2017 association integrated report · 2018-05-09 · remuneration top accomplishments overnance...

Powering trust, opportunity and prosperity

2017 Integrated report

Transparency and value creation are at the heart

of the accounting profession. It’s fitting then

that, in this inaugural year of the Association of

International Certified Professional Accountants,

we present our first integrated annual report.

The report is designed to offer information

freely while also telling the story of how our

organization creates value. Reporting of this

kind is a journey. The framework for integrated

reporting was developed by the International

Integrated Reporting Council and can take up to

three years to implement fully. We are dedicated

to creating an environment of responsible capital

allocation, recognizing the full range of factors

that affect value and supporting integrated

thinking and planning. By doing so, we will be

stewards of an organization as vital and vibrant

as the profession it represents.

aicpa-cima.comaicpa.orgcimaglobal.comcgma.orgcpa.com

2 Letter from leadership

6 Top accomplishments

12 Governance

15 External environment

16 Strategy and business model

22 Financial performance and key performance indicators (KPIs)

28 Risks and opportunities

30 Executive remuneration

31 Resources and relationships

33 Financials

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Executive remuneration

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Letter from leadership

Financials

Financial performance and KPIs

Risks and opportunities

Strategy and business model

External environment

Resources and relationships

We are professional accountants. We are proud of our heritage and energized by the opportunities ahead. We are leaders in public and management accounting. Controllers and auditors. Tax advisers and valuation experts. CFOs and forensic analysts. We are at the start of our careers, and we are CEOs who lead multinational businesses.

We are strategic counselors to individuals. The ethical conscience of organizations. We are protectors of the public interest.

That is the theme of this, the first integrated report from the Association of International Certified Professional Accountants (the Association) that launched in January 2017. Formed by members of the American Institute of CPAs (AICPA) and The Chartered Institute of Management Accountants (CIMA), the Association brings together the broad diversity and full force of the accounting profession worldwide — encompassing more than 667,000 members and students across 184 countries and territories — to power our shared purpose.

Achieving that purpose is an ambitious goal that has never been more relevant or important. We are in an age of innovation, connection and acceleration unlike anything the world has ever seen. The speed of change is challenging comprehension, amplifying risk and forcing the reimagining of everything from careers to business models. Clients and organizations are looking to our profession to untangle the web of complexity, provide clarity amid the uncertainty and make sure both personal finances and organizational strategies are made to last.

To do that, we must push ourselves to evolve faster than the world around us. We must anticipate the next services that investors, customers, clients and other stakeholders will demand; understand how corporate business models and firm structures will need to adapt; and prepare for the future of audit and finance. The Association, leveraging the strengths of CIMA and the AICPA, provides a powerful platform to address the challenges of today, while anticipating the demands of tomorrow. We will remain relevant by supporting the leading purveyors in our profession, ensuring our members have the skills and competencies they need and

But no matter the role played, service provided or location in the world, we are united by a common purpose: To champion trust, advance opportunity and fuel prosperity.

Letter from leadershipLetter from leadership

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evolving our organization to continuously meet the needs of a changing profession. And we have made significant progress in this first year:

• Launched new guidance and tools in critical — and emerging — areas such as cybersecurity risk management, integrated reporting and sustainability reporting

• Expanded the availability of hundreds of competency-enhancing resources through our new CGMA Store and held our largest ever conference — AICPA ENGAGE — to give professionals access to a broader depth of insights and expertise

• Updated the Uniform CPA Exam, in partnership with NASBA, to test higher-order cognitive skills that will be crucial to the roles of future CPAs

• Conducted research with employers, academics and other influencers across 14 countries on the future of finance to further develop the CGMA Competency Framework and Syllabus

• Professionalized management accounting in the U.S. by opening the CGMA designation to other qualified professionals who meet rigorous education and examination requirements

• Advocated for the profession and the public interest in Washington, DC, as the U.S. approved sweeping tax reform legislation and spoke out on myriad other issues affecting public and management accounting around the world

• Positioned ourselves to lead the profession in defining the impact of blockchain technology on the areas of tax, accounting and finance through our partnership with the Wall Street Blockchain Alliance

Kimberly Ellison-Taylor, CPA, CGMA Chairman, Association Board Chairman, AICPA

“ The pace of change is accelerating so rapidly that the future isn’t now — it is something that happened yesterday.”


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• Released Audit Data Standards and an audit data analytics guide to help our members position themselves as the most trusted advisers to their clients and businesses, and continued to advance the critical task of evolving the audit through our Enhancing Audit Quality initiative

• Rolled out new resources such as CGMA Advantage, a daily briefing on issues of importance to finance professionals, as well as a new responsive website for the highly regarded FM magazine to help management accountants stay at the forefront of news and insight

• Worked with firms and CPA state societies in the U.S. to broaden the reach of the CPApowered awareness campaign that demonstrates the value of CPAs to business

• Extended efforts to promote the value of management accounting at events around the world, including the inaugural CGMA Africa Conference, the CGMA Shanghai Conference, CIMA Business Leaders Summit Colombo and CGMA 100 in Hong Kong

• Began the detailed work of integrating CIMA and AICPA strategy, management and operations to deliver on the promise of the Association; this internal work, which will continue over the next few years, is fundamental to our ability to deliver an even better experience to you

To bring it all together, we created a new, modern look for the Association, AICPA and CIMA. While CIMA and the AICPA remain distinct and highly respected bodies, the members of both organizations are united with colleagues from around the world through their additional membership in the Association. Our new, bold and iconic brand signals this connection across public and management accounting with a consistent commitment to quality and integrity. The brand bears out our dedication to driving a dynamic accounting profession around the world.

David Stanford, FCMA, CGMA Vice Chairman, Association Board President, CIMA

“ To stay ahead amid today’s disruption, we need to be agile and create our own future.”


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And we’re just getting started.

As the environment for the profession continues to evolve, the Association will be here — anticipating, reacting to and, most importantly, leading change on behalf of AICPA and CIMA members.

It is our privilege to present the inaugural Association of International Certified Professional Accountants’ integrated report. Within this report, we reflect on the success of our first year and look forward to a future where our profession continues to power trust, opportunity and prosperity for all.

Kimberly Ellison-Taylor, CPA, CGMA Chairman, Association Board Chairman, AICPA

David Stanford, FCMA, CGMA Vice Chairman, Association Board President, CIMA

Barry C. Melancon, CPA, CGMA Chief Executive Officer

Barry C. Melancon, CPA, CGMA Chief Executive Officer

“ As stewards of the global accounting profession, we must not only imagine the possibilities, but also reimagine the profession.”


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living in

184 countries and territories

employed by

150,000 firms and employers

served by

41 staff and representative offices

supporting

31 credentials, designations, diplomas and certificates

Association by the numbers

667,000+ members and students

Top accomplishmentsStronger together for a stronger profession. That’s the promise of the Association, which brings together the strengths of two world-leading membership bodies – CIMA and AICPA — to benefit public and management accounting across the globe. In its first year, the Association set a solid foundation for the future of the profession.

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Embracing emerging service areas and innovation • Released a Cybersecurity Risk Management Reporting Framework,

establishing a common and consistent language for cybersecurity risk management reporting

• Published new audit and attestation guides:

- Guide to Audit Data Analytics

- Attestation Engagements on Sustainability Information Guide

• Entered partnership with the world’s leading blockchain alliance, the Wall Street Blockchain Alliance, to position the profession and Association as a global thought leader

• Extended strategic cloud bill payment solution, through our subsidiary CPA.com, to help firms grow their client accounting service practice

• Advanced RIVIO Clearinghouse — also through CPA.com — which ensures private companies and authorized third parties can share audit reports from validated CPA firms

• Funded four emerging companies through a new Startup Accelerator program intended to incubate technologies that could transform the profession

300+employees, academics and other finance professionals were interviewed on the future of finance to develop a new CGMA Competency Framework and CIMA Syllabus.

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Promoting competency development• Held first AICPA ENGAGE, the largest

professional development conference in our history

• Expanded access to hundreds of competency-enhancing resources through the new CGMA Store

• Introduced six new certificates on a range of topics, including cybersecurity, US GAAP, personal financial planning and System and Organization Controls (SOC)

• Launched Certified in Entity and Intangible Valuations™ credential

• Signed agreement with Hewlett-Packard to provide 4,300 of its employees access to professional learning content — the largest contract of its type in our collective history

96in-person conferences, schools, workshops and certificate programs

1,300+virtual learning events

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762,000+ professionals reached on social media through our new Human Intelligence Series, which launched in October and focuses on competencies for future success

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Keeping the pipeline to the profession strong

Acquired Accounting Pilot and Bridge Project (APBP), a yearlong U.S. high school program that includes financial accounting, managerial accounting and financial statement analysis topics

Introduced the University Program in Personal Financial Planning, which focuses on estate, retirement, risk, investment and tax planning for students who want to be CPAs

235,193CPA Exams sat

22,502registrants on ThisWaytoCPA.com website.

Signed a deal with the South African Institute of Chartered Accountants (SAICA) to broaden access to CGMA for South African CAs and, for the first time, access to the CA-SA qualification for CGMAs

Raised awareness of CGMA among 15,700 U.S. accounting and finance faculty through university outreach

Opened a new office in Indonesia to better attract and support CGMA candidates in one of the fastest-growing emerging markets

127,241CIMA students

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100,865CIMA qualification and CGMA exams sat

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Promoting the profession, designations and credentials

806 millionpeople reached through media outreach

27 millionfinance professionals made aware of CGMA

11.5 millionbusiness owners exposed to the benefits of CPAs through CPApowered

5 millionbusiness leaders reached through national U.S. radio campaign with senior finance leaders from Bose, AT&T and BJ’s Wholesale Club endorsing the CGMA designation

44 millionconsumers reached through financial literacy efforts

2,300pioneers signed up to implement the Global Management Accounting Principles

22 millionconsumers reached by the tax campaign in the U.S.

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487,000social media engagements (likes, shares and comments)

1,600,000video views through Facebook Live, YouTube and our websites

12,000,000visitors to journalofaccountancy.com

1,100,000blog views Launched new CGMA Advantage, a

daily briefing on issues of importance to finance professionals, and a new responsive website for FM magazine to help management accountants stay at the forefront of news and insight

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Creating engaging, inspiring experiences

52,000,000web page views of the Association’s online resources

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GovernanceOperating as one organization with a shared vision and purpose

June 2016AICPA and CIMA members overwhelmingly approved the creation of a new global organization to advance the entire accounting profession.

August 2016We began integrating operations and acting as one organization.

January 2017We officially launched the Association.

Integrating the staff, operations and strategies of two complex organizations is not an easy feat. Few, if any, other professional bodies have attempted it. That’s why our first task of 2017 was creating a single organization, guided by a high-performing governance structure.

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2017 Association Board of DirectorsAligned with our organization’s unique value proposition, the Association Board of Directors addresses relevant issues and opportunities within both public and management accounting to protect the public interest and meet the needs of members and the profession at large.

The Board is composed of 38 leaders in the profession and public. Each of these leaders also serves on either the Public Accounting Board or the Management Accounting Board. The Management Accounting Board focuses on significant issues affecting CGMA designation holders and management accounting. The Public Accounting Board focuses on significant issues affecting CPAs and public accounting. Together, all board members address the issues that significantly affect the entire accounting profession — both public and management accounting — such as cybersecurity, global advocacy and competency development.

We support a diverse workplace and leadership. When considering candidates for the board, the Nominations Committee reviews a variety of factors including professional experience, competencies, geographic location and gender. As of December 2017 the Association board was aligned with our membership composition of 32% women, and featured representatives from five continents.

Association Board members

Paul Ash, FCMA, CGMA, FRSA

Anita Baker, CPA, CEBS

Bob Beedham, FCMA, CGMA

Mark Begich (Public Member)

David Benello (Public Member)

Tom Broderick, CPA, CGMA

Tim Christen, CPA, CGMA

Paul Curth, CPA

Debbie Don-Pierrot, FCMA, CGMA

Kimberly Ellison-Taylor, CPA, CGMA

Melody Feniks, CPA, CGMA

Terry Grafenstine, CPA, CGMA

Dan Griffiths, CPA, CGMA

Amarjeet Hans, CGMA

Eric Hansen, CPA, CGMA

Andrew Harding, FCMA, CGMA

Ed Jordan, CPA, CGMA

J. Michael Kirkland, CPA, CGMA

Barry Melancon, CPA, CGMA

Andrew Miskin, FCMA, CGMA

Mandy Nelson, CPA

Rick Niswander, Ph.D., CPA, CGMA

Anne Northup (Public Member)

Chandana Panditharatne, FCMA, CGMA

Margery Piercey, CPA, CGMA

Bill Pirolli, CPA, CFF, PFS, CGMA

Jeff Porter, CPA

Amy Radin (Public Member)

Amal Ratnayake, MBA, FCMA, CGMA

Elaine Richardson, FCMA, CGMA

Chris Schmidt, CPA

Richard Sharp, BSc, MBA, FCMA, CGMA

David Stanford, FCMA, CGMA

Mary Stone, CPA

Steve Swientozielskyj, FCMA, CGMA

Louise Taylor, FCMA, CGMA

Ron Yates, CPA

John Zheng, FCMA, CGMA

Board leadershipKimberly Ellison-Taylor, CPA, CGMA Chairman, Association Board

David Stanford, FCMA, CGMA Vice Chairman, Association Board

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AICPA governing CouncilAICPA’s governing Council is made up of approximately 265 members and representatives from every U.S. state and U.S. territory. Council convenes twice a year, in May and October, and smaller regional meetings are held each year in March.

CIMA Governing CouncilCIMA’s Governing Council is made up of 52 members: 37 elected, 11 co-opted and four honorary officers. Council governs CIMA and its affairs and meets three times a year to discuss and set policy.

AICPA leadership Kimberly Ellison-Taylor, CPA, CGMA Chairman, AICPA

Eric Hansen, CPA, CGMA Vice Chair, AICPA

CIMA leadership David Stanford, FCMA, CGMA President, CIMA

Steve Swientozielskyj, FCMA, CGMA Deputy President, CIMA

Governance

Driving valueThe Association’s governance process is a key component of its ability to create value over time. As we create, evolve and progress our 3-year strategic plan, we frequently gather input through discussions and breakouts with the Association Board, regional boards, CIMA Council and AICPA Council and incorporate their insights and input. In addition, we regularly report progress against our plan to the Boards and Councils.

In addition, the entire Board is actively engaged in Enterprise Risk Management in line with the COSO (Committee of Sponsoring Organizations of the Treadway Commission) framework. Risks are identified to the organization in the categories of strategic, financial, operational, technological and external risks, and plans are developed and approved by the Board to mitigate those risks.

2017 AICPA and CIMA Councils

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External forces driving change

Financial changes worldwide

Workforce changes

Geopolitical shifts

Regulatory complexity

Technology and cyber issues

We live in extraordinary times shaped by a convergence of trends — from technological innovation to geopolitical shifts — that are bringing fundamental change to the way we live, work and interact with one another. The World Economic Forum calls it the Fourth Industrial Revolution, a transformation unlike anything humankind has experienced.

Businesses are changing how they plan, operate and engage with their customers. They’re rapidly — and regularly — evolving their operating models to cope with increasing pressures to innovate, compete and survive. They are exploring new, and sometimes surprising, partnerships and increasing their investment in technology to secure their strategic advantage as new competitors emerge.

Individuals, too, are navigating a thicket of market and regulatory complexity to protect themselves from new risks. And the workplace continues to evolve as artificial intelligence and robotic technologies increasingly automate routine tasks. Workers, faced with the need to retrain and upskill, need to be more agile than ever.

The accounting profession must evolve as our clients businesses do. They depend on us to help make sense of these extraordinary times, to lead in emerging areas and provide comprehensive services to power their success. We must be positioned to deliver on those expectations. And our challenge is not only to imagine the possibilities, but to reimagine the profession for today and tomorrow.



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Strategy and business modelThe Association looks to the horizon to make sure the profession, as well as the professionals working within it, are prepared for the future. Our business model is a map for how we power trust, opportunity and prosperity for the public, our members and the profession. As the global accounting profession adapts to change and disruption, we must be agile and continuously evolve our own business model.

Our strategic priorities

Our core business activities

Our strategic objectives

Our mission Driving a dynamic

accounting profession worldwide

Our visionTo be the most influential

body of professional accountants

Our purpose We power trust,

opportunity and prosperity

Exam development and

administration

Continuing professional development

Global advocacy

Thought leadership

Communications and member engagement

Strategic positioning

Promoting competency

globally

Global advocacy

Evolving auditing in the

future

Growth and value

Opening U.S. market for CGMA

Operational excellence

Transforming our organization


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Global advocacyCreate a global voice for advocacy on both business and regulatory issues.

Value and growthCreate a sustainable, global platform providing value for members, growth of the profession and talent for the future.

Operational excellenceDrive operational performance to reinvest in the profession and our members.

Strategic positioningStrategically position management and public accounting and our designations.

Our strategic objectivesOur four strategic objectives for 2017 support our Vision, Mission and Purpose, and provide overall direction for the Association’s work. They encompass both core business activities and our strategic efforts.


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Our core business activitiesOur mission is to drive a dynamic accounting profession worldwide. We champion the relevancy of the profession by positioning accountants as frontline partners in tomorrow’s success. We develop a strong pipeline of future talent with programs designed to engage students and young professionals, and offer qualifications that meet the highest bar of competency, quality and integrity. We help current professionals adapt to the constantly changing needs of clients and businesses by providing the latest news, insight and learning. And we advocate on key issues to protect the public interest and advance our members and profession. These core business activities enable us to fulfill our strategic objectives. They are divided into five categories:

The Association’s founding bodies, the AICPA and CIMA, develop exams to test for competence in public and management accounting.

The Uniform CPA Exam is a licensing exam used by 55 U.S. state board jurisdictions as part of the process of granting a license to practice as a CPA in the U.S. The AICPA develops the content of the exam, scores the exam and works with Prometric, NASBA (National Association of State Boards of Accountancy and the state boards to administer the exam and ultimately license CPAs.

Pearson VUE administers CIMA Professional Qualification exams and the final CGMA strategic case study exam in 150 countries. Completion of the CIMA qualification and attainment of the ACMA and CGMA designations serve as a statement to employers that an individual can perform the competencies required by real-world business situations. The final CGMA case study exam, which all candidates must pass, employs an innovative simulation approach to test a broad range of skills and competencies that employers around the world have identified as critical in today’s business environment.

Exam development and administration

All members are required to undertake Continuing Professional Development (CPD) or Continuing Professional Education (CPE) to enhance their knowledge and skills as they progress through their careers. The Association creates myriad professional development resources annually, ranging from authoritative technical guidance to a multitude of practical and application-based learning. These learning resources are created for a wide range of industries, locations and job roles and include digital learning, webcasts, printed materials, conferences and other formats to meet individual learning styles and preferences. The technical expertise of our members and staff make these the most robust resources to prepare our members to be leaders, both now and in the future. The sale of CPD/CPE products generates almost one-third of the Association’s revenue, which is reinvested back into the organization to fund other services that benefit our members.

Continuing professional development


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Thought leadership represents the Association’s efforts to engage accounting, finance and other professionals around ideas and conversations that transform their thinking. In this way, we create awareness, desire and ability within our membership — awareness of changes and developments that affect the profession, a desire to be part of these changes and the ability to respond. We talk to firms and businesses worldwide, helping us understand how they operate and what challenges they’re facing. We combine this data with insight from members, subject matter experts, academics and market research to gain a comprehensive understanding of the firm and business environment and its impact on the profession. We use this information to develop resources that educate our members on emerging needs, help them understand the relevance to their roles and provide them the resources they need to respond effectively. This research also ensures CIMA meets its Royal Charter responsibilities to promote the science of management accountancy.

Thought leadership

The value of our thought leadership, tools and resources is realized when we deliver them to our members precisely when they need them. That’s why we continue to engage our members and students throughout their careers — from the moment they begin their studies to the day they retire. We communicate with them through multiple channels, including email, award-winning magazines and newsletters such as the Journal of Accountancy, FM, CPA Letter Daily and CGMA Advantage, blog posts, conferences, webcasts, podcasts, social media, live phone support and more. Engagement and delivery of valuable content is critical to attracting and retaining students and members.

Communications and member engagement

The Association has significant influence as the representative of more than 667,000 current and next generation accounting professionals. We work to protect the public interest and advance the needs of our members and the profession. Our advocacy team engages members and staff around the world to identify the most critical issues to the profession and then works through regional representatives to address how they affect local markets. In the U.S., we represent the profession directly both at a national and state level, working closely with state CPA societies.

Global advocacy

Advocacy efforts in 2017 included:• Focusing on international issues such as

mandatory audit firm rotation, anti-money laundering compliance and international auditing standards

• Working with U.S. state societies to achieve firm mobility in six additional states and adoption of a comprehensive definition of attest in seven additional states

• Responding to major events, including Brexit and U.S. tax reform, providing members with tools such as Brexit Resources for Tax Professionals and the Tax Reform Resource Center

We will remain diligent in these and other areas of critical importance to our members in the coming year.


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Our strategic prioritiesFrom extensive research on member and profession needs, we identify strategic priorities aligned with our strategic objectives and core activities. While they do not encompass all that we do, the priorities are key focus areas. In 2017, we had four strategic priorities. Here’s how we performed on each of them:

Promoting competency globally We focused on making sure current and future professionals have the competencies employers increasingly demand. In April, we updated the Uniform CPA Exam to test higher-order cognitive skills, and in June held the first AICPA ENGAGE conference — our largest event ever — bringing seven unique conferences together under one roof. We also enhanced learning through the launch of the CGMA Store and the new Human Intelligence Series, which generated more than 700,000 views around the world. And we signed an agreement with Hewlett-Packard (HP) to provide 4,300 of its employees access to our learning content, the biggest contract of its type in our collective history. We did miss a few of our targets on this initiative, which can largely be attributed to work needed on culture change and issues related to international data privacy considerations. While the data privacy issues were largely addressed late in 2017, we are building a new approach to promoting competency globally through our business transformation efforts.

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Evolving auditing in the future Data analytics, blockchain and other technologies are poised to transform the audit and create demands for new types of assurance services. We are focused on leading our members through this period of change and helping them fully understand the shifting needs of the market. In 2017, we established a strategic partnership with CaseWare and began the process of funding this initiative. We began developing a new Preparation, Compilation and Review (PCR) tool called OnPoint for CPAs that will make PCR engagements more dynamic, intelligent and efficient. We also released new audit guides for cybersecurity and sustainability. The new cybersecurity risk management reporting framework enables all organizations — in industries worldwide — to take a proactive and agile approach to cybersecurity risk management, reporting and communicating on those activities with stakeholders.

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Opening the U.S. market for CGMA We officially opened the U.S. market to a broader pool of qualified professionals in October. We did so by building a new digital learning and assessment experience with innovative, adaptive technology that is different from anything we used previously. The strategic level alone includes 71 learning objectives and related assessments. We adopted a minimum viable product approach and had more than 50 initial pioneers who agreed to provide ongoing feedback so we can continually improve the experience. This market-centric approach caused a delay in the launch of the learning platform as we responded to feedback. This delay put us behind our goal of candidates for 2017. We expect the time we took to align the platform to market needs will accelerate our growth in 2018.

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Transforming our organization We began to evolve our business model to better meet the challenges of tomorrow by improving our performance and efficiency. From August 2016 through mid-2017, we focused on integrating strategy, operations and management to deliver on our promise to members. As 2017 progressed, we accelerated our own transformation to remain relevant to members and the profession. We engaged external experts to help us transform our business and operating model and are focused on three primary areas:

1. Re-engineering the member and customer experience

2. Evolving our operating and business model

3. Realigning our cost base to align resources to those services most valued by the members, students and other stakeholders we serve

The profession and our members are undergoing fundamental change (e.g., new services and business models) and using technology and augmented intelligence in ways previously unimaginable. We, too, must put our resources in the right place to achieve our strategic priorities.

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Our 2018–2020 plan continues to focus on these four key strategic priorities and adds a fifth:Future-proofing public and management accounting.

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We report our financial performance on our Combined Statement of Activity according to the four components of our value chain: becoming a member, delivering member value, promoting competency globally and building influence and reputation. Further, we have established a series of key performance indicators (KPIs) to measure our progress as an organization. Five of them provide the best overall assessment of organizational performance: new members, total membership, net promoter score, total revenue and net income.

We establish targets for each KPI annually and we will continue to report on these metrics to track progress against our multi-year strategic plan.

Financial performance and key performance indicators (KPIs)

Financial Performance and KPIs

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Net assets and financial positionThese combined financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (US GAAP). Many readers of these financial statements from around the world are accustomed to financial statements being prepared in accordance with International Financial Reporting Standards (IFRS). As a result, some entities included in these combined financial statements have been converted from IFRS to US GAAP. The primary differences between IFRS and US GAAP affecting these financial statements are unrealized gains on investments and actuarial pension gains, which are recorded in other comprehensive income for IFRS but are recorded in the statement of activity for US GAAP.

Overall, the Association’s inaugural year was a success. Our results were strong, and our plans for 2018 will capitalize on this momentum as we continue to optimize our operations and deliver even more value for our members and the profession.

For 2017, the Association’s change in net assets was $13 million. We generated $365 million in revenue and gains, offset by $351 million in expenses. While we don’t budget for market-driven gains or losses, our operating results were in line with our budget.

The Association ended the year in a strong financial position, with cash and cash equivalents of nearly $47 million and investments of more than $134 million. Further, we have access to a $50 million line of credit for any short-term operating needs.

We continue to monitor AICPA and CIMA pension plans, which remain liabilities of their respective founding membership bodies. During 2017, both pension schemes experienced positive gains primarily related to better-than-expected returns that increased the value of assets as well as changes in demographic assumptions that decreased liabilities. Both plans are frozen and closed to future accruals, and both founding membership bodies have committed to meeting at least minimum funding levels in accordance with agreed upon plans to ensure adequate funding in the future.

The commentary below describes the revenues and associated expenses within each part of our value chain. Relevant KPI targets and results for 2017 are included in the KPI section that follows.

Becoming a memberStudent subscriptions and registration fees for our exams and exemptions comprise revenue for becoming a member. Expenses include support for student learning and progression and our costs to develop and support the CGMA and CPA examinations. We strive to enable students and candidates to achieve success while maintaining the rigor of our examinations. In addition, we also support efforts to drive growth of the profession and a strong pipeline of future talent. Through our programs, we engage with universities and other influencers around the world to reach students and young professionals and position the accounting profession as a preferred choice for career opportunity.


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Delivering member valueRevenue from delivering member value consists of member subscriptions and dues for CIMA and the AICPA, respectively, as well as revenue from affinity programs. As a reminder, members of CIMA and the AICPA have automatic dual membership in the Association as part of their regular membership fees. Expenses relate to our investment in resources and benefits that help our members thrive in their careers. Membership in both founding entities increased over 2016, due to our continued success in recruitment and retention efforts, with AICPA and CIMA retaining more than 94% and 98%, respectively, of their members. We expect another year of membership growth in 2018.

Promoting competency globallyRevenue from promoting competency globally is derived from our key strategic initiative to lead the global accounting and finance profession in competency development and lifelong learning. We advance this mission by delivering thought leadership, experiences, learning products and services. These resources help professionals and the organizations where they work navigate a rapidly changing firm and business environment. Expenses associated with promoting competency globally are costs to develop and deliver these resources, as well as our continued investment in innovative, frictionless learning experiences that engage those in the profession overall.

Building influence and reputationRevenue from building influence and reputation is generated from our Enhancing Audit Quality initiative and audit quality centers. Expenses relate to the Association’s strong commitment to raising the profile of the accounting profession and recognition for our members and their designations. We do that through a wide range of activities, including integrated advertising campaigns, public relations programs and extensive advocacy. Other expenses include investments related to supporting audit quality, professional ethics, the future of finance, and diversity and inclusion.

Membership in both founding entities increased over 2016, due to our continued success in recruitment and retention efforts, with AICPA and CIMA retaining over 94% and 98%, respectively, of their members.


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KPI 2017 target

2017 result Discussion

Members and students

CIMA

AICPA

CGMA students

CPA candidates

672K

109K

431K

132K

93K

667K

109K

431K

127K

96K

Strong membership results prove the value proposition of the Association and its founding bodies. 2017 member and student targets were met, with the exception of CGMA students, for which growth lagged expectations in Europe and Asia-Pacific. Note: CPA candidates are excluded from total membership counts.

Net promoter score (NPS)

CIMA

AICPA*

42

26

23

24

NPS is a measure of how strongly someone will endorse our brand or services. The range of potential values is from -100 to 100. While we were expecting relatively lower scores in 2017 due to anticipated uncertainty inherent in times of organizational change, we are working to understand and address the key drivers of lower scores and improve them in 2018. Other measures of member satisfaction have remained high. That includes our CGMA Brand Index, which exceeded its target of 35.

Total revenue** $309.4M $311.2M Indicates the strength of the Association’s financial position as well as the strength of our value proposition and commitment to competency development.

Net income*** ($10M) $4.4M In 2017, we met our Board-approved budget target of a $10M operating deficit, which was used to invest in the creation of the Association and our strategic value drivers, offset by market-driven gains of $14M. The Association’s combined audited financial statements provide additional information regarding our financial health and activities.

* 2017 was a baseline year for AICPA NPS, which will help us understand drivers of the result and make positive changes in the future.** Total revenue target and results exclude related organizations and affiliates of the Association’s founding membership bodies.*** Net income target excludes related organizations and affiliates of the Association’s founding membership bodies as well as

market-driven changes in investments and pension and post-retirement benefits.

KPIs


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Opening the U.S. market for CGMA While we met our target of opening the new learning platform in 2017, we experienced delays because of our market-centric approach to development. We adapted our approach based on market feedback, which ultimately put us behind our target for candidates during the year. We expect the time we have taken to align the platform to market needs will accelerate our growth in 2018.

Promoting Competency Globally (PCG) target This initiative relates to the availability of our learning resources. The Association allows us to provide competency-enhancing resources to more people in more places. We fell short of some targets due to various factors, primarily:

• delays in the ability to offer resources to CIMA members because of international privacy considerations;

• time needed for staff to understand the full breadth of our capabilities — both management and public accounting — in our markets; and

• legal and finance operational considerations for global offerings.

To address these issues, we will implement a new approach to promoting our offerings in 2018.

Hackett Global Business Services (GBS) programWe successfully exited our joint effort related to GBS by selling our interest to the Hackett Group. The program was not meeting revenue expectations and would have required further investment to continue operating.


Targets not fully metWhile 2017 was a successful year overall, we fell short of performance targets for a handful of strategic initiatives. These shortcomings represent opportunities for growth.

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External trend ImplicationsAlignment to strategic priorities

Technology Rapidly advancing technologies like artificial intelligence and blockchain are disrupting the profession

Re-engineer the member experience to provide digital experiences that are seamless, frictionless and nearly instant.

Develop technology solutions for small- and medium-sized firms that may not otherwise have the resources to develop them on their own.

• Promoting competency globally

• Transforming our organization

• Future-proofing public and management accounting

• Evolving auditing in the future

Future of jobs As technology automates more tasks, workers must reskill to stay relevant

Lead the reskilling of the profession by providing learning that will equip accounting and finance professionals with the skills that will be critical to future success.

Reinforce the value and protect the reputation of CPAs as the preeminent providers of individual tax services.


• Future-proofing public and

management accounting

Shifting global landscape The global economy is changing through the rise of mega cities and as economic power shifts east

Expand influence and support so that finance and accounting professionals have the skills necessary to help drive quality and power these new markets.



Innovation and business disruption Companies are reinventing their business models, services and offerings to stay ahead of new technologies and changing consumer preferences

Transform our organization to allow us to be more nimble and responsive to member needs.

Prioritize the member experience so that we focus on enhancing and expanding our offerings that will provide the greatest value for our members and stakeholders.




Changing membership models New models are emerging to meet consumer expectations influenced by the growth of subscription-based services

Optimize revenue mix between membership and other sources.

Develop alternative engagement and affiliation options for individuals not interested in membership.



• Future-proofing public and management accounting

Looking aheadAs we execute on our 2018–2020 strategic plan, we see a number of trends that will have an impact in the coming years. We are closely monitoring these trends, their implications for value creation and the outlook for the profession and the Association.

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During 2017, we enhanced the Enterprise Risk Management (ERM) approach for the Association by leveraging best practices from both founding bodies, the AICPA and CIMA. The new ERM approach leverages the COSO (Committee of Sponsoring Organizations of the Treadway Committee) Enterprise Risk Management – Integrated Framework.

The ERM is a key element of our 2018–2020 Strategic Plan. It equips the Association with a systematic approach to identify, assess and develop mitigation plans for the risks that have the greatest potential to prevent the Association from executing on its strategy.

Input for the ERM was collected through a multi-step, iterative process that included external reports and multiple interviews with members, volunteers and leadership. We systematically assessed each risk by identifying and addressing their potential causes, consequences and mitigations. The significance of each risk is then based its their likelihood of occurring and impact, both before and after mitigation plans are in place.

Risk is inherent in any organization. But risk becomes opportunity when identified proactively and mitigated conscientiously. Each of the risks we have identified to our business model presents an opportunity to improve our operations and better serve our members.


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Risk is inherent in any organization. But risk becomes opportunity when identified proactively and mitigated conscientiously.


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Risk Mitigation/opportunity

CPA or CGMA designations lose relevancy As the economic landscape and market demands change, the CPA and CGMA must evolve to remain relevant.

Provide guidance, education, credentials and certificates that drive competence in members to help them enhance quality in core service areas, as well as lead in new areas.

Association’s business model fails to evolve We need to successfully transform our business to respond to the changing market.

Integrate AICPA and CIMA’s strategy, management and operations to allow us to serve the collected membership more fully and anticipate future needs quickly.

Insufficient penetration of U.S. market for CGMA CGMA is a new designation in a competitive market. U.S. penetration is essential to our future growth.

Develop programs to build relationships and work with firms and individuals to communicate the value of the CGMA. Expand access pathways to the designation. Elevate awareness through marketing and PR programs.

Global products fail to perform as planned A diverse source of revenue is critical to our ability to maintain healthy cash flows needed for investment in the profession, sustainment and growth.

As disruption changes business around the globe, take advantage of increased demand for guidance, insight and expertise. Capitalize on expansion of economic power in emerging economies.

Lack optimal member digital experience As technology companies set new expectations for consumers, failing to improve our digital interactions could significantly affect our ability to compete and grow.

Enhance the capabilities of our existing digital platforms, while also implementing new channels to meet fast-changing member expectations as part of evolving our business model.

Cyberattack on organization database Cyberattacks have the potential to significantly affect relations with members, disrupt core operations and damage our brand and reputation.

Apply our own cybersecurity framework and work with world-class technology suppliers to monitor systems and secure our digital assets. Put redundancies in place for appropriate system protection and backup.

CPA or CGMA exam compromised Failure to deliver a consistent and robust examination process in a secure environment would significantly harm our reputation.

Work with exam providers to provide remedy in the event of compromise. This could include multiple test options given across multiple locations or back-up tests to take the place of a compromised exam.

Technology disintermediates profession The rapid speed of disruptive innovations (e.g., automation) and new technologies may outpace the profession’s ability to compete in the marketplace.

Drive the incorporation of technology to enhance the quality and value of services. Use data analytics to enhance the future of audit, finance and tax. Become a thought leader in the implications of technologies such as blockchain, artificial intelligence and robotics through internal expertise and partnerships. Expand advisory services to provide assurance for new and emerging technologies. Enable smaller CPA firms access to cutting-edge audit technology to help them stay competitive.

Rise in geopolitical instability As the Association expands globally, we may encounter regulatory uncertainty, entry barriers, lower economic prospects and more difficult member/student engagement in less stable markets.

Diversify interests and focus on areas of political and economic stability.

Key enterprise risks


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The Association seeks to attract and retain talented leaders to develop and execute its strategy. A total compensation package for the CEO and the senior leadership team comprises base compensation, performance-related compensation and benefits. Total compensation levels and practices are based on both internal equity and local market practices in the territories where the Association operates.

The Remuneration and Talent Committee of the Board provides oversight on executive compensation through its charter by:

• Ensuring that employee compensation and pay practices are consistent with the Association’s values and competitive practices and are designed with the long-term success and sustainability of the organization in mind

• Reviewing and approving initiatives established for the Association CEO, and assessing annual performance against such goals and the strategic plan

• Establishing the total compensation of the CEO, including the level of performance-related compensation based on the assessment of annual performance

• Reviewing the total compensation of the Association’s senior leadership team

• Using an independent compensation consultant to provide analysis of market compensation practices

To comply with the United States Internal Revenue Service regulations, the Association is required to disclose the compensation for up to 20 key employees, as defined, and its five current highest compensated employees, as defined, on its annual tax return (Form 990, Return of Organization Exempt from Income Tax). The Form 990 can be found on website resources such as Foundation Center and Guidestar. The filing due date for the Association’s Form 990 is May 15; however, the due date can be extended until Nov. 15 upon filing a request with the IRS, which the Association has filed.



http://foundationcenter.org

https://www.guidestar.org/

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A highly engaged staff is critical to our success. The Association comprises a workforce and leadership drawn from a range of disciplines to develop the tools, resources and intelligence the profession needs to clarify complexity, anticipate risk and create opportunity.


Our successful staff engagement puts us in the Best Companies “One to Watch” category. This accreditation is a special status awarded to organizations in which workplace engagement shows promising signs for the future.

1,200+employees working on behalf of the profession (as of Dec. 31, 2017)

83.3%Staff retention

Our grassroots group of 84 “culture champions” from offices around the world help drive adoption of organizational strategy, values and behaviors. They provide input into materials relating to business strategy and employee engagement.

Our IdeaQuest competition, launched in 2017, encourages staff innovation. Teams from around the world submitted ideas to enhance our services and improve our business processes.

Employee salaries are competitive within their local markets. We use global salary benchmarking data to determine if a salary has fallen below market and adjust appropriately.

Our Leadership Development Program focuses on growing talent within the organization and positioning them to become the next generation of Association leadership. Currently, half of Leadership Development Program participants are women.

We have an objective, behavior-based interview process and conduct ongoing training to remove unconscious bias.


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PartnershipsThe Association has numerous relationships and partnerships to represent the interests of CIMA and AICPA members and students to best position the accounting profession for future success. These include:

New and emerging technology Wall Street Blockchain Alliance (WSBA) — We are working with the WSBA to define the impact of blockchain technology for the accounting profession and advance the interests of both the public and profession in this area. As part of this collaboration, the Association — through our technology arm, CPA.com — will administer the WSBA’s working group on tax and accounting, a focal point for advocacy and education on blockchain within the profession.

Creating and providing learning Pearson VUE — Together with CIMA, Pearson VUE provides computer-based testing for the CGMA designation at more than 5,000 locations, making taking the exam more convenient for students.

Prometric — Prometric provides technology solutions that made the next generation Uniform CPA Exam possible. Along with NASBA and AICPA, they help administer the exam in some of the 55 jurisdictions in the U.S.

Tuition providers — CIMA relies on valued partners to teach students and guide them through qualification. Of these third-party providers, the strongest relationships are with Kaplan and BPP.

Association to Advance Collegiate Schools of Business (AACSB) — The AICPA collaborates with the AACSB on new initiatives to ensure the profession is actively engaged in accreditation. We support the AACSB’s launch of a new committee that scans the environment to ensure accreditors are aware of major changes to the profession. Together, we’ve also created a practitioner engagement program for AACSB that trains and increases the number of practitioners on accreditation peer review teams and committees.

American Accounting Association (AAA) — The AICPA advances accounting education through the AAA by recognizing research and teaching excellence and supporting teaching best practices.

Supporting the public interestState CPA societies — In the U.S., we work collaboratively with all 54 state CPA societies to advance the profession and public interest by partnering on advocacy, learning and competency development and pipeline of future talent.

NASBA — The AICPA works with the National Association of State Boards of Accountancy (NASBA) on several fronts. NASBA assists more than 30 boards of accountancy with application processing, credential evaluation, exam administration and score reporting while AICPA is responsible for preparing and scoring the Uniform CPA Exam through its Board of Examiners. The AICPA also works with NASBA to foster adoption and implementation of Mutual Recognition Agreements, which create paths for U.S. CPAs to gain practice privileges abroad, while granting similar recognition to qualified professional accountants from other countries to practice in the U.S.

International Federation of Accountants, Global Accounting Alliance and other professional accounting bodies and regulators — We maintain a number of relationships with various accounting bodies and regulatory agencies to protect the profession and keep it vital and thriving into the future.



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Powering trust, opportunity and prosperity

2017 Combined financial statements and independent auditor’s report

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To the Members Association of International Certified Professional Accountants

We have audited the accompanying combined financial statements of Association of International Certified Professional Accountants and Related Organizations, which comprise the combined statement of financial position as of December 31, 2017, and the related combined statements of activities, preferred stock and net assets and cash flows for the year then ended, and the related notes to the financial statements.

Management’s Responsibility for Financial StatementsManagement is responsible for the preparation and fair presentation of these combined financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of combined financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these combined financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the combined financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the combined financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the combined financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the organization’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the combined financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of Association of International Certified Professional Accountants and Related Organizations as of December 31, 2017, and the changes in their preferred stock and net assets and their cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Roseland, New Jersey April 30, 2018

Independent Auditor’s Report

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Financial statementsAssociation of International Certified Professional Combined Statement of Financial Position Accountants and Related Organizations December 31, 2017 ($000) Assets:

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 46,866Receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,903Deferred costs and prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,630Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134,445Buildings, furniture, equipment and leasehold improvements, net . . . . . . . . . . . . . . . . 18,314Software and technology, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,651Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,554

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 268,363

Liabilities:Accounts payable and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 56,985Advance dues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88,888Unearned revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,263Deferred rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,314Deferred employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,009

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212,459

Preferred stock and net assets:Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,790Net assets with donor restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,970Net assets without donor restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,144

Total preferred stock and net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,904

Total liabilities, preferred stock and net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 268,363

See Notes to Combined Financial StatementsFinancials

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Association of International Certified Professional Combined Statement of Activities Accountants and Related Organizations Year ended December 31, 2017 ($000) Changes in net assets without donor restrictions

Becoming a member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 57,225Delivering member value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173,920 Promoting competency globally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82,918Building influence and reputation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,887Contributions and contributed services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,308Investment return, net of expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,645 Total revenue and gains without donor restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . 357,903

Net assets released from restriction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 638 Total revenue, gains and other support without donor restrictions . . . . . . . . . . . 358,541

Operating expensesProgram services Becoming a member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,688 Delivering member value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,742 Promoting competency globally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88,599 Building influence and reputation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,880

Total program services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,909

Supporting activities General management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,476

Membership development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,541 Total supporting activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,017

Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350,926

Change in net assets without donor restrictions from operations . . . . . . . . . . . . . . . . 7,615Pension and postretirement benefit gains under net periodic cost . . . . . . . . . . . . . . . 6,150Translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (600)

Change in net assets without donor restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,165Net assets without donor restrictions, beginning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,979

Net assets without donor restrictions, ending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,144

Changes in net assets with donor restrictionsContributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 505Net assets released from restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (638)Investment return, net of expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Change in net assets with donor restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 128)

Net assets with donor restrictions, beginning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,098

Net assets with donor restrictions, ending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,970

Change in preferred stock and net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,037Preferred stock and net assets, beginning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,867

Preferred stock and net assets, ending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 55,904

FinancialsSee Notes to Combined Financial Statements

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Association of International Certified Professional Combined Statement of Cash Flows Accountants and Related Organizations Year ended December 31, 2017 ($000) Reconciliation of change in net assets to net cash provided by operating activities:

Change in net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,037Adjustments to reconcile change in net assets to net cash provided by operating activities:

Depreciation and amortization: Buildings, furniture, equipment and leasehold improvements . . . . . . . . . . . . . . . . . . . 5,983 Software and technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,060Gain of disposal of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (895)Gain of sale of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,158)Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 488Provision for: Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,084 Deferred rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,918) Deferred employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,190)Changes in operating assets and liabilities: Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,631 Deferred costs and prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,018) Accounts payable and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (72) Advance dues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 749 Unearned revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,788 Deferred employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,751) Total adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,219)

Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,818

Investing activities: Payments for purchase of software and technology . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,598) Payments for purchase of buildings, furniture, equipment and leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (412) Payments for purchase of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (142,932) Proceeds from sale of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145,030 Proceeds from disposal of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,399 Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,513)

Effect of exchange rates on cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,924 Net increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,229

Cash and cash equivalents, beginning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,637

Cash and cash equivalents, ending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 46,866

Supplemental disclosures of noncash investing activities: Software and technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,016

FinancialsSee Notes to Combined Financial Statements

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Note 1 — OrganizationThe combined financial statements include the accounts of the Association of International Certified Professional Accountants, American Institute of Certified Public Accountants (AICPA), The Chartered Institute of Management Accountants (CIMA), the Association of International Certified Professional Accountants, UK (Association UK) and their subsidiaries and related organizations, which have been combined in accordance with accounting standards for not-for-profit organizations. As used herein, the “Association” includes all such entities.

The Association is a global membership organization whose mission and vision is to be the most influential body of professional accountants driving a dynamic accounting profession worldwide. In June 2016, members of AICPA and CIMA, in separate membership ballots, approved the creation of the Association to integrate management, operations and strategy while preserving the membership bodies of both organizations. The Association launched on January 1, 2017, with the AICPA and CIMA as founding members. Members and students of the AICPA and CIMA are also members of the Association with over 667,000 members globally at December 31, 2017. The Association is organized as a not-for-profit organization domiciled in the United States of America (US).

AICPA is the national professional organization for Certified Public Accountants (CPAs) and is organized as a not-for-profit domiciled in the US.

CIMA is the global professional body of management accountants and is incorporated by Royal Charter and domiciled in the United Kingdom (UK).

The Association UK is a cost sharing group providing services to CIMA. It is owned by the Association (90%), AICPA (5%) and CIMA (5%).

Subsidiaries and Related Organizations of AICPACPA.com is a provider of cloud-based Business Solutions targeting the practice management, client services and developmental needs of public and management accountants. CPA.com is also responsible for marketing certain products and services, managing certain affinity programs and for providing certain technology services support to the Association. As of December 31, 2017, AICPA and the American Institute of Certified Public Accountants Foundation (Foundation) control approximately 77% of CPA.com’s voting rights. In accordance with CPA.com’s amended shareholder agreement, AICPA’s voting percentage will exceed 50% in perpetuity, subject to AICPA’s approval to a transaction in which additional shares are issued to an investor. Notwithstanding AICPA’s controlling interest in CPA.com, AICPA does not guarantee any of the obligations nor is it responsible for any of CPA.com’s liabilities.

The mission of the Accounting Research Association, Inc. (ARA) is to provide funds for studies and research in regard to principles and standards of the accounting profession (see Note 11).

The AICPA Benevolent Fund provides temporary financial assistance to members of AICPA and their families.

Foundation’s mission is to grow the next generation of CPAs through three primary focuses: accounting education and outreach, scholarships and fellowships, and diversity and inclusion (see Note 11).

Related Organizations of CIMAThe CIMA Benevolent Fund provides assistance to CIMA members and ex-members and their families in times of hardship.

The Anthony Howitt Lecture Trusts’ mission is to advance education in management accountancy and related subjects.

Notes to Combined Financial Statements

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Note 2 — Summary of significant accounting policies

Adoption of accounting standardIn August 2016, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2016–14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for- Profit Entities. ASU 2016–14 improves the financial reporting of not-for-profit organizations by providing more useful information to donors, grantors, creditors and other financial statement users. ASU 2016-14 changes the existing classes of net assets, improves the transparency and utility of liquidity information, changes the required presentation of cash flow information and requires the presentation of expenses by both function and natural classification. ASU 2016–14 is effective for fiscal years beginning after December 15, 2017. Management has elected to early adopt ASU 2016-14. As a result of the adoption of ASU 2016–14, the Association has presented its net asset classifications as such and expanded the disclosures related to supporting service expenses and liquidity information.

Basis of presentation The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

All significant intercompany accounts and transactions have been eliminated in combination.

Financial statement presentation follows the accounting standards requirements for not-for-profit organizations. Under these standards, an organization is required to report information regarding its financial position and activities according to two classes of net assets depending on the existence and/or nature of any donor restrictions as follows: net assets without donor restrictions and net assets with donor restrictions.

Valuation of assets and liabilitiesThe Association considers investments with an original maturity of 90 days or less when purchased to be cash equivalents. As of December 31, 2017, the Association’s cash equivalents consisted primarily of short-term U.S. Treasury obligations and money market funds.

Investments in equity securities with readily determinable fair values and all investments in debt securities and investment partnerships are reported at fair value with unrealized gains and losses included in the combined statement of activities. The investment partnership represents ownership in a private investment partnership that trades global equity securities under the direction of asset managers.

The carrying amounts of cash and cash equivalents, receivables and accounts payable approximate fair value because of the short-term nature of the items. The fair value of mutual funds and exchange traded funds is determined by quoted market prices. The fair value of the investment partnership is determined by the asset manager based on the market values of the underlying equity securities.

Inventories consist of paper and material stock, publications in process and printed publications and course material and are stated at the lower of cost or net realizable value. A moving average method is used for determining inventory cost. Inventories are reflected as a component of deferred costs and prepaid expenses in the accompanying combined statement of financial position.

Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business acquisitions that occurred after July 1, 2002, and are accounted for under the purchase accounting method. Goodwill is not amortized and is evaluated annually for impairment. In 2017, the Association performed a quantitative analysis using a weighted average of discounted cash flow

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approach and market valuation approach, which compared CPA.com’s net book value to the value indicated by the fair value of CPA.com’s equity securities. Goodwill was not impaired for the year ended December 31, 2017.

Buildings, furniture, equipment and leasehold improvements are capitalized when the amount and useful life policy are met. They are stated at cost, less accumulated depreciation or amortization computed on the straight-line method. Furniture and technology are depreciated over their estimated useful lives of three to ten years. Leasehold improvements are amortized over the shorter of their useful lives or the remainder of the lease period. Buildings and freehold/leasehold land are depreciated over a period of 40 to 50 years on a straight-line basis.

Software and technology is stated at cost, less accumulated amortization computed on the straight-line method. Software and technology is amortized over its estimated useful lives of three to five years.

Concentrations of credit riskFinancial instruments, which potentially subject the Association to concentrations of credit risk, include cash and cash equivalents, investments and receivables. At December 31, 2017, balances on deposit at US financial institutions exceeded Federal Deposit Insurance Corporation (FDIC) insured limits. Cash equivalent amounts in sweep investment accounts are not insured nor guaranteed by the FDIC. The Association maintains its significant cash balances with a high quality financial institution which the Association believes limits these risks.

Credit risk with respect to receivables is also limited because the Association deals with a large number of customers in a wide geographic area. The Association closely monitors the extension of credit to its customers while maintaining allowances for potential credit losses. On a periodic basis, the Association evaluates its receivables and establishes an allowance for doubtful accounts, based on a history of past write-offs and collections and current credit considerations. As of December 31, 2017, the allowance for doubtful accounts was $2,513,000.

Notes and mortgages received by the AICPA Benevolent Fund in connection with assistance payments to members and their families are recorded as assets, net of amounts deemed uncollectible. Notes and mortgages are noninterest bearing and are due upon the death of the member and spouse and/or sale of the mortgaged property. Credit risk with respect to receivables is limited because the AICPA Benevolent Fund secures notes from a limited number of payment recipients in a wide geographic area. The AICPA Benevolent Fund closely monitors the extension of notes and mortgages to its members while maintaining allowances for potential losses. On a periodic basis, the AICPA Benevolent Fund evaluates its receivables and establishes an allowance for doubtful accounts, based on a history of past write-offs, market value of mortgaged properties, and collections and current credit considerations.

DerivativesThe Association utilizes derivative financial instruments to hedge its exposure to foreign exchange risks arising from operational activities. The Association does not hold or issue derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments. The Association recognizes all derivatives as either assets or liabilities in the combined statement of financial position and measures those instruments at fair value. Changes in the fair value of those instruments are reported in the combined statement of activities.

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The Association entered into foreign exchange contracts in 2017 to mitigate against potential losses on certain expenditures to be paid by non-US or UK offices in 2018.

Value of derivatives at deal rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (7,438)Value of derivatives at year end spot rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,360 Interest rate differential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (30)

Loss recognized in the combined statement of activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (108)

Revenue recognitionRevenue from dues is recorded in the applicable membership period. Dues received in advance of the applicable membership period are recorded as deferred revenue and recognized in that future period.

Revenue from publications, professional development, conferences and professional examinations and exemption fees is recognized when goods are shipped to customers or services are rendered.

Revenue from subscription-based products is deferred and recognized on the straight-line method over the term of the subscriptions, which is primarily for one year.

Revenue related to affinity contracts is recognized when earned, in accordance with the respective agreements.

Advertising revenue is recorded as print or electronic publications are issued.

Revenue is recognized net of any related sales or value added taxes.

AICPA entered into a third-party agreement that provides for AICPA to break even with regards to revenue earned and certain external and internal costs incurred in developing, maintaining and providing the computerized Uniform CPA Examination in jurisdictions (Jurisdictions) recognized as member bodies of the National Association of State Boards of Accountancy (NASBA), referred to as the Domestic Examination. Accordingly, such revenue or costs have been deferred and are reflected in the accompanying combined statement of financial position net of revenue or cost recognized (see Note 8). AICPA also entered into a third-party agreement (International Examination Agreement) for AICPA to provide the computerized Uniform CPA Examination, on behalf of the Jurisdictions, to select international locations (International Examination). The International Examination Agreement does not provide for AICPA to break-even; accordingly, revenues and costs are recognized as earned or incurred.

Contributions and other assets are recorded with or without donor restrictions when received depending on the existence of any restrictions. Conditional promises to give are not included as support until the conditions are substantially met.

A number of people have contributed significant amounts of time to the activities of the Association. The combined financial statements do not reflect the value of these contributed services because they do not meet the criteria for recognition.

Promotions and advertisingCosts of promotions and advertising are expensed as incurred. Total promotion and advertising expenses were $8,062,000 for the year ended December 31, 2017.

Accounting for software and technology costsAll costs incurred in the planning stage of developing internal use software and technology are expensed as incurred, as are internal and external training costs and maintenance costs. Fees such as licensing or hosting, including software as a service arrangement, are expensed over the period of benefit.

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External and internal costs, excluding general and administrative costs and overhead costs, incurred during the application development stage of internal use software and technology, are capitalized. Such costs include external direct costs of materials and services consumed in developing or obtaining software and technology, payroll and payroll-related costs for employees who are directly associated with and who devote time to developing software and technology. Upgrades and enhancements that result in additional functionality to the software and technology, which enable it to perform tasks that it was previously incapable of performing, are also capitalized.

Capitalized costs are amortized on the straight-line method over a three to five-year period and begins when all substantial testing of the software and technology is complete and is ready for its intended use.

On at least an annual basis, the Association performs a review of its capitalized costs for impairment. For the year ended December 31, 2017, no impairment was indicated.

Income taxesThe Association of International Certified Professional Accountants, AICPA and ARA are organized as 501(c)(6) not-for-profit organizations under the Internal Revenue Code (Code). Certain income of AICPA, however, is subject to taxation. The AICPA Benevolent Fund and Foundation are organized as 501(c)(3) not-for-profit organizations under the Code. CPA.com is organized as a for-profit entity.

CIMA incurs corporation tax on trading profits, chargeable gains and investment income less any charitable donations by way of gift aid; membership and examination income are not subject to corporation tax. CIMA is also subject to tax in a number of the non-UK markets. CIMA’s associated charities are not subject to tax. A provision is made for deferred taxation to the extent that material timing differences are expected to reverse in future periods. No provision for deferred taxation existed as of December 31, 2017.

The Association has analyzed tax positions taken for filing with the Internal Revenue Service of the US and Her Majesty’s Revenue and Customs of the UK as well as any other jurisdictions where it operates. The Association does not anticipate any adjustments that would result in a material adverse effect on the Association’s financial condition, results of operations or cash flows. Federal income tax returns related to US domiciled entities prior to December 31, 2014, are closed, as are UK tax returns up to and including financial year December 31, 2016. Management continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings.

CPA.com accounts for income taxes pursuant to the asset and liability method, which requires deferred income tax assets and liabilities to be computed annually for temporary differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the temporary differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized (see Note 9).

As of December 31, 2017, the Association did not recognize any interest and penalties associated with tax matters.

Employee benefit plansThe AICPA sponsors a postretirement benefit plan and both AICPA and CIMA sponsor defined benefit pension plans. The plans’ assets and benefit obligations are measured, and the funded status of these plans are reported in the combined statement of financial position at December 31, 2017 (see Note 10).

Subsequent eventsThe Association has evaluated events and transactions for potential recognition or disclosure through April 30, 2018, which is the date the combined financial statements were available to be issued (see Note 14).

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Note 3 — Liquidity resources

The Association’s primary revenue sources are its fees associated with students and members which are included in becoming a member and delivering member value on the combined statement of activities and revenues from its key strategic initiative in promoting competency globally. This includes leading the global accounting and finance profession in competency development and lifelong learning including thought leadership, experiences, products and services. These resources help professionals and the organizations in which they work to succeed as they navigate a rapidly changing business environment.

The Association has various sources of liquidity at its disposal, including cash and cash equivalents, investments and a $50,000,000 line of credit.

The following table reflects the Association’s financial assets as of December 31, 2017, reduced by amounts that are not available to meet general expenditures within one year of the statement of financial position date because of contractual restrictions or internal board designations. Amounts not available to meet general expenditures within one year also may include net assets with donor restrictions. 2017 ($000)

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 46,866Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134,445Receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,903

Total financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204,214

Investments collateral related to letter of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167

Investments collateral related to credit limit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 836

Net assets with donor restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,970

Financial assets available to meet cash needs for general expenditures within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 201,241

Note 4 — Functional expensesThe costs of program and supporting services activities have been summarized on a functional basis in the table below:

Management has reviewed all overhead costs and determined that it is appropriate to allocate a portion of these costs to the program services. There are a number of allocation methodologies that are used focusing on the location the costs are incurred along with staffing levels and program service cost incurred prior to allocations.

Financials

Program Services Supporting Services

Becoming a Member

Delivering Member

Value

Promoting Competency

Globally

Building Influence

and Reputation

General Management

Membership Development Total

($000)

People costs $ 29,632 $ 26,458 $ 36,495 $ 45,180 $ 11,577 $ 9,104 $ 158,446

Cost of goods sold 9,012 2,561 28,398 212 – – 40,183

Selling expense 3,007 866 5,964 3,408 – – 13,245

Occupancy 2,517 1,709 3,079 4,985 1,096 1,231 14,617

Meetings and travel 5,399 5,380 3,279 6,230 569 87 20,944

Office expense 1,677 1,175 3,451 3,548 220 950 11,021

Professional services 16,036 10,010 4,408 20,289 10,433 4,155 65,331

Organizational support 1,507 4,440 133 1,523 18 31 7,652

Depreciation and amortization 1,243 846 2,680 1,950 4,337 965 12,021

Insurance, taxes, interest and other 658 297 712 555 5,226 18 7,466

Total $ 70,688 $ 53,742 $ 88,599 $ 87,880 $ 33,476 $ 16,541 $ 350,926

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Note 5 — Fair value measurementsThe framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1) and the least priority to unobservable inputs (level 3). The three levels of the fair value hierarchy are described as follows:

Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Association has the ability to access.

Level 2: Inputs to the valuation methodology include:

• quoted prices for similar assets or liabilities in active markets;

• quoted prices for identical or similar assets or liabilities in inactive markets;

• inputs other than quoted prices that are observable for the assets or liabilities;

• inputs that are derived principally from or corroborated by observable market data by correlation or other means.

If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability.

Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs.

Following is a description of the valuation methodologies used for assets and liabilities measured at fair value. There have been no changes in the methodologies used at December 31, 2017.

Mutual funds: Valued at the daily closing price as reported by the fund. Mutual funds held by the Association are open-end mutual funds that are registered with either a US or UK regulatory body. These funds are required to publish their daily net asset value (NAV) and to transact at that price. The mutual funds held by the Association are deemed to be actively traded.

Exchange traded funds: Exchange traded funds are baskets of securities designed to replicate various indices and whose value is determined through daily market action in the shares of the exchange traded fund. Fair market value is determined by obtaining prices from quoted market sources.

Private equity investments: The Association’s private equity investments include a direct investment in a limited partnership. The NAV, as provided by the limited partnership, is used as a practical expedient to estimate fair value. The NAV is based on the fair value of the underlying investments held by the fund less its liabilities. This practical expedient is not used when it is determined to be probable that the fund will sell the investment for an amount different than the reported NAV.

To estimate the fair value of the foreign exchange contracts (level 2) as of the measurement date, the Association obtains inputs other than quoted prices that are observable for the liability. These inputs include current foreign exchange rates and consider nonperformance risk of the Association and that of its counterparties.

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The following tables set forth by level, within the fair value hierarchy, the Association’s assets and liabilities at fair value as of December 31, 2017:

Assets at fair value as of December 31, 2017

Level 1 Level 2 Total ($000)

Mutual funds $ 94,643 $ 94,643Exchange traded funds 27,616 27,616

Total assets in the fair value hierarchy 122,259 122,259Investments measured at NAV (a) – 12,186

Total assets measured at fair value $ 122,259 $ – $ 134,445

Financial derivative instruments Foreign exchange contracts $ 108 $ 108Total liabilities measured at fair value $ – $ 108 $ 108

(a) In accordance with Subtopic 820–10, certain investments that were measured at net asset value per share (or its equivalent) have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the line items presented in the statement of financial position.

The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Association believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

Included in the Association’s combined statement of financial position as of December 31, 2017, are investments of $134,445,000. Such amounts have been measured at fair value on a recurring basis.

Fair value of investments that calculate net asset value per shareThe following table summarizes investments measured at fair value based on the NAV per share as of December 31, 2017:

The investment in limited partnership has certain redemption restrictions. Withdrawals can be made from the capital account on any business day by giving three days’ notice to the general partner. Such notice is irrevocable, unless the general partner determines to allow the notice to be revoked.

Global Equity Long Only Fund LP: The Fund pursues its investment objective primarily through investing in long positions in global public equity securities.

Financials

Assets at net asset value as of December 31, 2017

Investment name Fair valueUnfunded

commitment

Redemption frequency

(if currently eligible)Redemption notice period

($000)Global EquityLong-Only Fund LP $ 12,186 None Daily 3 days

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Note 6 — Buildings, furniture, equipment and leasehold improvements

Buildings, furniture, equipment and leasehold improvements consist of: ($000)

Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,113Furniture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,725 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,147Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 23,575 54,560Less accumulated depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 36,246

$ 18,314

Note 7 — Software and technology ($000)

Software and technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 85,753Less accumulated depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 64,102 $ 21,651

Note 8 — Commitments and contingencies

Computerization of the Uniform CPA ExaminationIn connection with the Domestic Examination, AICPA is party to an agreement with National Association of State Boards of Accountancy (“NASBA”) and Prometric, which expires in 2024, whereby AICPA delivers the Domestic Examination in a computer-based format. NASBA developed and maintains the National Candidate Database, which serves as the gateway for candidates applying to take the Domestic Examination. Prometric is responsible for providing scheduling, test preparation, test delivery and results processing of the Domestic Examination in a computer-based testing environment consistent with AICPA and NASBA requirements.

AICPA receives fees through NASBA based upon the number of examinations taken. The agreement provides for AICPA to break even with regard to costs incurred in developing and maintaining the Domestic Examination. Through December 31, 2017, approximately $257,709,000 of revenue and $248,385,000 of costs have been incurred. For the year ended December 31, 2017, AICPA recognized revenue of approximately $20,696,000. Accordingly, costs equal to the revenue recognized have been expensed. At December 31, 2017, the balance of revenues in excess of costs of $9,324,000 is included in accounts payable and other liabilities in the accompanying combined statement of financial position.

In conjunction with the International Examination Agreement, AICPA offers the International Examination in Bahrain, Brazil, Japan, Kuwait, Lebanon and the United Arab Emirates.

Lease commitmentsThe Association has several long-term leases for the rental of real estate. The leases include provisions for the abatement of rental payments, amounts to be paid to the Association by the landlords, as well as scheduled base rent increases over the respective lease terms.

The total amount of the base rent payments, net of the amounts to be paid to the Association by the landlords, is being charged to expense using the straight-line method over the respective lease terms.

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Minimum rental commitments on non-cancelable real estate and equipment leases in effect as of December 31, 2017, exclusive of future escalations for real estate taxes and building operating expenses, less future minimum sublease rentals, are: ($000)

2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,9822019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,5222020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,6312021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,2482022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,815Years subsequent to 2022 . . . . . . . . . . . . . . . . . . . . . 27,774

Future minimum rental commitments . . . . . . . . . . $ 73,972

Rental expense for the year ended December 31, 2017, was $11,930,000.

Other commitmentsThe Association has other commitments for service agreements in place with various vendors. Minimum commitments in effect as of December 31, 2017, are:

($000)2018 . . . . . . . . . . . . . . . . . . . . . $ 4,8022019 . . . . . . . . . . . . . . . . . . . . . 1,2632020 . . . . . . . . . . . . . . . . . . . . . 652

Purchases related to other commitments totaled $10,517,000 for the year ended December 31, 2017.

Letters of creditAs of December 31, 2017, the Association has an irrevocable standby letter of credit of $167,000 which expires on July 31, 2018, and is associated with its North Carolina lease.

Line of creditThe Association has available a line of credit with a bank for short-term borrowings of up to $50,000,000 at the bank’s prevailing interest rate. Amounts outstanding under the line of credit are collateralized by certain investments. There were no outstanding borrowings at December 31, 2017, beyond the letter of credit. The line of credit expires on December 19, 2018.

Credit limitThe Association has a credit limit with a bank for its commercial card program of $3,000,000. Amounts outstanding against the credit line are collateralized by certain investments. The amount outstanding as of December 31, 2017, was $836,000 and is included in accounts payable and other liabilities in the combined statement of financial position.

LitigationFrom time to time, the Association is a defendant in actions arising in the ordinary course of business. In the opinion of management, such litigation will not have a material adverse effect on the Association’s financial condition or change in net assets.

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Note 9 — Taxation

At December 31, 2017, CPA.com has net deferred tax assets of approximately $1,871,000 which arise primarily from net operating loss carryforwards for federal, state and city income tax purposes of approximately $80,162,000, $16,870,000 and $15,704,000, respectively, expiring in 2019 through 2030 and certain other temporary differences. Included in these net operating losses are pre-acquisition losses of approximately $23,700,000, which are subject to annual limitations. Due to the uncertainty of the realization of the deferred tax assets, substantially a full valuation allowance has been provided. At December 31, 2017, the deferred tax asset decreased by approximately $488,000 based on management’s belief that this amount will not be realized before expiration. The amount of the deferred tax asset considered realizable could change in the near term if estimates of future taxable income during the net operating loss carryforward period changes. The effect of the change in the deferred tax asset has been included in supporting activities — general management in the combined statement of activities.

On December 22, 2017, the United States enacted tax reform legislation commonly known as the Tax Cuts and Jobs Act (Act), resulting in significant modifications to existing law. CPA.com has completed the accounting for the effects of the Act. The primary impact of the Act includes a reduction in the corporate tax rate from 35% to 21%. As a result, a remeasurement of the deferred tax assets and liabilities from 35% to 21% resulted in deferred tax assets, deferred tax liabilities and the corresponding valuation allowance being reduced. The net impact is reflected in the $488,000 deferred tax expense discussed previously.

Note 10 — Employee benefit plans

Defined benefit pension plansAICPA sponsors a noncontributory defined benefit pension plan (the Plan) for qualifying employees. The amount of the annual benefit to be paid at normal retirement date is based on credited service, which varies based on participant hire dates. On June 30, 2013, the AICPA closed the Plan to new entrants and froze future benefit accruals to existing employees.

The Society of Actuaries (SOA) published mortality tables and improvement scales are used in developing the best estimate of mortality for plans in the U.S. In 2017, the SOA published updated improvement scales. AICPA updated the assumptions for the purposes of measuring the pension and postretirement health care plans at December 31, 2017.

Economic assumptions used to determine the benefit obligations recognized in the combined statement of financial position are:

December 31, 2017Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.65%Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A

Weighted average assumptions used to determine the net periodic benefit cost are:

December 31, 2017Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.20%Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.75%Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A

AICPA is utilizing a yield curve methodology to determine its discount rate. This methodology uses a weighted average yield to determine the Plan’s discount rate by forecasting the Plan’s expected benefit payments by year.

The expected return on Plan assets was derived by reviewing historical returns, preparing several models about future expected returns using the current diversified asset mix and conducting a historical study of market recoverability.

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For the year ending December 31, 2018, AICPA expects to contribute $5,000,000 to the Plan. The following tables provide further information about the AICPA’s Plan: December 31, 2017 ($000) Projected benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 137,351Fair value of plan assets, net of plan liabilities of $547 and accrued income of $617 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129,925Net unfunded status of the plan recognized as a liability in the combined statement of financial position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,426Employer contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,600Benefit payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (5,737)Accumulated benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 137,351Period benefit expense for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 234

Amounts in unrestricted net assets that have not yet been recognized as a component of net periodic benefit cost comprise the following:

The amounts in unrestricted net assets and expected to be recognized as a component of net periodic benefit cost for the year ending December 31, 2018, are $11,000 and $1,185,000, respectively, representing amortization of net prior service cost and amortization of actuarial loss.

Estimated future Plan payments reflecting expected future service for each of the five years subsequent to December 31, 2017, and in the aggregate for the five years thereafter are as follows:

($000) 2018 . . . . . . . . . . . . . . . . . . . . . . $ 5,9442019 . . . . . . . . . . . . . . . . . . . . . . 6,1842020 . . . . . . . . . . . . . . . . . . . . . . 6,4422021 . . . . . . . . . . . . . . . . . . . . . . 6,6392022 . . . . . . . . . . . . . . . . . . . . . . 6,815 2023 to 2027 . . . . . . . . . . . . . . 36,410

The Plan’s overall investment strategy is to provide for growth of capital with a moderate level of volatility. The expected long-term rate of return for the Plan’s assets is based on the expected return of each of the asset categories, weighted based on the median of the target allocation for the class. All investments are chosen with care, skill, prudence and due diligence with the assistance of a paid investment consultant. Performance of each investment manager is reviewed quarterly and interviews of each investment manager are generally conducted within a two-year cycle by an investments committee comprised of AICPA members with investment industry experience. Investment risk is managed in several ways, including, but not limited to, the creation of a diversified portfolio across multiple asset classes and geographic regions. A listing of permitted and prohibited investments is maintained in AICPA’s Statement of Investment Policy, dated June 2017.

Financials

Unrecognized prior service cost

Actuarial (gain) loss Total

($000)Balance, December 31, 2016 $ 406 $ 48,915 $ 49,321 Decrease during the year ended December 31, 2017

(2,264)

(2,264)

Amortization during the year ended December 31, 2017

(11)

(967)

(978)

Balance, December 31, 2017

$ 395

$ 45,684

$ 46,079

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The Plan adopted a dynamic asset allocation strategy, which is intended to reduce volatility with the Plan’s funded status as the funded status improves over time. As the Plan’s funded status improves, the target allocation of the Plan’s assets in fixed income investments will increase and overall target allocation of the Plan’s assets in equity and other types of investments will decrease. The target asset allocations are 69% fixed income and 31% equity securities. Fixed income investments include securities issued or guaranteed by the U.S. Government, its agencies or government-sponsored enterprises, mutual funds, as well as corporate bonds from diversified industries and mortgage-backed and asset-backed securities. Equity investments include mutual funds that invest in large-cap core and international equities located in the U.S. and non-U.S. based companies.

Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2017.

Common stocks, foreign stocks and U.S. Government securities: Valued at the closing price reported on the active market on which the individual securities are traded.

Corporate and foreign bonds: Valued using pricing models maximizing the use of observable inputs for similar securities. This includes basing value on yields currently available on comparable securities of issuers with similar credit ratings. When quoted prices are not available for identical or similar bonds, the bonds are valued under a discounted cash flows approach that maximizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable, such as credit and liquidity risks or a broker quote if available.

Mutual funds: Valued at the daily closing price as reported by the fund. Mutual funds held by the Plan are open‐end mutual funds that are registered with the Securities and Exchange Commission. These funds are required to publish their daily net asset value (“NAV”) and to transact at that price. The mutual funds held by the Plan are deemed to be actively traded.

Commingled trust: The NAV, as provided by the commingled trust, is used as a practical expedient to estimate fair value. The NAV is based on the fair value of the underlying investments held by the fund less its liabilities. This practical expedient is not used when it is determined to be probable that the fund will sell the investment for an amount different than the reported NAV.

The fair values of the Plan’s assets at December 31, 2017, by asset category, are as follows:

Fair value measurements using

Level 1 Level 2 Total ($000)

Mutual funds $ 44,138 $ – $ 44,138Fixed income securities 9,876 51,637 61,513

Total assets in the fair value hierarchy 54,014 51,637 105,651

Investments measured at net asset value (a) 24,204 Total investment at fair value $ 54,014 $ 51,637 $ 129,855

(a) In accordance with Subtopic 820-10, certain investments that were measured at net asset value per share (or its equivalent) have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the fair value of plan assets previously mentioned in this note.

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Fair value of investments that calculate net asset valueThe following table summarizes investments measured at fair value based on the NAV per share as of December 31, 2017:

State Street 20+ Year U.S. Treasury STRIPS Index Non-Lending FundThe Fund is managed using an indexing investment approach, which attempts to approximate the Index (“Bloomberg Barclays U.S. 20+ Year STRIPS Index”) over the long term. The Fund expects that it will typically seek to replicate Index returns for the Portfolio through investments in the cash markets.

CIMA sponsors The Chartered Institute of Management Accountants Pension and Assurance Scheme (Scheme), a funded defined benefit pension scheme in the UK. The Scheme is administered within a trust which is legally separate from CIMA. Trustees are appointed by both CIMA and the Scheme’s membership and act in the interest of the Scheme and all relevant stakeholders, including the members and CIMA. The Trustees are also responsible for the investment of the Scheme’s assets.

This Scheme provides pensions and lump sums to members on retirement and to their dependents on death. Members who leave service before retirement are entitled to a deferred pension. The Scheme closed to new members in 2002, and to accrual of benefits in 2012.

The Scheme is subject to regular actuarial valuations, which are usually carried out every three years. An actuarial valuation was carried out at April 1, 2015. These actuarial valuations are carried out in accordance with the requirements of the Pensions Act 2004 and so include deliberate margins for prudence. This contrasts with these accounting disclosures, which are determined using best estimate assumptions.

The results of the formal actuarial valuation as at April 1, 2015, have been projected to December 31, 2017, by a qualified independent actuary. The amounts in the following disclosures were measured using the Projected Unit Method.

CIMA and the Scheme agreed on a plan to reduce the liability to zero over ten years to 2023. This is through additional contributions from CIMA and expected investment returns on the Scheme’s assets. In 2017, CIMA’s contributions amounted to $1,645,000.

Economic assumptions used to determine the benefit obligations recognized in the combined statement of financial position are: December 31, 2017

Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.50%Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A


December 31, 2017Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.65%Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.43%Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A

Financials


Investment nameFair value

December 31, 2017Unfunded

commitment


(if currently eligible)Redemption notice period

($000)State Street 20+ Year U.S. Treasury STRIPS Index Non-Lending Fund

$ 24,204

None

Daily

Trade date +2

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The Scheme utilizes a yield curve methodology to determine its discount rate. This methodology uses a weighted average yield to determine the Scheme’s discount rate by forecasting the Plan’s expected benefit payments by year.

The expected return on Scheme assets was calculated using a risk-based modeling tool taking account of stochastic projections.

For the year ending December 31, 2018, CIMA expects to contribute $1,690,000 to the Scheme. The following tables provide further information about the Scheme: December 31, 2017 ($000) Projected benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 77,528Fair value of plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,730Net unfunded status of the plan recognized as a liability in the combined statement of financial position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 19,798Employer contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,645Benefit payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (1,367)Accumulated benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 77,528Foreign currency adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,081 Period pension benefit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 539

Financials


The amounts in unrestricted net assets and expected to be recognized as a component of net periodic benefit expense for the year ending December 31, 2018, is $0.

Estimated future Scheme payments reflecting expected future service for each of the five years subsequent to December 31, 2017, and in the aggregate for the five years thereafter, are as follows:

($000) 2018 . . . . . . . . . . . . . . . . . . . . . . $ 2,1562019 . . . . . . . . . . . . . . . . . . . . . . 2,1502020 . . . . . . . . . . . . . . . . . . . . . . 2,6502021 . . . . . . . . . . . . . . . . . . . . . . 3,0222022 . . . . . . . . . . . . . . . . . . . . . . 2,563 2023 to 2027 . . . . . . . . . . . . . . 18,584

The Scheme’s overall investment strategy is to achieve a return in excess of the Scheme actuary’s discount rate; and to reduce investment volatility compared to investing in a pure equity portfolio. Protection has been bought against part of the interest rate and inflation rate risk.

Unrecognized prior service cost


($000)Balance, December 31, 2016 $ – $ – $ – Decrease during the year ended December 31, 2017

(3,116)

(3,116)


–

–

–


$ –

$ (3,116)

$ (3,116)

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All investment managers were chosen following interviews by the Trustees of the Scheme based on advice from a paid investment consultant. The Trustees have compiled a Statement of Investment Principles setting out their long-term objectives and processes for monitoring performance of the investment managers. Investment risk is managed through the use of levered liability driven investments and the use of a diverse non-correlated investment portfolio.

The Trustees adopted a strategic asset allocation for the Scheme and monitor the funding level regularly. It is intended that any investment gains above a certain level will be used to reduce the expected return and volatility while aiming to reach full funding at the end of the current recovery plan.

The Scheme’s asset allocation does not intend for now to hold any physical gilts or bonds, but to use levered liability driven investments to manage interest and inflation risk. The growth assets are diversified across smart beta equity portfolios, emerging market equities, property yields, private markets and secured finance. The equity allocation is global.

Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2017.

Unit linked funds: Valued at the daily or weekly price as reported by the fund. Unit linked funds held by the Scheme are Open Ended Investment Companies and regulated by the Financial Conduct Authority in the UK. These funds actively publish prices daily and accept orders, with the final trans-action price being determined at a fixed point each day once all orders are placed.

Alternative investment funds: The Scheme invests in alternative investment funds. The NAV, as pro-vided by the fund, is used as a practical expedient to estimate fair value. The NAV is based on the fair value of the underlying investments held by the fund less its liabilities. This practical expedient is not used when it is determined to be probable that the fund will sell the investment for an amount different than the reported NAV.

The fair values of the Scheme assets at December 31, 2017, by asset category, are as follows:

Fair value measurements using ($000) Level 2 Total Unit linked funds $ 40,746 $ 40,746 Total assets in the fair value hierarchy 40,746 40,746Investments measured at net asset value (a) 16,984

Total at fair value $ 40,746 $ 57,730

(a) In accordance with Subtopic 820—10, certain investments that were measured at net asset value per share (or its equivalent) have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the fair value of plan assets previously mentioned in this note.

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Fair value of investments that calculate net asset valueThe following table summarizes investments measured at fair value based on the NAV per share as of December 31, 2017:

Partners FundThe Fund’s investment strategy is to offer investors the attractive risk/return potential of a combined alternative investment portfolio by investing in a combination of different alternative asset classes and/or alternative investment strategies. The primary investment objective is to achieve capital growth over the medium to long-term.

Insight Secured Finance FundThe Fund invests primarily in a variety of debt and debt-related securities, loan investments and structural financial instruments. The Fund seeks to produce an annual interest-based return.

Postretirement planThe AICPA sponsors employee postretirement health care and life insurance plans for qualifying employees hired before May 1, 2003, and contributes toward the annual cost of retirees remaining in these plans.

Economic assumptions used to determine the benefit obligations recognized in the combined statement of financial position are:

December 31, 2017Discount rate . . . . . . . . . . . . . . . . . . . . . 3.55%


December 31, 2017Discount rate . . . . . . . . . . . . . . . . . . . . . 4.05%

The AICPA is utilizing a yield curve methodology to determine its discount rate. This methodology uses a weighted average yield to determine the postretirement plan’s discount rate by forecasting the postretirement plan’s expected benefit payments by year.

For the year ending December 31, 2018, the AICPA expects to contribute $554,000 to the postretirement plan.

Financials


Alternative investments

Fair value December 31,

2017Unfunded

commitment


(if currently eligible)

Redemption notice period

($000)

Partners Fund $ 8,399 None Monthly 1 month + 1 day

Insight Secured Finance Fund 8,585 None Quarterly 3 months

Total $ 16,984

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The following table provides further information about the AICPA’s postretirement plan:

December 31, 2017 ($000) Postretirement benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,785Net unfunded status of the plan recognized as a liabilityin the combined statement of financial position . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,785Employer contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 506Benefit payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (549)Periodic postretirement expense for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 265


The amounts in unrestricted net assets and expected to be recognized as a component of net periodic benefit expense for the year ending December 31, 2018, are ($177,000) and $400,000, representing amortization of net prior service credit and amortization of actuarial loss.

Estimated future postretirement benefit payments reflecting expected future service for each of the five years subsequent to December 31, 2017, and in the aggregate for the five years thereafter are as follows:

($000) 2018 . . . . . . . . . . . . . . . . . . . $ 5542019 . . . . . . . . . . . . . . . . . . . 5572020 . . . . . . . . . . . . . . . . . . . 5612021 . . . . . . . . . . . . . . . . . . . 5502022 . . . . . . . . . . . . . . . . . . . 543 2023 to 2027 . . . . . . . . . . . 3,080

Defined contribution plansThe Association also sponsors separate defined contribution plans covering substantially all employees meeting minimum age and service requirements. Participation in the plans is optional and employer contributions being made to the plans are in amounts equal to a certain percentage of employees’ contributions. The cost of these plans was $5,659,000 for the year ended December 31, 2017.

Deferred compensationThe Association has a nonqualified deferred compensation plan for certain key employees. Amounts accrued under this plan are $8,955,000 as of December 31, 2017, and are included in the accompanying combined statement of financial position as a component of accounts payable and other liabilities. As of December 31, 2017, unvested deferred compensation to be recognized over a period of eighteen months was $1,673,000.

Financials

Unrecognized prior service credit


($000)Balance, December 31, 2016 $ (1,125) $ 4,025 $ 2,900 Increase during the year ended December 31, 2017

–

75

75


573

(440)

133


$ (552)

$ 3,660

$ 3,108

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Note 11 — Preferred stock and net assets

Preferred stock and net assets as of December 31, 2017, are as follows: December 31, 2017 ($000) Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 35,790

Net assets without donor restrictions: Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (684) AICPA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,235 CIMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,489) CPA.com . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,500) ARA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 AICPA Benevolent Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,477 CIMA Benevolent Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,860 AICPA Foundation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,599 Anthony Howitt Lecture Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 639 $ 18,144

Net assets with donor restrictions

Foundation Accounting Doctoral Scholars (ADS) . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,347 Foundation Financial Education Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Foundation John L. Carey Scholarships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205 ARA - Audit Analytics Initiative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 417 $ 1,970

In 2016, the AICPA Board of Directors designated $750,000 of unrestricted funds to supplement the continuation of the ADS program.

Donor restricted net assets are subject to donor-imposed stipulations that can be met either by actions of the Foundation and ARA and/or the passage of time.

Net assets with donor restrictions

Accounting Doctoral Scholars (ADS) ADS initiative focuses on the faculty shortage of accounting Ph.D.s and is working to increase the number of accounting Ph.D.s. The original ADS program achieved its goals and the Foundation began a new phase of the program continuing to focus on candidates working in public accounting who are looking to transition to an academic career.

John L. Carey Scholarships Founded in honor of former AICPA President John L. Carey upon his retirement, the scholarship program provides financial assistance to liberal arts undergraduates who are pursuing graduate accounting study at a college or university whose business administration program is accredited by the Association to Advance Collegiate Schools of Business International.

Accounting Research Association The mission of the ARA is to provide funds for studies and research in regard to principles and standards of the accounting and auditing profession.

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Note 12 — Affiliated party transactions

The Association receives royalty, advertising and general and administrative services fees from the American Institute of Certified Public Accountants Insurance Trust (Trust). The Association received net revenue of $4,919,000 from the Trust for the year ended December 31, 2017.

The General Charitable Trust (GCT) is a registered charity and was formed for the advancement of education in the subjects of accounting, management accounting, electronic data processing, costing, auditing, taxation, applied economics, finance and other related subjects of an educational nature. During 2017, the Association made gift aid donations of $174,000 to the GCT.

Note 13 — Accumulated translation adjustments

Translation adjustments for the year ended December 31, 2017, consist of foreign currency translation adjustments associated with the Association’s combined foreign entities. Changes in accumulated translation adjustments are reported in the combined statement of activities. The amount of accumulated translation adjustments is included within net assets without donor restrictions at December 31, 2017, in the combined statement of financial position. The change in accumulated translation adjustments for the year ended December 31, 2017, is as follows:

2017 ($000)

Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ –Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (600)

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (600)

Note 14 — Subsequent events

In February 2018, the Association made an announcement impacting the jobs of certain employees. First, the opening of an office in Kuala Lumpur, Malaysia, for which certain support activities currently performed by employees of the Association in various locations would be moved to Kuala Lumpur to allow for centralization of processes to achieve cost efficiencies. Second, the announcement of a technology partner, whereby the Association would partner with a third-party to increase the Association’s speed to market, leverage best-in-class information technology and service capabilities and achieve cost efficiencies. As part of the announcement, impacted employees were communicated a last day of employment, and each individual will be entitled to receive a severance payment, in accordance with the Association’s policy, if the individual remains employed until his or her last day of employment. Severance costs associated with impacted employees approximated $1,400,000.

Further, in April 2018, the Association entered into a seven-year technology agreement (Agreement) with a third-party with fees totaling up to $52,000,000 over the same period. The Agreement can be terminated by the Association, without cause, upon at least six months’ prior written notice to the third-party, although such notice cannot be served prior to the second anniversary of the effective date of the Agreement. The Association may also enter into additional statements of work (“SOWs”) for services not included in the Agreement. For all SOWs, unless otherwise provided in the applicable SOW, the Association may, without cause, terminate any individual SOW, upon 180 days prior written notice. Upon termination of the Agreement or any SOW, the Association shall pay the third-party for services rendered and any applicable expenses up to the date of termination.

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Our commitment to the sustainable development goals.

The Association of International Certified Professional Accountants recognizes 17 Sustainable Development Goals (SDGs) developed by the U.N. for governments, the private sector, civil society and individuals to transform our world. Organizations should align to the SDGs in order to realize maximum value creation, reduce risk, define opportunity and report on the impact their business activities have on sustainable development. The Association of International Certified Professional Accountants recognizes the contribution the accountancy profession can make to this model and takes a keen interest in promoting sustainable development in its business activities. Our efforts support goals 5 (Gender Equality), 8 (Decent Work and Economic Growth), 10 (Reduced Inequalities), 12 (Responsible Consumption and Production), 16 (Peace, Justice and Strong Institutions), and 17 (Partnerships for the Goals).

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