2000–01 AICPA Annual Report Reveals Steep Losses

At its October Council meeting the American Institute of CPAs distributed its annual report for the year ended July 31, 2001. It contains the most thorough-to-date disclosures of the operating results, financing and ownership of CPA2Biz. The report also reveals a substantial increase in the AICPA’s consolidated long-term debt that arose during the 2001 fiscal year because of the CPA2Biz capitalization and its acquisitions and a continuing trend of operating deficits. For footnote aficionados, an extensive narrative allows for a reconstruction of some aspects of the deal with AICPA senior management as part of the CPA2Biz capitalization.

According to the disclosures in note 10 of the report, CPA2Biz lost $36,150,000 on total revenue of $29,276,000 for the year. CPA2Biz had at year-end total assets of $52,112,000 and total liabilities of $42,219,000, which includes $11,200,000 in long-term debt. Capitalization on July 31, 2001, consisted of $47,500,000 of preferred stock and $3,356,818 for 101,357 shares of common stock. CPA2Biz also issued $10,000,000 in preferred stock in October 2001. Both the preferred and common stock vote. AICPA senior management received 4,850 shares of common stock that was capitalized at $169,750.50, or $35 per share.

On a consolidated basis, the AICPA showed a $39,752,000 loss in unrestricted net assets for the year, dropping its unrestricted net asset balance from $42,771,000 to $3,019,000. The management discussion of financial results indicates that the AICPA portion of the consolidated results was close to budget with a $756,000 excess of revenue over expenses before its $461,000 share of the loss in Shared Services LLC and intercompany eliminations. The $37,726,000 operating loss compares to an operating loss of $3,849,000 in 2000 (previously reported as $3,499,000, without a note explanation offered), and an operating loss of $5,323,000 in 1999. Management’s discussion and analysis reiterates that the actual results for the year, both for the AICPA and CPA2Biz, are in line with budgets and projections.