2020/21 Audit Report
By Gordon Smith, CPA, NJCPA Chief Financial Officer –
November 1, 2021
The combined financial statements for the
NJCPA and Affiliates (NJCPA Education
Foundation and NJCPA Scholarship Fund)
for the year ended May 31, 2021, have
been published.
The effects of the COVID-19 pandemic
that began in the latter part of the fiscal
year ended May 31, 2020, persisted
through the fiscal year ended May 31,
2021. Social distancing requirements
continued to prevent members from
attending education events in person, and
all Society interest groups, committees
and the Board of Trustees continued to
meet remotely. While this has not been
ideal, members, volunteers and staff have
persevered. Summer brought renewed
hope for the return to in-person events,
but the rise of the Delta and other COVID
variant strains slowed the progress. As
of this writing, in-person events will not
resume until after the new year.
Unrestricted consolidated revenues for
fiscal 2021 increased 3.3 percent from the
prior year. Investment income gained the
most as the investment portfolios returned
between 26 and 28 percent for the year,
the result of strong financial markets.
Improvements were also seen in advertising
revenue, royalties and commissions, and
peer review fees.
New Jersey Society of CPAs
Under the Society, membership dues
were $3.56 million, a decrease of less than
1 percent from the prior year; a slight
decrease in dues-paying members offset
the implemented small dues increase.
Overall membership decreased from
14,725 members at May 31, 2020, to
14,301 members at May 31, 2021, with 70
percent of the decrease attributable to non-dues-paying Student members. The Fellow
member retention rate remained strong at 94.6 percent in fiscal 2021, the same as
the prior year, while the overall member
retention for 2021 was 90.5 percent versus
90.1 percent for 2020.
Peer review fees for fiscal 2021 from
administration of that program rose slightly
to $353,000, the result of a small price
adjustment, though there remains pressure
on the program as firms continue to evaluate
whether they will continue to perform
certain attest services and remain part of
the program.
As previously noted, the investment
portfolios had strong returns for the fiscal
year as financial markets performed well.
Unrealized gains drove the results while
decreases in interest and dividends, the
result of companies managing cash and
operations during a pandemic, pared down
those returns.
Expense savings versus budget were
realized in several areas, the largest being in the Travel and Meetings line as costs for
attending in-person meetings were essentially
non-existent due to the lack of such
meetings. Costs relating to staff education
were significantly below budget as any
learning was done virtually as opposed
to attending in-person. Employee-related
costs were below budget as staff compensation
was limited due to the pandemic,
and certain information technology costs
were delayed or canceled, also due to
the pandemic.
With a modest increase in revenues and
a decrease in total expenses, the Society
experienced an increase in net assets of
$819,000. Separately, the Society applied
for and received funds under the federal
government’s Paycheck Protection Program,
with such proceeds shown in the Statement
of Financial Position under liabilities; the
Society expects forgiveness of such loan
once its application is filed and reviewed.
NJCPA Education Foundation
Throughout fiscal 2021, the NJCPA
Education Foundation continued to
provide educational programming on a
fully virtual basis, as was done in the latter
part of fiscal 2020. Fiscal 2021 included a
portion of calendar year 2020, the last
year of New Jersey’s CPE reporting cycle.
While the last year of a triennial normally
brings increased revenues due to higher
attendance, and though attendance was
very strong, fiscal 2021 programming
revenues were lower than the prior year
due to the fact that online programming
carries lower per-unit revenues. However,
the direct costs to produce programs
decreased more than revenue decreased,
resulting in better gross margins for
fiscal 2021.
As in the Society, investment income
was strong on portfolio performance and,
from an expense perspective, employee-related
costs came in below budget as less
staff time than expected was allocated to
educational activities. Reduced expenses
versus budget were also seen in, among
other categories, printing and distribution,
as printed catalogs were not produced as
information was disseminated digitally,
and contributions to the Scholarship Fund
were held as the Education Foundation
Board analyzes investment needs moving
forward.
Although the Foundation saw revenues
decline in fiscal 2021, expenses declined
even more, and the fiscal year brought
a positive change in net assets of approximately $752,000 versus a flat budget. For
2021, all-virtual educational programming
served more than 27,000 registrants and
delivered just under 60,000 credit hours
of CPE.
NJCPA Scholarship Fund
Revenues in the NJCPA Scholarship
Fund for fiscal 2021 were approximately
$443,000 over budget. Investment income
came in $504,000 over budget on large,
unrealized gains as financial markets
performed very well but were partially
offset by lower contributions from the
Education Foundation, as that entity’s
Board analyzes funds needed for future
investment. Total expenses for fiscal 2021
were roughly $30,000 below budget as
the awards ceremony was cancelled for
a second year due to COVID along with
reduced employee-related costs.
The Fund restructured its award given to
high school seniors beginning their college
careers from a four-year, scaled award to a
one-time award. A total of $250,500
was awarded in state and local scholarships
to 52 applicants, while making payments
on prior-year awards for another 53
students; overall award expense was
$4,200 below budget.
The higher-than-budgeted revenues
and reduced expenses resulted in a positive
change in net assets of $308,000 for fiscal
2021 versus a budgeted negative change
of $164,000 and compared to a negative
change in net assets for fiscal 2020 of
$103,000.