In a report to the Spring Meeting of its Governing Council, the American Institute of CPAs gave a review of its 2013 forecast and its proposed 2014 budget that indicated that the institute was in healthy financial condition.

According to a presentation by Tommye Barie, the chair of the Finance Committee and a partner at Mauldin & Jenkins, and institute senior vice president and COO anthony Pugliese, the forecast operating results for 2013 are expected to show an excess of revenue over expenses of approximately $1.6 million, despite an expected decline in revenue due to lower-than-expected sales for CPE and publication products, and a $2.2 million decline in exam revenue, due to fewer domestic CPA Exam sections being administered. 

These declines were partially offset by a $1.3 million increase in other revenue, including higher member insurance program income and higher investment income.

Institute management has more than fully offset the rest of the decline through cost reductions in non-member-facing areas, including lower salary expense.

As of March 31, 2013, the institute’s total assets were $165.7 million, $5.2 million more than at the same time in the previous year. Most of the increase is due to an increase in investments. The AICPA’s portfolio has increased by over $15 million, Pugliese noted.

Total liabilities were $154.3 million, compared to $139.1 million the year before, with the increase primarily due to a larger pension liability due to a decline in the interest rate.

“As with every other business,” Pugliese said, “the low-interest-rate environment has hurt our pension plan. ... Over the past 9 months, we have worked extensively to deal with this.”

To save $10 million over the four years from 2014, the AICPA is accelerating a plan freeze from 2017 to next month. To offset that, it will be boosting its 401(k) plan. In fiscal 2014, it will be offering lump-sum payouts to some retirees, in an effort to help reduce the volatility associated with its pension obligations.

Other highlights in the presentation:

  • The AICPA recouped its investment in the domestic CPA Exam in 2011, three years earlier than expected.
  • It is forecasting profits of $1.8 million for the international exam, which is now being offered in six countries, with plans to expand to more.
  • For fiscal 2014, the institute is forecasting a net increase in revenue of $6.8 million to $193.4 million, due to expected moderate growth in the membership base and modest dues and rate increases.
  • Salaries are expected to rise $4.1 million for 2014.
  • The institute has a capital expenditure budget of $5.1 million for 2014, and expects $5 million in debt service payments and $2 million in pension funding requirements.

 
For more from the Spring Meeting of Council, see: 

• Melancon Keynote Highlights Transformation

• AICPA Votes to Allow Revised Definition of Attest Services

• AICPA Aims to Offer Credentials Overseas

• CGMA Exam Details Emerge

AICPA Aims for Greater Diversity in Accounting

CPAs Try to Get Congress to Do Something