RESULTS FROM OPERATIONS
Total revenue for the year surpassed the $100 million mark for the first time in the organization’s history. Our total revenue of $101.7 million in fiscal 2018 (2017: $97.1 million) was derived from three main sources: member dues and fees, education, and professional development. These three sources delivered 95% of total revenues in fiscal 2018, approximately the same proportion as in fiscal 2017 (96%).
Member dues and fees. CPA Ontario collected $45.3 million in dues and fees from our members in fiscal 2018 (slightly less than the $46.3 million collected in 2017); this sum represented 45% of the organization’s revenues (a smaller share than in 2017: 48%). Member dues and fees enable CPA Ontario to fulfill our regulatory functions to promote and protect the public trust. Our regulatory functions include carrying out practice inspections, investigations, responses to complaints, and work with the Public Accountants Council, among other functions. In addition to our regulatory role, CPA Ontario delivers a wide range of member services, including advising on ethical and regulatory matters, career services, networking opportunities, and affinity programs. Member dues and fees collected this year have also enabled CPA Ontario to invest in technology and process improvements that will enhance member and student experience, enable improved professional development offerings, and deliver economies of scale in the years ahead.
Education programs. Education program revenue and student fees totalled $40.5 million in fiscal 2018 (as compared to $35.8 million in 2017). Of this total, $25.5 million (2017: $22.3 million) came from the CPA preparatory course and the professional education program, and $0.5 million (2017: $0.3 million) came from other programs. The rest – $14.5 million in 2018, up from $13.2 million the previous year – came from student fees.
Overall, students enrolled in 7,994 preparatory courses (as compared to 8,949 in 2017) and 17,241 professional education program modules (in 2017: 15,543). The contribution margin from CPA programs in fiscal 2018 is $9.5 million, or 37.3%; in 2017, the contribution margin was $7.6 million, or 34.2% of our total. The significant increase in contribution margin dollars was driven by two factors. We saw 11% higher enrolment in the CPA professional education program, attesting to demand for and relevance of our program offerings. We also received a refund for development costs of the education and examination components of the CPA Certification Program and Preparatory Courses under an Education Agreement with CPA Canada. The increase in contribution margin percentage is due to lower per-unit module and exam costs, combined with savings in delivery and support of the education program.
The increase of $1.3 million in student fees this year is due to a slight increase in student population, which at March 31, 2018 stood at 21,547 (as compared to 21,515 at the close of 2017). In addition, there was a one-time boost to revenue versus the prior year due to the elimination of a fee subsidy related to a student magazine.
Professional Development (PD) programs. PD revenues increased by $0.4 million, from $10.9 million in fiscal 2017 to $11.3 million in fiscal 2018. This increase was driven mainly by sponsorship revenue from a new affinity partner contract signed in fiscal 2017.
Expenses. Total expenses for fiscal 2018 were $93.9 million, up $12.3 million from $81.6 million in fiscal 2017. This increase is primarily due to an increase in education and operations expenses. The expenses incurred in delivering our education programs increased as a result of higher enrollments in the CPA Program and serving more students. Within operations, our legal expenses increased as we conducted a comprehensive review of our governing documents, and increased our investigation and prosecution activities. Expenses in fiscal 2018 also included new spending in strategic areas, such as thought leadership, change management, a strategy refresh, and new technology as we commenced development of our new customer relationship management system and business transformation.
Overall, fiscal 2018 resulted in an excess of revenues over expenses of $7.8 million (2017: $15.5 million). We expect higher expenses next year as we execute on our digital and business transformation and other initiatives, such as a facility strategy to co-locate all our employees, who are currently spread out in two locations. We anticipate these investments will further improve CPA Ontario’s service delivery in the years ahead.