NOTES TO FINANCIAL STATEMENTS.

• Position: California Society of Certified Public Accountants - Statistical Data Included

1. Organization and Significant Accounting Policies

   The California Society of Certified Public Accountants (CalCPA) is a nonprofit incorporated membership organization whose purpose is to advance the profession of accountancy in the State of California CalCPA 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 CalCPA and the Foundation are derived primarily from CPAs in California. CalCPA and the Foundation share some administrative functions. Such costs are incurred by CalCPA, who charges the Foundation for its estimated share.

   PRINCIPLES OF CONSOLIDATION

   The Board of Trustees of the Foundation consists of members of CalCPA who are elected by the governing Board of Directors of CalCPA. Because of common control, the accompanying financial statements reflect the consolidation of CalCPA and the Foundation. Material transactions between the entities have been eliminated in consolidation.

   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 in the membership period. Dues collected in advance of the membership period are recorded as deferred revenue until earned. Peer review registration fees are recognized over the calendar year. Peer review processing and review fees are recognized as review engagements are completed. Revenue from professional education programs is recognized in the periods the programs are held.

   CASH AND EQUIVALENTS

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

   ADVERTISING COSTS

   Direct response advertising consists primarily of catalogs and brochures for educational seminars and other events. Direct response 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.

   INVESTMENTS

   Investments are stated at market value.

   PROPERTY AND EQUIPMENT

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

   DONATED SERVICES

   Members of CalCPA donate their time to various activities of CalCPA 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.

   INCOME TAXES

   CalCPA and the Foundation are exempt from income taxes under Internal Revenue Code (IRC) Sections 501(c)(6) and 501(c)(3), respectively, and related California code sections. However, the...