SAE Annual Report 2009 - 33

SAE INTERNATIONAL
Notes to the Financial Statements Note 1 - Summary of Significant Accounting Policies A. Nature of Organization

SAE is affiliated with SAE Institute, a Pennsylvania not-for-profit corporation organized by SAE in December 2003. It operates as a trade association organized to oversee and manage its programs and participant groups. Its mission is to provide an efficient and legal framework for automotive, aerospace, or commercial vehicle companies and organizations to create solutions to technical and business problems. The Internal Revenue Service has granted SAE Institute tax-exempt status under 501(c)(6) of the IRC. SAE INTERNATIONAL

SAE International

An SAE Section is a local unit comprised of SAE members in a defined technical or Notes to the Financial Statements (Continued) geographic area. The purpose of local sections is to meet the technical needs of the SAE members in that given area. There are over 78 established sections and groups. The funds Note and accounts of SAE Sections are not included in(Continued) 1 - Summary of Significant Accounting Policies the accompanying financial statements. B. A. Basis ofof Organization (Continued) Nature Accounting

Notes to the Financial Statements

SAE International (SAE) is a not-for-profit corporation originally organized and incorporated in 1905 under the laws of New York and reincorporated in 1986 under the laws of Pennsylvania. SAE is a technical society aimed at developing, collecting and disseminating, on a worldwide basis, the knowledge of mobility technologies in order to advance these fields and their practitioners in a manner which serves humanity. SAE Foundation (the Foundation) is an unincorporated division of SAE and, accordingly, is included in the accompanying financial statements. The Foundation was created to facilitate financial contributions from members and others to provide an additional source of income beyond those sources normally available to SAE for activities in support of SAE’s purpose, mission and goals. The Foundation operates under the direction of a Board of Trustees, which ultimately reports to the Board of Directors of SAE. Administrative support is provided by SAE. The following affiliated organizations do not meet the criteria requiring consolidation with SAE. As such, the activities of each are not included in the accompanying financial statements: SAE Foundation Canada is organized as a separate entity under the laws of Canada. It was formed to manage the activities, missions and goals in support of SAE in Canada, which requires SAE Foundation Canada’s solicitation and receipt of specific funding from individuals, public or private corporations, foundations, or government agencies. SAE Foundation Canada operates under the direction of a Board of Directors. SAE is affiliated with Performance Review Institute, Inc. (PRI), a Pennsylvania not-for-profit corporation organized by SAE in April 1990 to SAE INTERNATIONAL compile and review performance standards, to promote and administer quality assurance, accreditation the Financial Statements (Continued) Notes to and certification programs for the benefit of the general public, industry and government. PRI also contributes funds, property and services to not-for-profit organizations that develop and publish standards for maintaining and improving quality and (Continued) Note 1 - Summary of Significant Accounting Policiesperformance within the automotive industry. The Internal Revenue Service has granted PRI tax-exempt status under A. Sectionof Organization (Continued) Nature 501(c)(6) of the IRC. SAE is affiliated with SAE Institute, a Pennsylvania not-for-profit corporation organized by SAE in December 2003. It operates as a trade association organized to oversee and manage its programs and participant groups. Its mission is to provide an efficient and legal framework for automotive, aerospace, or commercial vehicle companies and organizations to create solutions to technical and business problems. The Internal Revenue Service has granted SAE Institute tax-exempt status under 501(c)(6) of the IRC. Page 10 An SAE Section is a local unit comprised of SAE members in a defined technical or geographic area. The purpose of local sections is to meet the technical needs of the SAE members in that given area. There are over 78 established sections and groups. The funds and accounts of SAE Sections are not included in the accompanying financial statements. B. Basis of Accounting

The accompanying financialwith SAE Institute, a on the accrual basis of accounting SAE is affiliated statements are prepared Pennsylvania not-for-profit in accordance with generallyby SAE in Decemberprinciples. Net asset classifications and corporation organized accepted accounting 2003. It operates as a trade changes in each organized classes are reported in the financial statements, and detailed association of those to oversee and manage its programs and participant information regarding the purpose of temporarily and permanently restricted net assets are groups. Its mission is to provide an efficient and legal framework for disclosed in Note 8. automotive, aerospace, or commercial vehicle companies and organizations to create solutions to technical and business problems. The Internal Revenue The accompanying financial statements include onlyunder assets, liabilities,IRC. assets Service has granted SAE Institute tax-exempt status the 501(c)(6) of the net and financial activities of SAE. The funds and accounts of SAE Sections are not included in the accompanying financiallocal unit comprised of SAE members permitted to technical or An SAE Section is a statements. However, Sections are in a defined invest in a money market investment pool andlocal sections is to meet the managed by SAE. Funds of geographic area. The purpose of a long-term investment pool technical needs of the SAE Sections participating in the There are over 78 established sections and groups. Theas an included in investments and are reflected funds members in that given area. pool accounts payable SAE Sections are not included in the accompanying financial statements. and accounts of liability in the accompanying financial statements. C. B. Change in Accounting Principle Basis of Accounting

During 2009, management reviewed theare prepared used toaccrual basis of accounting The accompanying financial statements methods it on the recognize revenue for the sales of subscriptions to SAE’s Financial Statements (Continued)royalty revenues received in accordance with Notes to the digital accounting principles. Net asset classifications and generally accepted library product and the under contract from a third classes aresells SAE’sin the financial related documents. As a changes in each of those party that reported standards and statements, and detailed result, SAE has changed its method of accounting for these revenue streams. assets are information regarding the purpose of temporarily and permanently restricted net Revenues from digital Note 8. subscriptions were previously recognized point of sale and are now disclosed in library Note 1 - Summary of Significant Accounting Policies (Continued) recognized ratably over the term of the subscription. Royalty revenues were previously recognized ratably and are Principle (Continued) The accompanying financial statements include of sale. C. Change in Accounting now recognized at the point only the assets, liabilities, net assets and financial activities of SAE. The funds and accounts of SAE Sections are not included in the SAE believes that the new methodsHowever, Sections are permitted to invest in a accompanying financial statements. of revenue recognition more accurately reflect money results of operations and a economic substance of managed by SAE. Funds of periodic market investment pool andthelong-term investment poolthe transactions. The 2009 Sections participating the pool are accounts investments and are reflected as an effect of these changesinwas to increaseincluded inreceivable by approximately $321,000, accounts payable revenue the accompanying financial statements. increase deferred liability inby approximately $870,000, and decrease the change in net Page 11 assets by approximately $244,000. The financial statements for 2008 have been C. Change in Accounting these retrospectively restated forPrinciple changes, which resulted in an increase in accounts receivable of approximately $447,000, an increase in deferred revenue of $1,031,000, and During 2009, management reviewed the methods it used recognize revenue for the a decrease in change in net assets of approximately $210,000.toBeginning net assets have sales of subscriptions to SAE’s digital library product and $374,000 as of January 1, been decreased accordingly in the amount of approximatelythe royalty revenues received under contract from third party application of the new methods. 2008 for the effect ofaretrospectivethat sells SAE’s standards and related documents. As a result, SAE has changed its method of accounting for these revenue streams. Revenues from digital library subscriptions were previously recognized point of sale and are now D. Estimates recognized ratably over the term of the subscription. Royalty revenues were previously recognized ratably and of now recognized at the point of sale. The preparation are financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported revenues and expenses during the reporting period. Actual results could differ from those estimates. Page 11 E. Cash and Cash Equivalents

SAE INTERNATIONAL

For purposes of the statement of cash flows, SAE considers all highly liquid investments with an initial maturity of three months or less to be cash equivalents. SAE’s cash balances were allocated to numerous banking institutions operating in 33 western Pennsylvania. From time to time, the balance 2009be in excess of the Federal may Annual Report Deposit Insurance Corporation (FDIC) insurance limit.

The accompanying financial statements are prepared on the accrual basis of accounting in accordance with generally accepted accounting principles. Net asset classifications and

SAE Annual Report 2009

Table of Contents for the Digital Edition of SAE Annual Report 2009