CALIFORNIA CPA EDUCATION FOUNDATION.

CONSOLIDATED FINANCIAL STATEMENTS & INDEPENDENT AUDITOR'S REPORT 1999 to 2000

CALCPA TREASURER'S REPORT

It is my pleasure to report on CalCPA's financial results for the fiscal year ended April 30, 2000. We recognized an excess of revenue over expenses in the amount of $1,247,000. Our ending fund balance increased to $2,507,000 with cash and cash equivalents of $4,156,000.

The results of operations are significantly better than the prior year when CalCPA recognized losses of $1,121,000. There were many reasons for this dramatic turnaround including:

* Joint efforts and sacrifices by members and staff. Meeting expenses were substantially under budget at the chapter, board and committee levels.

* Member dues revenue exceeded budget. Billing and monitoring of membership renewals has improved our cash flow, allowed us to replenish our cash reserves, and eliminated the need to borrow funds.

* Staff reductions resulted in the restructuring of staff responsibilities to increase efficiency.

* Publications revenue exceeded budget. Publication expenses were substantially under budget due to changes made in the communications division.

* CalCPA operated in a maintenance mode this year while conducting an executive search and hiring a new executive director.

The Finance Committee worked diligently in its oversight capacity to monitor compliance with the budget guidelines approved by the board of directors. The fund balance has been increased to a level in excess of the guidelines for the year ended April 30, 2000. The Finance Committee monitored the performance of our investments quarterly and worked closely with our investment consultant to diversify our investment portfolio and establish a line of credit secured by our investments. CalCPA has returned to a fiscally sound position with a positive outlook for the future. It has been an honor to serve as CalCPA treasurer this past year. I have enjoyed the experiences and challenges we faced this year. I wish to thank all of our members, management team and staff for making this a successful year for CalCPA.

Michael Pimentel

FOUNDATION TREASURER'S REPORT

The accompanying financial statements of the California CPA Education Foundation, for the fiscal year ended April 30, 2000, reflect its continued successful delivery of quality programs, while controlling the costs necessary to produce and provide them. Total revenues were steady, primarily as a result of the Foundation's decision to continue pricing its programs to members at very low margins. Additionally, through the creative work of its management team and program leaders, substantial cost savings were achieved in delivering those programs.

The Foundation did suffer a significant disappointment during the year when it was determined that its new database software was not going to be completed by the vendor, and that the database program would be unable to meet the Foundation's requirements. This has caused both the Foundation and the vendor to pursue legal and other remedies. The impact of this dispute on the financial statements was material. The capitalized cost of this abandoned software, $531,000, was written off by the Foundation in its entirely. This cost has been reflected within the Foundation's "Management and General" expenses in the accompanying Consolidating Statements of Activities. It is also discussed in Note 6 to the financial statements.

The Foundation is continuing to explore new and innovative CPE products and alliances. Through its innovative programs and delivery styles, its management and program leadership will continue to deliver effective programs, within an affordable pricing structure. We look forward to its continued success in its new facilities in Redwood City.

D. Paul Regan

GILBERT ACCOUNTANCY CORPORATION

CERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT...