Independent auditors' report, combined financial statements and supplementary information.

• Position: Annual Report 2012-2013

CalCPA TREASURER'S REPORT

CalCPA finishes another fiscal year in strong financial condition. Our net assets increased by $2.7 million this year, reflecting a surplus from operations of $900,000 plus investment income of $1.8 million. Our year-end balance sheet shows net assets in excess of $23 million. We have no long term debt other than deferred compensation and that obligation is fully funded by our employees own contributions. Clearly, we have the resources to weather a financial storm and to grow in the future.

[ILLUSTRATION OMITTED]

The year has not been without challenges. Our membership dues renewal revenue fell by 4% compared to the previous year. This appears to reflect the aging of our baby boomer membership segment and their transition from the workforce to the golf course. On a brighter note, our new member dues income was up by 19% over the previous year. Despite our revenue challenges, expense reductions and tight cost controls by CalCPA's professional management team resulted in the year's operating surplus.

Our financial Challenge for the future is to replace the baby boomers. This will be accomplished if we continue our work to attract and retain the younger members--our YEPs--by making CalCPA relevant to their needs. These efforts are among the highest priorities for your volunteer leadership and professional management. The need for the services and skills of CPAs has never been greater. The future for the profession and for CalCPA is very bright.

--Timothy F. Good, CPA

CALIFORNIA CPA EDUCATION FOUNDATION TREASURER'S REPORT

2013 was a challenging fiscal year for the Foundation. Over the past couple of years, the shift in customer demand for web-based educational content has accelerated at a surprising pace. This shift has challenged the Foundation to adapt, and to do so rapidly. In the fiscal year, revenues topped $12 million versus a budget of $14 million. Through diligent efforts of the Foundation staff, costs were held in check, bringing the deficit from operations to $707k before net investment income, versus a budgeted deficit of $114k. Even with this operational deficit, net assets for the year did grow 1%.

[ILLUSTRATION OMITTED]

There is good news as well. The Foundation has expanded its reach to 27 states. It also initiated an external review of all courses to ensure that the CPE content it provides meets NASBA standards. The Foundation's commitment to quality learning products is affirmed by this!

The Foundation faces challenging times. Our product base has grown. The number of out-of-state webcast partners has grown. But the competition in the web-based marketplace is strong. There may very well come a time where accredited web-based continuing education is provided for little or no charge at all. The Foundation's role in advocacy, outreach, and membership are also important aspects of the Foundation's mission. An important component of the CalCPA Society's value to its members is the access to high quality continuing education. As the delivery method continues to evolve, the Foundation must as well. I look forward to the corning year and the challenge that it presents to us.

Peter Iannone, CPA

Independent Auditors' Report

COUNCIL OF THE

CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS and BOARD OF TRUSTEES OF THE CALIFORNIA CERTIFIED PUBLIC ACCOUNTANTS EDUCATION FOUNDATION

San Mateo, California

Report on the Combined Financial Statements

We have audited the accompanying combined financial statements of California Society of Certified Public Accountants (Society) and California Certified Public Accountants Education Foundation (Foundation), which comprise the combined statement of financial position as of April 30, 2013, and the related combined statements of activities, functional expenses, and cash flows for the year then ended, and the related notes to the financial statements.

Management's Responsibility for the Combined Financial Statements

Management is responsible for the preparation and fair presentation of these combined financial statements in accordance with accounting principles generally accepted in the United States of America: this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of combined financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these combined financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the combined financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the combined financial statements, whether due to fraud or error, in making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the combined financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the combined financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of California Society of Certified Public Accountants and California Certified Public Accountants Education Foundation as of April 30, 2013, and the changes in their combined net assets and their combined cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

The combined financial statements of California Society of Certified Public Accountants and California Certified Public Accountants Education Foundation, as of and for the year ended April 30, 2012, were audited by other auditors whose report dated June 8, 2012 expressed an unmodified opinion on those statements.

Report on Supplementary Information--Combining Statements

Our audit was conducted for the purpose of forming an opinion on the combined financial statements as of and for the year ended April 30, 2013 as a whole. The accompanying supplementary information is presented for purposes of additional analysis and is not a required part of the combined financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the combined financial statements. The information as of and for the year ended April 30, 2013, has been subjected to the auditing procedures applied in the audit of the combined financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the combined financial statements or to the combined financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information as of and for the year ended April 30, 2013 is fairly stated in all material respects in relation to the combined financial statements as a whole. The supplementary information as of and for the year ended April 30, 2012, was audited by other auditors whose report, dated June 8, 2012, expressed an unmodified opinion on such information in relation to the financial statements as a whole.

San Francisco, California

June 7, 2013

Notes to Combined Financial Statements

Years Ended April 30, 2013 and 2012 (Amounts Expressed In Thousands)

1. ORGANIZATION

   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 and administers the Peer Review Program on behalf oldie American Institute of Certified Public Accountants in California. Arizona and Alaska, The 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. The Society is governed by the CalCPA Council (Cot well), which is elected by the membership of the Society. The Foundation is governed by a Board of Trustees. Revenues for the Society and the Foundation are derived primarily from CPAs in California. The Society and the Foundation share administrative functions. Such costs are allocated between the entities based on their estimated share. The California CPA Institute (CalCPA Institute), a public charity nonprofit organization, was formed in October 2004 to administer scholarship activities, financial literacy and other programs. The activities of the CalCPA Institute are consolidated with the activities of the Society.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   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 by the...