Management’s Discussion and Analysis

Institute of Management Accountants, Inc. and Affiliates
Combined Financial Statements, Years Ended June 30, 2012 and 2011
(All dollar amounts are in thousands)

The Association

The Institute of Management Accountants, Inc., and its subsidiaries and affiliates (collectively, IMA), is the association of accountants and financial professionals in business. IMA provides a forum for research, practice development, education, knowledge sharing, and advocacy of the highest ethical and best business practices to a network of more than 65,000 professionals. An affiliate of IMA, the Institute of Certified Management Accountants (ICMA), offers the Certified Management Accountant (CMA) credential, the professional certification for critical internal financial management responsibilities, including planning, budgeting, business reporting, decision analysis, and risk management.

Summary

The combined financial statements include the accounts of the Institute of Management Accountants, Inc. and its subsidiaries, IMA Services, Inc. and IMA Products and Services, LLC, as well as its affiliates, Institute of Certified Management Accountants, Inc., Institute of Management Accountants Research Foundation, Inc., and Institute of Management Accountants Memorial Education Fund, Inc.

Highlights of the combined financial results for the years ended June 30, 2012 and 2011 are: 

Total assets on a combined basis were $21,976 in Fiscal 2012 compared to $21,008 at the end of Fiscal 2011. Cash increased $620 to $4809 in Fiscal 2012 from $4,189 in Fiscal 2011. Cash, excluding investment portfolio amounts held in cash and reported in cash above, increased $868 to $4,143 in Fiscal 2012 compared to $3,275 in Fiscal 2011. The investment portfolio, including portfolio amounts held in cash and reported in cash above, increased by $253 to $13,155 in Fiscal 2012 from $12,902 at the end of Fiscal 2011. The value of fixed assets, after accounting for higher amortization and depreciation than in prior years, was $3,868 at the end of Fiscal 2012, compared to $4,289 at the end of Fiscal 2011. In 1985, IMA was one of the founding members of the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). IMA’s allocable interest in the assets of COSO was valued at $213 at the end of Fiscal 2012 and is included in other current assets. No corresponding value had been reported in prior fiscal years.

Total liabilities on a combined basis were $10,094 in Fiscal 2012 compared to $9,565 at the end of Fiscal 2011. The increase in liabilities is mainly due to membership growth, which increased deferred dues to be amortized over the period of membership benefits, and growth in staffing and staff related accruals.

Program Revenues

Program revenues increased $794 or 4% to $21,135 in Fiscal 2012 from $20,341 in Fiscal 2011. CMA exam related revenue increased $538 or 8% to $7,360 in Fiscal 2012 compared to $6,822 in Fiscal 2011. The number of people entering the CMA program and related entrance fee revenue, CMA exam registrations and related registration fee revenue, and active and new CMAs and related maintenance fee revenue all increased over the prior fiscal year. Affinity revenue increased by $301 or 45%, from $673 in Fiscal 2011 to $974 in Fiscal 2012, reflecting a higher number of affinity partnerships. The recognition of membership dues revenue was relatively consistent with the prior year, with a decrease of $70, less than 1%, to $9,204 for the period although membership increased 4,281 in Fiscal 2012 to 65,099.   A significant portion of revenue related to increased membership was deferred at the end of Fiscal 2012 and will be recognized in Fiscal 2013, coinciding with the period of member benefits.

Operating Expenses

Total operating expenses increased by $1,112 or 6% to $21,096 in Fiscal 2012 from $19,984 in Fiscal 2011. Expenses charged directly to programs decreased by $335 or 3%, primarily as a result of lower CMA program costs following completed transition to the two-part exam. Shared program expenses increased $942 or 27% as a result of enhanced membership and certification promotional efforts. Administrative support expenses increased by $505 or 9%, primarily as a result of increased amortization expense including the result of a change in the estimated useful life of customized software.

Investment Return

Investment income totaled $466 in Fiscal 2012, compared to $2,195 in Fiscal 2011. The improvement in the value of the investment portfolio reflects a general improvement in the market for the underlying securities, which was not as significant as the improvement in Fiscal 2011. Fiscal 2012 investment income includes recognition of IMA’s allocable interest of $213 in the assets of COSO.

Current Operating Fund

The Current Operating Fund concluded Fiscal 2012 with a deficit balance of $428, compared to a balance of $169 at the end of Fiscal 2011, following an operating results deficit of $744 specific to the Institute of Management Accountants, Inc., joint venture investment income of $213 and a $66 decrease in the unfunded accumulated benefit obligation.

Reserve Fund

The Reserve Fund concluded Fiscal 2012 with a balance of $3,582, compared to a balance of $3,306 at the end of Fiscal 2011. Registration fees for new members are credited to the Reserve Fund, and totaled $180 in Fiscal 2012, as compared to $167 in Fiscal 2011. Investment returns credited to the Reserve Fund were $96 in Fiscal 2012.

Institute of Certified Management Accountants, Inc. (ICMA)

ICMA is the affiliated entity that administers the Certified Management Accountant credentialing program. The net assets of ICMA increased by $713 as a result of operations, and $71 as a result of investment portfolio gains during Fiscal 2012. As of June 30, 2012, the net assets of ICMA were $6,094, as compared to $5,310 in June of 2011.

Institute of Management Accountants Memorial Education Fund, Inc. (IMAMEF)

IMAMEF consists of various funds established to support the educational goals of IMA, to further its ethics program, and to award scholarships to students pursuing an education in management accounting. Scholarships and grants awarded by IMAMEF for Fiscal 2012 and 2011 were $9 and $45 respectively. In Fiscal 2012, IMAMEF also contributed $240 to the Institute of Management Accountants Research Foundation, Inc. (IMARF) to fund its grant and grant related expenditures. Investment gains credited to IMAMEF were $86 in Fiscal 2012, compared to $441 in Fiscal 2011. The net assets of IMAMEF at the end of Fiscal 2012 and 2011 were $2,491 and $2,659 respectively.

Institute of Management Accountants Research Foundation, Inc. (IMARF)

Grants awarded to doctoral candidates pursuing research related to management accounting and to organizations furthering accounting education were $97 and $75 in Fiscal 2012 and 2011 respectively. IMARF had net assets of $143 at the end of Fiscal 2012 as compared to a net asset deficit of $1 at the end of Fiscal 2011. In Fiscal 2012, IMARF received a contribution of $240 from IMAMEF which covered or will cover the majority of its expenditures for both Fiscal 2012 and Fiscal 2013.

In Fiscal 2012, the IMARF Board approved a change to the name of the organization. It was formerly known as the Institute of Management Accountants Foundation in Applied Research, Inc. (IMAFAR).