The PR Society of America 2010 audit appears to violate one of accounting’s bedrock rules -- income is booked as earned -- said CPAs. They said they find only a “miniscule” amount of PRSA deferred dues ($290,948 on dues of $4,479,744) and said this bloats the claimed net assets figure of $3,455,037.

Since anniversary billing started in the 1990s, renewals are spread throughout the year, they said.

PRSA Treasurer
Phil Tate
Adding $2.2M to “liabilities” (since service is owed on the year’s dues) would change the net assets figure to about $1.2 million.

Operating expenses were $10,465,256 in 2010 on revenues of $10,513,366. Revenues were $10,217,501 in 2005.

Section 5.46 of the Financial Accounting Standards Board (ASC 958-605-2-1) says that “revenues derived from membership dues in exchange transactions should be recognized over the period to which the dues relate.” The major professional associations, including the American Bar Assn., American Medical Assn., American Society of Assn. Executives and the American Institute of CPAs, as well as the International Assn. of Business Communicators defer substantial amounts of dues income.

The associations have the cash but acknowledge that it is unearned.

PKF, the Society’s auditor, gave an unqualified approval to the presentation of its finances, which were sent to members by William Murray, president and COO.

Profit in 2011 Is Doubtful

Treasurer Philip Tate of Luquire George Andrews, Charlotte, said in a blog that while the Society was able to meet its goal of returning one percent of budgeted expenses to the Society’s “reserves,” this will probably not be possible in 2011.

“Returning even a small surplus (operating surplus was $48,110) amid a difficult economy and increased market pressures required aggressive cost-cutting,” he said. This was done by “rebidding contracts, reducing staff, freezing salaries and implementing cost-efficient technologies.”

Tate said “an incredible” $1.5 million has been cut from operating expenses in the past “several years” and that there is “no room for further cuts and no obvious sources of new revenue.”

However, members said one obvious way to cut costs while speeding delivery would be digitizing the monthly Tactics and the quarterly Strategist.

Spending on publications totaled $1,025,479, down from $1,231,003. Among the T&S expenses are $731,750 for staff and $285,349 for postage and printing.

Income in 2010 included $222,599 in investment income. This was made up of $115,168 in unrealized gains in common stocks; $32,534 in realized gains, and $74,897 in dividends and interest.

Salaries/Fringes at 51% of Income

Pay/fringes for the staff of about 50 rose 3% to $5,368,206 and account for 51% of expenses of $10,465,256.

Pay/fringes in 1992 were $2,039,783 on expenses of $5,216,000, or 39% of expenses.

According to statistics kept by the ASAE, non-profit groups in the $5-$10M range spend about 35% of their expenses on pay/fringes.

A release on the Society’s finances is in the “newsroom” of its website but the audit and other financial reports are only available to members with access codes.

Murray, VP-PR Arthur Yann, chair Rosanna Fiske and Tate have been asked to explain why the Society’s audit is in apparent conflict with accounting rules but have not responded.