180,708) (2,943) (183,651) Cash flows from investing activities Proceeds from sale and 5,144,720 5,144,720 maturity of investments Purchases of investments (5,105,088) (5,105,088) Purchases of property and (21,505) (21,505) equipment Net cash provided by (used in) investing activities 18,127 -- 18,127 Net (decrease) increase in cash and cash equivalents (162,581) (2,943) (165,524) Cash and cash equivalents, 574,458 115,439 689,897 beginning of year Cash and cash equivalents, end $411,877 $112,496 $524,373 of year Supplemental Disclosure of Cash Flow Information Cash paid during the year for $15,223 $ -- $15,223 income taxes 2008 TEI TEIF Total Cash flows from operating activities Change in net assets $920,428 $2,246 $922,674 Adjustments to reconcile change in net assets to net cash (used in) provided by operating activites Depreciation and 98,915 492 99,407 amortization Loss on disposal of 50 50 property and equipment Net loss (gain) on (15,622) (15,622) investments Changes in assets and liabilities: Accounts receivable 94,856 94,856 Due (to) from affiliate (15,048) 15,048 -- Prepaid expenses 10,152 10,152 Security deposit 14,306 14,306 Accounts payable (306,535) (15,000) (321,535) Accrued liabilities (578) (578) Deferred revenue (131,612) (131,612 Deferred rent 102,634 102,634 Total adjustments (148,482) 540 (147,942) Net cash (used in) provided by operating activities 771,946 2,786 774,732 Cash flows from investing activities Proceeds from sale and 8,407,090 8,407,090 maturity of investments Purchases of investments (9,487,237) (9,487,237) Purchases of property and (159,523) (159,523) equipment Net cash provided by (used in) investing activities (1,239,670) -- (1,239,670) Net (decrease) increase in cash and cash equivalents (467,724) 2,786 (464,938) Cash and cash equivalents, 1,042,182 112,653 1,154,835 beginning of year Cash and cash equivalents, end $574,458 $115,439 $689,897 of year Supplemental Disclosure of Cash Flow Information Cash paid during the year for $46,733 $ -- $46,733 income taxes A. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization: Tax Executives Institute, Inc. (TEI), incorporated in 1944 in New York, is a professional organization for corporate and business employees who are responsible for the tax affairs of their employers in an executive, managerial, or administrative capacity. TEI is exempt from the payment of income taxes on its exempt activities under Section 501(c)(6) of the Internal Revenue Code. However, TEI is subject to tax on its unrelated business activities such as advertising.

TEI Education Fund (TEIF) was formed in 1987 to sponsor or cosponsor continuing education programs and otherwise to further TEI's educational objectives. TEIF is exempt from the payment of income taxes on its exempt activities under Section 501(c)(3) of the Internal Revenue Code, and has been classified by the Internal Revenue Service as other than a private foundation within the meaning of Section 509(a)(1) of...