f y e d 31, 2014 w s f i 2013 -...

FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2014WITH SUMMARIZED FINANCIAL

INFORMATION FOR 2013

ACCREDITING COUNCIL FOR CONTINUING EDUCATION AND TRAINING

CONTENTS

PAGE NO.

INDEPENDENT AUDITOR'S REPORT 2 - 3

EXHIBIT A - Statement of Financial Position, as of December 31, 2014, withSummarized Financial Information for 2013 4

EXHIBIT B - Statement of Activities and Change in Net Assets, for the Year EndedDecember 31, 2014, with Summarized Financial Information for 2013 5

EXHIBIT C - Statement of Cash Flows, for the Year Ended December 31, 2014,with Summarized Financial Information for 2013 6

NOTES TO FINANCIAL STATEMENTS 7 - 12

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INDEPENDENT AUDITOR'S REPORT

To the Board of TrusteesAccrediting Council for Continuing Education and TrainingWashington, D.C.

We have audited the accompanying financial statements of the Accrediting Council forContinuing Education and Training (the Council), which comprise the statement of financial position as ofDecember 31, 2014, and the related statements of activities and change in net assets and cash flows forthe year then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statementsin accordance with accounting principles generally accepted in the United States of America; this includesthe design, implementation and maintenance of internal control relevant to the preparation and fairpresentation of financial statements that are free from material misstatement, whether due to fraud orerror.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. Weconducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica. Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free from material misstatement.

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

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

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects,the financial position of the Council as of December 31, 2014, and the change in its net assets and itscash flows for the year then ended in accordance with accounting principles generally accepted in theUnited States of America.

4550 MONTGOMERY AVENUE · SUITE 650 NORTH · BETHESDA, MARYLAND 20814(301) 951-9090 · FAX (301) 951-3570 · WWW.GRFCPA.COM

___________________________

MEMBER OF CPAMERICA INTERNATIONAL, AN AFFILIATE OF HORWATH INTERNATIONAL

MEMBER OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS' PRIVATE COMPANIES PRACTICE SECTION

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Report on Summarized Comparative Information

We have previously audited the Council's 2013 financial statements, and we expressed anunmodified audit opinion on those audited financial statements in our report dated April 25, 2014. In ouropinion, the summarized comparative information presented herein as of and for the year endedDecember 31, 2013, is consistent, in all material respects, with the audited financial statements fromwhich it has been derived.

As discussed in Note 1 to the financial statements, during 2014, the Council changed its methodfor accounting for accounts receivable and deferred revenue. Management believe the current treatmentbetter represents the activities of the Council. To conform to the current year's presentation, accountsreceivable and deferred revenue in the prior year's financial statements were increased by $558,039.This had no effect on the previously reported change in net assets.

As discussed in Note 7 to the financial statements, during 2013, the Council understated deferredcompensation and salary expense due to a recordation error. Accordingly, the deferred compensationand undesignated net assets at December 31, 2013 shown for summarized purposes in theaccompanying financial statements have been retroactively restated. The effect of the correction is adecrease in undesignated net assets of $21,250 at December 31, 2013.

May 18, 2015

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EXHIBIT A


STATEMENT OF FINANCIAL POSITIONAS OF DECEMBER 31, 2014

WITH SUMMARIZED FINANCIAL INFORMATION FOR 2013

ASSETS

20142013

(As Restated)CURRENT ASSETS

Cash and cash equivalents $ 289,607 $ 2,516,074Investments (Notes 3 and 6) 2,235,843 366,488Accounts receivable 813,361 590,438Prepaid expenses 47,883 48,166

Total current assets 3,386,694 3,521,166

FIXED ASSETS

Land 296,000 296,000Buildings 1,241,083 1,241,083Furniture 311,866 294,152Computer database 365,988 316,488

2,214,937 2,147,723Less: Accumulated depreciation and amortization (896,295) (817,448)

Net fixed assets 1,318,642 1,330,275

TOTAL ASSETS $ 4,705,336 $ 4,851,441

LIABILITIES AND NET ASSETS

CURRENT LIABILITIES

Accounts payable and accrued liabilities $ 95,014 $ 195,904Accrued salaries and related benefits (Note 7) 65,770 232,439Deferred revenue 1,287,846 1,252,338

Total current liabilities 1,448,630 1,680,681

NET ASSETS

Unrestricted:Undesignated (Note 7) 3,246,706 3,160,760Board designated (Note 4) 10,000 10,000

Total net assets 3,256,706 3,170,760

TOTAL LIABILITIES AND NET ASSETS $ 4,705,336 $ 4,851,441

See accompanying notes to financial statements. 4

EXHIBIT B


STATEMENT OF ACTIVITIES AND CHANGE IN NET ASSETSFOR THE YEAR ENDED DECEMBER 31, 2014


Unrestricted

20142013

(As Restated)

UndesignatedBoard

Designated Total TotalREVENUE

Sustaining fees $ 1,047,861 $ - $ 1,047,861 $ 1,020,719Examination fees 1,218,423 - 1,218,423 1,149,631Application fees 151,960 - 151,960 217,533Processing and other fees 233,251 - 233,251 177,560Conference, workshops and

seminars 203,337 - 203,337 204,013Investment income (Note 3) 16,313 - 16,313 7,191

Total revenue 2,871,145 - 2,871,145 2,776,647

EXPENSES

Program Services:Council Meetings and Exam Visits 2,292,873 - 2,292,873 2,243,569Conventions and Workshops 240,257 - 240,257 204,002Systems/Network Management 128,233 - 128,233 86,158

Total program services 2,661,363 - 2,661,363 2,533,729

Supporting Services:General and Administrative 123,836 - 123,836 108,398

Total expenses 2,785,199 - 2,785,199 2,642,127

Change in net assets 85,946 - 85,946 134,520

Net assets at beginning of year, asrestated (Note 7) 3,160,760 10,000 3,170,760 3,036,240

NET ASSETS AT END OF YEAR $ 3,246,706 $ 10,000 $ 3,256,706 $ 3,170,760


EXHIBIT C


STATEMENT OF CASH FLOWSFOR THE YEAR ENDED DECEMBER 31, 2014


20142013

(As Restated)CASH FLOWS FROM OPERATING ACTIVITIES

Change in net assets $ 85,946 $ 134,520

Adjustments to reconcile change in net assets to net cash (used) provided by operating activities:

Depreciation and amortization 78,847 73,118Unrealized loss 3,935 2,207Realized loss 13,100 10,531

(Increase) decrease in:Accounts receivable (222,923) (502,606)Prepaid expenses 283 (7,160)

Increase (decrease) in:Accounts payable and accrued liabilities (100,890) 25,266Accrued salaries and related benefits (166,669) (60,654)Deferred revenue 35,508 625,867

Net cash (used) provided by operating activities (272,863) 301,089

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of fixed assets (67,214) (17,259)Purchase of investments (2,077,390) -Sales of investments 191,000 210,000

Net cash (used) provided by investing activities (1,953,604) 192,741

Net (decrease) increase in cash and cash equivalents (2,226,467) 493,830

Cash and cash equivalents at beginning of year 2,516,074 2,022,244

CASH AND CASH EQUIVALENTS AT END OF YEAR $ 289,607 $ 2,516,074



NOTES TO FINANCIAL STATEMENTSDECEMBER 31, 2014

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL INFORMATION

Organization -

The Accrediting Council for Continuing Education and Training (the Council) is a non-profitorganization, incorporated and located in the District of Columbia. The Council was founded in1974 for the purpose of improving continuing education and training and has been officiallyrecognized by the U.S. Department of Education since 1978 as a "reliable authority" as to thequality of education and training provided by the institutions they accredit.

Basis of presentation -

The accompanying financial statements are presented on the accrual basis of accounting, andin accordance with FASB ASC 958, Not-for-Profit Entities.

The financial statements include certain prior year summarized comparative information in totalbut not by net asset class. Such information does not include sufficient detail to constitute apresentation in conformity with generally accepted accounting principles. Accordingly, suchinformation should be read in conjunction with the Council's financial statements for the yearended December 31, 2013, from which the summarized information was derived.

Cash and cash equivalents -

The Council considers all cash and other highly liquid investments with initial maturities of threemonths or less to be cash equivalents.

Bank deposit accounts are insured by the Federal Deposit Insurance Corporation (“FDIC”) up toa limit of $250,000. At times during the year, the Council maintains cash balances in excess ofthe FDIC insurance limits. Management believes the risk in these situations to be minimal.

Investments -

Investments are recorded at their readily determinable fair value. Realized and unrealized gainsand losses are included in investment income in the Statement of Activities and Change in NetAssets.

Accounts receivable -

Accounts receivable are stated at their net realizable value, which approximates fair value.Management considers all amounts to be fully collectible. Accordingly, an allowance fordoubtful accounts has not been established.

Fixed assets -

Fixed assets in excess of $1,000 are capitalized and stated at cost. Fixed assets aredepreciated on a straight-line basis over the estimated useful lives of the related assets,generally three to seven years. The cost of maintenance and repairs is recorded as expensesare incurred.

Income taxes -

The Council is exempt from Federal income taxes under Section 501(c)(3) of the InternalRevenue Code. Accordingly, no provision for income taxes has been made in theaccompanying financial statements. The Council is not a private foundation.

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL INFORMATION(Continued)

Uncertain tax positions -

For the year ended December 31, 2014, the Council has documented its consideration of FASBASC 740-10, Income Taxes, that provides guidance for reporting uncertainty in income taxesand has determined that no material uncertain tax positions qualify for either recognition ordisclosure in the financial statements.

The Federal Form 990, Return of Organization Exempt from Income Tax, is subject toexamination by the Internal Revenue Service, generally for three years after it is filed.

Deferred revenue -

Deferred revenue consists of sustaining fees, examination fees, and conference, workshops,and seminars registrations. The Council recognizes sustaining fees on a pro-rata basis overthe membership period. The Council recognizes examination fees, conference, workshops, andseminars revenue when the related examination or event has occurred.

Net asset classification -

The net assets are reported in two self-balancing groups as follows:

Unrestricted net assets include unrestricted revenue and contributions received withoutdonor-imposed restrictions. These net assets are available for the operation of the Counciland include both internally designated and undesignated resources.

Temporarily restricted net assets include revenue and contributions subject to donor-imposed stipulations that will be met by the actions of the Council and/or the passage oftime. When a restriction expires, temporarily restricted net assets are reclassified tounrestricted net assets and reported in the Statement of Activities and Change in Net Assetsas net assets released from restrictions. At December 31, 2014, the Council did not haveany temporarily restricted net assets.

Contributed services -

The Council receives volunteers from member institutions who have donated their time inassisting with on-site examination team visits. Management has determined the value of thesedonated services do not meet the criteria for recognition as contributed services and has notreflected their value in the accompanying Statement of Activities and Change in Net Assets.

Use of estimates -

The preparation of the financial statements in conformity with accounting principles generallyaccepted in the United States of America requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities at the date of the financialstatements and the reported amounts of revenue and expenses during the reporting period.Accordingly, actual results could differ from those estimates.

Functional allocation of expenses -

The costs of providing the various programs and other activities have been summarized on afunctional basis in the Statement of Activities and Change in Net Assets. Accordingly, certaincosts have been allocated among the programs and supporting services benefited.

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL INFORMATION(Continued)

Risks and uncertainties -

The Council invests in various investment securities. Investment securities are exposed tovarious risks such as interest rates, market and credit risks. Due to the level of risk associatedwith certain investment securities, it is at least reasonably possible that changes in the values ofinvestment securities will occur in the near term and that such changes could materially affectthe amounts reported in the accompanying financial statements.

Fair value measurement -

The Council adopted the provisions of FASB ASC 820, Fair Value Measurement. FASB ASC820 defines fair value, establishes a framework for measuring fair value, establishes a fair valuehierarchy based on the quality of inputs (assumptions that market participants would use inpricing assets and liabilities, including assumptions about risk) used to measure fair value, andenhances disclosure requirements for fair value measurements. The Council accounts for asignificant portion of its financial instruments at fair value or considers fair value in theirmeasurement.

Accounting change -

During 2014, the Council changed its method for accounting for accounts receivable anddeferred revenue. To conform to the current year's presentation, accounts receivable anddeferred revenue in the prior year's financial statements were increased by $558,039. This hadno effect on the previously reported changes in net assets.

2. DESCRIPTION OF PROGRAM AND SUPPORTING SERVICES

The following program and supporting services are included in the accompanying financialstatements:

Council Meetings and Exam Visits - The Council oversees three evaluation review cycles peryear, during which various accreditation processing activities ensue, with on-site examination teamvisit reports of initial applicant and current member institutions serving as the core evaluation fortheir judgment of each institution’s compliance with the Council standards relative to objectives,resources, programs, policies and outcomes of the education and training offered.

Conventions and Workshops - The Council holds one convention each year and severalworkshops throughout the year that are designed to provide knowledge about the accreditationprocess and other relevant information about the industry.

Systems/Network Management - The Council has undertaken a major database upgrade,referred to as the Accreditation Management System (AMS), which incorporates upgradedfunctional efficiencies and effectiveness in all the major process areas, including institutionalreporting and records, application submissions, on-site visit and Commission meetingpreparations, workshop and conference registrations, and credit card processing.

General and Administrative - General and administrative costs are those that are not identifiablewith a single program but that are indispensable to the conduct of those activities. They includeoversight, business management, record keeping, budgeting and related administrative activities.

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3. INVESTMENTS

Investments consisted of the following at December 31, 2014:

Fair Value

Certificates of deposit 1,724,093Mutual funds 307,456Exchange traded funds and closed-end funds 204,294

$ 2,235,843

Included in investment income are the following:

Interest and dividends $ 33,348Unrealized loss (3,935)Realized loss (13,100)

TOTAL INVESTMENT INCOME $ 16,313

4. BOARD DESIGNATED NET ASSETS

As of December 31, 2014, net assets have been designated by the Board of Trustees for thefollowing purposes:

Capital Improvements $ 10,000

5. RETIREMENT PLAN

The Council offers participation in a 403(b) retirement plan with TIAA-CREF for eligible employees.The plan provides for matching contributions by the Council at its discretion which, at present, is50% of each employee’s contribution. Employee contributions may not exceed 10% of eachemployee’s gross annual salary. Employee eligibility in the plan is attained after 90 days of servicewith the Council. Contributions to the plan during the year ended December 31, 2014 totaled$38,755.

6. FAIR VALUE MEASUREMENT

In accordance with FASB ASC 820, Fair Value Measurement, the Council has categorized itsfinancial instruments, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices inactive markets for identical assets or liabilities (Level 1) and the lowest priority to unobservableinputs (Level 3). If the inputs used to measure the financial instruments fall within different levels ofhierarchy, the categorization is based on the lowest level input that is significant to the fair valuemeasurement of the instrument. Investments recorded in the Statement of Financial Position arecategorized based on the inputs to valuation techniques as follows:

Level 1. These are investments where values are based on unadjusted quoted prices for identicalassets in an active market the Council has the ability to access.

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6. FAIR VALUE MEASUREMENT (Continued)

Level 2. These are investments where values are based on quoted prices for similar instruments inactive markets, quoted prices for identical or similar instruments in markets that are not active, ormodel-based valuation techniques that utilize inputs that are observable either directly or indirectlyfor substantially the full-term of the investments.

Level 3. These are investments where inputs to the valuation methodology are unobservable andsignificant to the fair value measurement.

Following is a description of the valuation methodology used for investments measured at fairvalue. There have been no changes in the methodologies used at December 31, 2014.

Certificates of deposit - Generally valued at original cost plus accrued interest, whichapproximates fair value.

Mutual funds - The fair value is equal to the reported net asset value of the fund, which is theprice at which additional shares can be obtained.

Exchange traded and closed-end funds - The fair value is equal to the reported net asset valueof the fund, which is the price at which additional shares can be obtained.

The table below summarizes, by level within the fair value hierarchy, the Council's investments asof December 31, 2014:

Level 1 Level 2 Level 3 Total

Asset Class:Certificates of deposit $ - $ 1,724,093 $ - $ 1,724,093Mutual funds 307,456 - - 307,456Exchange traded and closed-

end funds 204,294 - - 204,294

TOTAL $ 511,750 $ 1,724,093 $ - $ 2,235,843

7. PRIOR PERIOD ADJUSTMENT

During fiscal year 2013, the Council erroneously recorded the final salary payment to the formerExecutive Director as a reduction in deferred compensation rather than as salary expense.Accordingly, the deferred compensation and undesignated net assets at December 31, 2013shown for summarized purposes in the accompanying report have been retroactively restated.

Following is a summary of the effect of the restatement resulting from the error:

Accrued Salariesand Related

BenefitsTotal

ExpensesUndesignated

Net Assets

December 31, 2013 balance,as previously stated $ 211,189 $ 2,620,877 $ 3,182,010

Adjustment to correct error 21,250 21,250 (21,250)

DECEMBER 31, 2013 BALANCE,AS RESTATED $ 232,439 $ 2,642,127 $ 3,160,760

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8. SUBSEQUENT EVENTS

In preparing these financial statements, the Council has evaluated events and transactions forpotential recognition or disclosure through May 18, 2015, the date the financial statements wereissued.

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