2019/20 Audit Report
The combined financial statements for the NJCPA and Affiliates (NJCPA Education Foundation and NJCPA Scholarship Fund) for the year ended May 31, 2020, have been published.
The latter part the fiscal year ended May 31, 2020, brought the coronavirus pandemic and much uncertainty to the world and its people, and the NJCPA and Affiliates was no exception. While the pandemic brought in-person learning to a halt, because of the investment in technology upon the NJCPA and Affiliates’ office relocation in July 2019, learning was quickly able to be transitioned to an online platform to best serve members.
Unrestricted consolidated revenues for fiscal 2020 increased roughly 1.5 percent from the prior year, with the majority of the increase coming in investment income where the investment portfolios had a slight positive return for the year compared to a 2.5 percent loss in the prior year. Advertising income, along with commissions/royalties, saw increases in the current year, partially offset by reductions in peer review and special event income.
New Jersey Society of CPAs
Under the Society, membership dues were flat year-over-year at $3.59 million, with the 2020 amount the result of a small dues increase and a slight reduction in dues-paying members. Overall, membership was relatively stable, ending May 31, 2020, at 14,725 members versus 14,900 members at May 31, 2019, with a Fellow member retention rate of 94.6 percent in fiscal 2020 compared to a 93.2 percent retention rate for fiscal 2019, and an overall member retention for 2020 of 90.1 percent compared to 88.9 percent in 2019.
Peer review fees in fiscal 2020 from administration of that program decreased 3 percent from the prior year as firms continued to remove themselves from the program as they no longer perform certain services. As previously noted, the investment portfolios had a slight positive return for the fiscal year as unrealized losses were more than covered by realized interest and dividends. Expense savings versus budget were realized in several areas, the largest being in the Office line item where moving costs were significantly lower than what was expected. Additional savings were seen in the Meetings & Travel line, as the traveling to and holding of live meetings was put on hold starting in mid-March 2020, and in the Information Technology line as certain projects were put on hold. While still experiencing a decrease in net assets for the year of $232,000, the reduction in actual expenses versus what was budgeted resulted in the Society being ahead of budget by $339,000.
NJCPA Education Foundation
With the pandemic halting all in-person learning activities, both at the state and chapter levels, the NJCPA Education Foundation faced a big challenge towards the end of the fiscal year but was able to quickly pivot to online training because of established abilities from both a technological and personnel perspective. While the total number of learning opportunities decreased, those that were offered online were well attended, and while overall program revenue decreased versus budget because of the pandemic, the direct cost to run those programs decreased at a higher rate than the decrease in revenues. Depreciation costs were also lower than budget as the cost to build out the education center with the technology to broadcast educational programs was lower than anticipated. The Foundation ended fiscal 2020 with a negative change in net assets of approximately $471,000, which was better than budget by $66,000, due to expense savings; this is compared to a negative change in net assets of $457,000 for fiscal 2019. For 2020, educational programming served 19,725 registrants and delivered just under 90,000 credit hours of CPE.
NJCPA Scholarship Fund
For the second year in a row, fiscal 2020 chapter contributions to the NJCPA Scholarship Fund were approximately 20 percent above budget due to better-than-expected financial results in those programs, even with the stoppage experienced at the end of the fiscal year. The Scholarship Fund received a contribution from the Society’s outgoing president, Kyle Sell, along with a matching gift from Deloitte, to drive general fundraising over budget by $48,000. However, the Fund saw a decrease versus budget in membership renewal fundraising of $21,000 and a decrease in investment income versus budget, resulting in total revenue being below budget by 4 percent. The Fund awarded $400,500 in state and local scholarships to 74 applicants and made payments on prior-year awards for another 53 students; overall award expense was $15,750 below budget. Because of the pandemic, the awards ceremony for scholarship winners was cancelled, resulting in event savings. These savings, along with a lower-than-budgeted awards expense and a slightly lower revenue number, resulted in a decrease in net assets of $103,000 for 2020 versus a budgeted decrease of $122,000 and compared to a decrease in net assets of $209,000 for 2019.