FAST FORWARD Building the Profession of Tomorrow

Finance and Operations ReportTom Hilton, CPA, CGMAAnthony Pugliese, CPA, CGMA, CITPSpring Council | May 18-20, 2014

Item 12

Agenda

Review 2014 Forecast

Membership, Operational, and Balance Sheet Highlights

Pension Update

Review Proposed 2015 Budget

2

2014 Forecast Update ($ in thousands)

3

2014 2014 Fav / Forecast Budget (Unfav)

Revenue Producing Activities 89,163$ * 93,703$ (4,540)$

Net Cost of Sales 22,190 22,763 573

Gross Margin 66,973 70,940 (3,967)

Membership Dues 110,890 111,290 (400)

Interest / Dividends / Other 12,143 11,114 1,029

Net Operating Revenue 190,006 193,344 (3,338)

Expenses, Excluding Pension 185,048 192,286 7,238

Pension Expense 4,900 1,000 (3,900)

Total Expenses 189,948 193,286 3,338

Net Excess of Operating Revenue Over Expense 58$ 58$ -$

* FY14 forecast is 3% higher than FY13 actual

2014 Membership Highlights

General Membership• Retention rate of 94% versus budget of 94.75% • On track to meet or exceed this year’s budget

Sections and Credentials• Retention trends in line with prior years• International expansion

CGMA Designation• On track to meet budget of 42,000 designees• Exam launch in Spring 2015

4

2014 Operational Highlights

Leveraging Horizons 2025 to advance AICPA’s Digital Strategy• Re-designing and re-launching Journal of Accountancy website• Implementing new operating systems to enhance member

service and interaction

Growing Product Lines and Revenue• Created new on-demand and group study products• Enhanced marketing efforts and streamlined product delivery

methodology

5

®

0%

10%

20%

30%

40%

50%

60%BLENDED L/T INDICES AICPA L/T INVESTMENTS

$88.4M

$112.3M $110.7M

$97.0M$97.7M

AICPA L/T Investments vs. Blended L/T Indices

6

Liquidated $10M in October-2013

$7.2M gains year to date

Domestic CPA Exam Reinvestment ($ in millions)

7

Max. Deferred Liability

International CPA Exam

Administering in six countries

Collaborating with NASBA on expansion to other countries

2014 profit of $1.4 million and 10,000 sections

8

Long-Term ($ in millions)

$10.0 $8.8

$3.8$0.0$0

$5

$10

$15

Apr-14 Jul-14 Jul-15 Apr-16

Total Debt

9

Pension Plan Update

Environmental factors for plan sponsors:• Negatively being impacted by low interest rate environment

• Mortality table changes will increase pension expense

• Increase in PBGC premiums may accelerate plan funding strategy

Recent changes to reduce pension exposure:• Accelerated plan freeze from April 30, 2017 to June 30, 2013

• Offered lump sum payouts to terminated vested participants

10

2015 Proposed Budget ($ in thousands)

11

2015 2014Budget Forecast Fav (Unfav)

Revenue Producing Activities 93,534$ 89,163$ 4,371$ Net Cost of Sales 22,869 22,190 (679)

Gross Margin 70,665 66,973 3,692

Membership Dues 114,730 110,890 3,840 Interest / Dividends / Other 11,347 12,143 (796)

Net Operating Revenue 196,742 190,006 6,736 Total Expenses 196,642 189,948 (6,694)

Net Excess of Operating Revenue Over Expense 100$ 58$ 42$

Cash Flow Projections through July 2015

-$13M

-$30

-$20

-$10

$0

$10

$20

$30

$40

$50

$60

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul

12

Council Resolution

Resolved:

That the proposed operating budget for the American Institute of Certified Public Accountants for the 2014-2015 fiscal year, as presented to Council as agenda item 12, be approved and adopted.

13

2014 AICPA Spring Council

Scottsdale, ArizonaMay 18-20, 2014