Contents

Leadership Message...... 3 Member Institutions ...... 12 Financial Audit Report ...... 24 Leadership Message from Chair Dr. Lawrence Leak It has been an honor to serve as the chair of the Council and the ACICS Board of Directors this year. As a public member of the Council, I view taking the reins as chair as a signal to the greater higher education community that the ACICS leadership is an independent and diverse body of thinkers.

As for my background, I am a lifelong educator with a professional career that spans the elementary, secondary, and postsecondary continuum. In retirement since 2008, I dedicate my service time as an independent public board member to the Historic St. Mary’s City Commission, St. Mary’s College of , and to ACICS.

Without a doubt, 2016 has been challenging year for ACICS. It has been satisfying to work and serve with so many who are committed to strengthening ACICS. Very early in 2016, the ACICS Council began adopting sweeping changes to our organizational structure, culture, accreditation guidelines, and accreditation practices. All these efforts are done to improve ACICS's effectiveness as an accreditor, enhance the quality of our member institutions, and to protect the students who enroll at the institutions that earn ACICS accreditation. Below, I provide a recap of the major accreditation criteria changes adopted by the ACICS Council and the significant material events/activities that took place in 2016.

Major Accreditation Criteria Changes Adopted by the ACICS Council in 2016

The following accreditation criteria changes are effective July 1, 2016, unless otherwise noted:

Definition of Academic Quality. The Council determined that it was important to provide a clear definition of academic quality within the Accreditation Criteria. The definition provides guidance on the measures of academic quality and how an institution and ACICS will assess these measures. The Council also determined that it was important to place the ACICS statement of mission (currently placed under Title I, Chapter 2, Introduction) under Title I, Chapter I of the Accreditation Criteria.

Data Integrity Standard. The Council included a new standard in order to provide explicit requirements for its expectations as it relates to the truthfulness, reliability, and accuracy of data collected and submitted by institutions to the Council in fulfillment of its accountability requirements. Following the comments from the field, the Council clarified the expectation that all data reported to ACICS must reflect accurate information and is subject to review.

Recruitment Activities Review. The Council maintains its requirement that each institution must ensure that any person or entity engaged in admissions or recruitment practices is communicating current and accurate information about the institution and its operations. The Council added the explicit requirement that the institution must ensure that student achievement disclosures (as described in Section 3-1- 704) are accurate. Following comments from the field, the Council clarified the language which states that the institution must maintain documentation that it systematically monitors its recruitments activities.

Institutional Performance Disclosures. The Council has fortified its policy regarding public disclosure of student achievement data. The language requires that information related to student achievement must be disclosed at the campus- and program-level (and not at the institution-wide level if a multi- campus institution) and that, at a minimum, each campus and each program (at each campus) provides its retention, placement, and licensure exam pass rates (where applicable). Following comments from the field, the Council also clarified that this data should be the information that is reported on its most recent Campus Accountability Report.

Placement Definition- Glossary. The Council has guidelines in which institutions must comply regarding the calculation of placement rates. The Council has included a succinct definition of placement within the Glossary of the Accreditation Criteria.

Debarment Policy. The Council revised its current procedures for appealing a debarment action. The procedures clarify that an individual or entity that receives an intent to bar notice will have one opportunity, either in writing or in person, to appeal that notice, which may include additional information for Council consideration. If the individual or entity chooses to appeal the notice, the Council will make a final decision on whether to issue a debarment order and determine the terms and length of that debarment following the appeal.

Admissions Requirements for Professional Master’s Degree Programs. The Council clarified language related to the admissions requirements for professional master’s degree programs that lead to certification or licensure required for employment in the field. The Council has clarified the standard that, if a baccalaureate degree is not required for a professional master’s degree by the appropriate specialized accrediting agencies and is common practice among accredited institutions, then the Council will accept such evidence as meeting the alternate admissions standards.

The following accreditation criteria changes are effective January 1, 2017, unless otherwise noted:

CAR Procedures and Guidelines- Appendix L. The Council finalized a number of changes to the standards related to student achievement and the Campus Accountability Report (CAR), which are all outlined in “Appendix L” of the Accreditation Criteria. The new Appendix includes the current student achievement rates and the applicable monitoring status and actions for campuses and programs that are not meeting acceptable student achievement indicators. The approved language more clearly defines the point at which a particular action will be taken, at the campus and program levels, including the issuance of an adverse action, a show-cause directive, a compliance warning, or reporting with restrictions against a campus or program. The Council also approved language in corresponding sections of the Criteria, such as student achievement review and Council actions at the program-level.

As communicated in the September 2016 Memorandum to the Field, if the proposed language was approved, it would be used by the Council to evaluate the data submitted in the 2016 Campus Accountability Report (effective December 6, 2016).

Council Action Standards. The Council finalized changes that would streamline its current Council action procedures. A number of changes have been approved and include the following:  The addition of an introduction to the Accreditation Deferred or Conditioned section to clarify the Council’s ability to take any of the actions so outlined, at any point in time, to include a final adverse action.  The removal of “admonition” as a formal Council action.  The combining of “show-cause directive” and “probation order” into one action; that of a show-cause directive. This enhanced language will require notification to the U.S. Department of Education, the students, and the public. Having been accepted, all applicable sections of the Accreditation Criteria that describe a “probation order” have been revised to a “show-cause directive”.  The determination that all hearings before the Council will be in writing unless an in- person hearing is specifically directed by the Council.

Requirement for Title IV Compliance Audit. The Council approved language that requires all institutions that participate in Title IV programs to now submit their compliance audit along with the submission of the Annual Financial Report (AFR). ACICS will review these audits and incorporate this information, as appropriate, into its current procedures for possible action or further at-risk review.

Mission Statement. The Council finalized language that clarified the requirement that the institution’s mission must include a mission statement and specific set of objectives that are devoted substantially to career-related education.

Campus Effectiveness Plans. The Council has finalized and approved a series of revisions to the criteria sections focused on Campus Effectiveness (CEP). These changes include the addition of “Appendix K,” which details the guidelines and requirements for the development, implementation, and monitoring of the CEP, including all evaluation elements and monitoring processes. In addition, the Council approved the addition of program-and campus-level graduation rates to the list of required elements as this rate significantly impacts the campus’s assessment of effectiveness.

Learning Site Definition. The Council finalized a definitive requirement for the distance from which a learning site may be geographically separated from its managing (main or branch) campus. This distance is a radius of five miles. Any learning site application that proposes to be further than five miles from its oversight campus will be reviewed by the Council on a case-by- case basis for appropriateness of the arrangement.

Those campuses that currently have active learning sites farther than 5 miles away from its oversight must comply with the new criterion language by January 1, 2018. ACICS will send separate communication to these campuses with additional information on the necessary actions to be taken. All learning sites are subject to an on-site evaluation visit.

Workshop Attendance Timeframe. The Council finalized language to qualify the time-limit expectation for the workshop attendance requirement. The 18-month window is up until the submission of the evaluation visit materials (i.e. two weeks prior to the visit) rather than 18 months prior to the submission of the self-study.

Externship Definition. The Council proposes clarifying the requirement that the externship course must be supervised by a qualified faculty member and that a written agreement must be developed that clearly outlines the arrangement between the institution and the externship site.

Admissions, Transfer Credit, and Catalog Disclosure. The Council finalized revisions to a number of items related to transfer of credits, and pertinent admissions and disclosure requirements for such credits. Institutions must ensure that foreign transcripts of international students are validated for their equivalency to U.S. requirements during the admissions process as well as for the evaluation of accepting transfer of credit. In addition, institutions may only accept transfer credits from accredited institutions that are recognized by the U.S. Department of Education or by their respective governments. Furthermore, transfer of credit policies and all contracts and agreements, including articulation agreements must be disclosed in the institutional catalog.

Basic Records. The Council finalized clarifying language, to include definitions, surrounding record maintenance and protection. The Council updated the language on record protection and now requires institutions to determine an appropriate records maintenance and retention policy and comply with that policy. In addition, the Council now more clearly defines student records, specifically relative to admissions and advisement records, the permanent academic record, and financial aid records.

Library, Instructional Resources, and Technology. The Council finalized extensive changes to the library and instructional equipment sections, for all institutions and at specific credential levels. These changes require all institutions to ensure that the resources lead to academic success and include research needs, as appropriate. In addition, the language acknowledges that there are additional online library services that provide further access to students. Notwithstanding, the Council continues to recognize the importance of the physical space needed for residential students to access information and the revisions include expectations to that effect.

Faculty Field Preparation. The Council revised the restriction of the number of preparations that can be taught by a faculty member at the non-degree level, given confusion on the interpretation of an “academic term” as a result of variation of application by institutions.

Significant Material Events/Activities in 2016

April 18, 2016. ACICS’s Board of Directors accepts the resignation of Albert Gray and announces a change in the top leadership of the agency by appointing Anthony S. Bieda to serve as Executive in Charge.

May 11-13, 2016. ACICS holds its annual professional development conference and business meeting in Ft. Worth, .

May 2016. ACICS appoints Mr. Roger Williams to serve as a Special Advisor to the ACICS Council of Commissioners. Special Advisor Williams brings nearly 25 years of experience in the management of higher education accreditation through his previous role as Executive Director of the Accrediting Council of Continuing Education and Training (ACCET). Mr. Williams transformed ACCET from the brink of losing its recognition with the Department and near bankruptcy in 1990, into a highly regarded agency with a healthy reserve and a stable future. Moreover, he led ACCET to become the only U.S. Department of Education recognized accrediting agency to be certified by the International Organization for Standardization as a Quality Management System.

June 15, 2016. The U.S. Department of Education issues a staff report to the Senior Department Official on Recognition Compliance Issues with the recommendation to “deny the ACICS’ petition for renewal of recognition, and withdraw the ACICS’ recognition”. This staff recommendation is formally presented to the National Advisory Committee on Institutional Quality and Integrity (NACIQI) for consideration at its June 2016 meeting.

June 22, 2016. ACICS announces the formation of a Special “Blue Ribbon” Advisory Committee to conduct a complete and in-depth examination of ACICS’s governance, standards, practices, operations, staffing, evaluator pool, support services, and accreditation processes. The committee is to propose a set of fundamental changes intended to enhance an evidence-based program of quality assurance.

June 23, 2016. The National Advisory Committee on Institutional Quality and Integrity (NACIQI) votes to send to the Senior Department Official (SDO) of the U.S. Department of Education a recommendation to deny recognition to ACICS.

July 2016. ACICS substantially revamps its senior leadership organizational structure with six out of the seven existing executive positions eliminated.

August 1, 2016. ACICS’s Board of Directors appoints Roger J. Williams as Interim Chief Executive Officer and President. Mr. Williams served as a Special Advisor to the ACICS Council of Commissioners since May 2015.

September 15, 2016. Roger J. Williams, Interim Chief Executive Officer and President, commences to provide timely periodic updates to member institutions on the major changes undertaken to transform and strengthen ACICS and its processes.

September 22, 2016. ACICS receives notice that the Senior Department Official at the Department of Education has accepted the recommendation of the Department staff and the National Advisory Committee on Institutional Quality and Integrity to deny renewal of recognition to the Council.

September 23, 2016. ACICS files a notice to appeal the Senior Department Official’s decision to Secretary King, US Department of Education.

September 28, 2016. ASICS hires Elise Scanlon, Esq., provide legal and consultative advice to ACICS as it undertakes reforms consistent with its mission as an accrediting agency recognized by the U.S Department of Education. Ms. Scanlon, working under the direction of Interim President Williams, has more than 20 years of experience in higher education accreditation having served as Executive Director of the Accrediting Commission of Career Schools and Colleges (ACCSC) from 1999-2008. As ACCSC’s Executive Director, she managed an accreditation process that included more than 700 higher education institutions. Ms. Scanlon, a respected national voice on issues pertaining to accreditation and for-profit institutions of higher education, leads the Elise Scanlon Law Group based in Washington, D.C.

December 12, 2016. ACICS receives notice that the Department of Education has denied our appeal of the September 22, 2016, decision by the Senior Department Official (SDO) to withdraw ACICS’s recognition as a nationally-recognized accreditation agency. ACICS will immediately file litigation seeking injunctive and other relief through the courts.

December 15, 2016. ACICS formally requests the federal district court to issue a Temporary Restraining Order in order to prevent implementation of the December 12, 2016, decision by the Department of Education to withdraw ACICS’s recognition as a nationally- recognized accreditation agency.

December 20, 2016. Federal District Senior Judge Reggie B. Walton denies ACICS’s request for a Temporary Restraining Order to prevent implementation of the December 12, 2016, decision by the Department of Education to withdraw ACICS’s recognition as a nationally-recognized accreditation agency.

December 20, 2016. Federal District Senior Judge Reggie B. Walton grants ACICS’s Motion for A Preliminary Injunction Hearing at which time the Court will review our claim that the Department’s decision to withdraw ACICS’s recognition as a nationally-recognized accreditation agency was flawed and potentially unlawful. The hearing is scheduled for February 1, 2017.

At the close of 2016, I realize that our member institutions and the students they serve, the ACICS leadership and staff, and my fellow Council Commissioners weathered a turbulent year. While no one can predict with certainty what lays ahead in 2017, I want all to know that ACICS is sparing no effort to regain its recognition status as a national accreditation agency. To date, ACICS has made significant progress reviewing and improving its internal practices and policies. Much more needs to be done and this ongoing work, under the astute direction and steady hand of Interim President Roger Williams, is vital to ACICS’s efforts to regain its status as an accrediting agency recognized by the US Department of Education.

As I end my term as Council Chair, I thank the ACICS staff and my fellow Council Commissioners for their tireless efforts to bring about needed changes to ACICS and its culture. In 2017, the 15-member ACICS Council gains greater independence with 7 public members, all with keen insight about postsecondary education and no ties to any of our member institutions.

I have great confidence in the leadership abilities of Interim President Williams and Michelle Edwards, in-coming Chair for 2017, to remain steadfast on ACICS’s organizational and policy reform efforts. I know that ACICS, its member institutions, and students who attend the institutions that ACICS accredits will see the fruits of their efforts and enjoy a brighter 2017.

Member Institutions (as of 8/2017) Alabama Brightwood College, Palm Springs Brightwood College, Riverside Fortis Institute, Birmingham Brightwood College, Sacramento Virginia College, Birmingham Brightwood College, Salida Virginia College, Huntsville Brightwood College, San Diego Virginia College, Mobile Brightwood College, Vista Virginia College, Montgomery Bryan University, Pasadena

Alaska Aeronautical University, Bakersfield California Institute of Advanced Management, El Monte California International Business University, San Diego Charter College, Anchorage California Miramar University, San Diego Arizona California University of Management and Sciences, Anaheim Cambridge Junior College - Woodland, Woodland Art Institute of Phoenix, Phoenix Cambridge Junior College, Yuba City Brookline College, Phoenix Charter College - Oxnard, Oxnard Brookline College, Tempe Coleman University, San Diego Brookline College, Tucson Design Institute Of San Diego, San Diego Brown Mackie College - Phoenix, Phoenix Empire College, Santa Rosa Brown Mackie College - Tucson, Tucson Golf Academy of America, Carlsbad Bryan University, Tempe Herguan University, Sunnyvale Golf Academy of America, Chandler Kingston University, Norwalk Le Cordon Bleu College of Culinary Arts Scottsdale, Scottsdale Laurus College, Oxnard The Art Institute of Tucson, Tucson Laurus College, San Luis Obispo UEI College, Phoenix Le Cordon Bleu College of Culinary Arts, Pasadena Arkansas Le Cordon Bleu College of Culinary Arts, Sacramento Le Cordon Bleu College of Culinary Arts, San Francisco Bryan University, Rogers Learnet Academy, Inc., Los Angeles California Nobel University - Buena Park, Buena Park Nobel University, Los Angeles American College of Commerce and Technology - Alhambra Northwestern Polytechnic University, Fremont Bay Area Medical Academy, San Francisco Pacific States University, Los Angeles Bergin University of Canine Studies, Rohnert Park Professional Golfers Career College, Temecula Beverly Hills Design Institute, Beverly Hills SAE Institute of Technology - San Francisco, Emeryville Brightwood College, Bakersfield SAE Institute of Technology, Los Angeles Brightwood College, Chula Vista San Diego Global Knowledge University, San Diego Brightwood College, Clovis Santa Barbara Business College - Online, Ventura Brightwood College, North Hollywood Santa Barbara Business College, Bakersfield District of Columbia Santa Barbara Business College, Rancho Mirage BAU International University, Washington Santa Barbara Business College, Santa Barbara Inter-American Defense College, Washington Santa Barbara Business College, Santa Maria

Santa Barbara Business College, Ventura Silicon Valley University, San Jose Florida South Coast College, Orange American College For Medical Careers, Orlando Southern California Health Institute (SOCHI), Los Angeles Art Institute of Fort Lauderdale, Fort Lauderdale Southern States University, Newport Beach Bethesda College of Health Sciences, Boynton Beach Southern States University, San Diego Brown Mackie College - Miami, Miramar Colorado City College, Altamonte Springs City College, Fort Lauderdale Colorado Heights University, Denver City College, Gainesville Ecotech Institute, Aurora City College, Hollywood Everest College, Colorado Springs City College, Miami Everest College, Thornton College of Business & Technology, Cutler Bay IBMC College, Colorado Springs College of Business & Technology, Hialeah IBMC College, Fort Collins College of Business & Technology, Miami IBMC College, Greeley College of Business & Technology, Miami IBMC College, Longmont College of Business & Technology, Miami Gardens Spartan College of Aeronautics and Technology, Broomfield Digital Media Arts College, Boca Raton Spartan College of Aeronautics and Technology, Westminster East West College of Natural Medicine, Sarasota Connecticut Everest University - Brandon, Tampa Everest University - Orange Park, Orange Park American Institute of Healthcare & Technology, Stratford Everest University - South Orlando, Orlando American Institute, West Hartford Everest University - Tampa, Tampa Branford Hall Career Institute, Branford Express Training Services, Gainesville Branford Hall Career Institute, Southington Florida Career College - Boynton Beach, Boynton Beach Branford Hall Career Institute, Windsor Florida Career College - Hialeah, Hialeah Harris School of Business, Danbury Florida Career College - Jacksonville, Jacksonville Ridley-Lowell Business & Technical Inst., New London Florida Career College - Margate, Margate Ridley-Lowell Business & Technical Institute, Danbury Florida Career College - Miami, Miami Stone Academy, East Hartford Florida Career College - Pembroke Pines, Pembroke Pines Stone Academy, Waterbury Florida Career College - Riverview, Tampa Stone Academy, West Haven Florida Career College - West Palm Beach, West Palm Beach

Florida Career College, Lauderdale Lakes Florida Career College, Orlando Southern Technical College, Port Charlotte Florida Technical College, Cutler Bay Southern Technical College, Tampa Florida Technical College, Deland Southern Technical College-Sanford, Sanford Florida Technical College, Kissimmee Suncoast College of Health, Bradenton Florida Technical College, Lakeland The Digital Animation & Visual Effects School, Orlando Florida Technical College, Orlando UAC School of Global Management, Miami Florida Technical College, Pembroke Pines Unilatina International College, Miramar Fortis College, Orange Park Universal Vocational Institute, Hialeah Golf Academy of America, Apopka Virginia College, Fort Pierce Gwinnett Institute, Orlando Virginia College, Jacksonville Harris-Casel Institute, Melbourne Virginia College, Pensacola Healing Hands Institute, Miami Hope College of Arts & Sciences, Pompano Beach Georgia International College of Health Sciences, Boynton Beach Jones College, Jacksonville Brown Mackie College - Atlanta, Atlanta Jose Maria Vargas University, Pembroke Pines Gwinnett College, Lilburn Larkin Health Sciences Institute, Miami Le Cordon Bleu College of Culinary Arts, Tucker Lasalle Computer Learning Center, Inc., Tampa Lincoln College of Technology, Marietta Le Cordon Bleu College of Culinary Arts In Miami, Miramar Miller-Motte Technical College, Augusta Le Cordon Bleu College of Culinary Arts, Orlando Miller-Motte Technical College, Columbus Life Line Med Training, Miami Miller-Motte Technical College, Macon Lincoln College of Technology, West Palm Beach Pacific Institute of Technology, Morrow Marconi International University, Inc., Pembroke Pines SAE Institute Atlanta, Atlanta Miami Regional University, Miami Springs Virginia College, Augusta Millennia Atlantic University, Doral Virginia College, Columbus Premiere International College, Fort Myers Virginia College, Macon SAE Institute of Technology, North Miami Beach Virginia College, Savannah San Ignacio University, DORAL Sanford-Brown College Online, Tampa Sanford-Brown College, Tampa Schiller International University, Largo - Boise, Meridian Southern Technical College - Auburndale, Auburndale Brown Mackie College - Boise, Boise Southern Technical College - Mount Dora, Mount Dora Southern Technical College, Brandon, Brandon

Southern Technical College, Fort Myers Southern Technical College, Orlando Illinois American National University, Lexington American National University, Louisville Ambria College of Nursing, Hoffman Estates American National University, Pikeville BIR Training Center, Chicago American National University, Richmond Gem City College, Quincy Beckfield College, Florence National Latino Education Institute, Chicago Brown Mackie College - Louisville, Louisville Northwest Suburban College, Rolling Meadows Daymar College, Bellevue PCCTI Healthcare, Oak Brook Daymar College, Bowling Green Rockford Career College, Rockford Daymar College, Owensboro SOLEX College, Wheeling Spencerian College, Lexington Tribeca Flashpoint College, Chicago Spencerian College, Louisville

Sullivan College of Technology and Design, Louisville

American National University, South Bend Louisiana Art Institute of Indianapolis, Indianapolis Camelot College, Baton Rouge Brightwood College, Hammond McCann School of Business and Technology, Monroe Brightwood College, Indianapolis McCann School of Business and Technology, Shreveport Brown Mackie College - Fort Wayne, Fort Wayne Virginia College, Baton Rouge Brown Mackie College - Indianapolis, Indianapolis Virginia College, Bossier City Brown Mackie College - Merrillville, Merrillville

Brown Mackie College - South Bend, South Bend College of Court Reporting, Valparaiso Maine International Business College, Fort Wayne Beal College, Bangor International Business College, Indianapolis Radiological Technologies University VT, South Bend Maryland

Brightwood College, Baltimore Kansas Brightwood College, Beltsville Brightwood College, Towson Art Institutes International - Kansas City, The, Lenexa Fortis College, Landover Bryan University, Topeka Stratford University Baltimore Campus, Baltimore

Kentucky

American National University, Danville American National University, Florence

Minnesota School of Business, Richfield The Art Institutes International Minnesota, Minneapolis Massachusetts

Branford Hall Career Institute, Springfield Mississippi Le Cordon Bleu College of Culinary Arts Boston, Cambridge Lincoln Technical Institute, Brockton Virginia College, Biloxi Lincoln Technical Institute, Lowell Virginia College, Jackson Lincoln Technical Institute, Somerville Mildred Elley, Pittsfield Missouri Salter College, Chicopee Salter College, West Boylston Bolivar Technical College, Bolivar Salter School, Fall River Brown Mackie College - St. Louis, Fenton Salter School, Malden Bryan University, Columbia Bryan University, Springfield Hickey College, Saint Louis Michigan Metro Business College, Cape Girardeau Detroit Business Institute-Downriver, Riverview Metro Business College, Jefferson City Dorsey School of Business - Lansing, Lansing Metro Business College, Rolla Dorsey School of Business, Detroit Pinnacle Career Institute - North Kansas City, Kansas City Dorsey School of Business, Madison Heights Pinnacle Career Institute, Kansas City Dorsey School of Business, Roseville Stevens - The Institute of Business and Arts, Saint Louis Dorsey School of Business, Saginaw Texas County Technical College, Houston Dorsey School of Business, Southgate The Art Institute of St. Louis, Saint Charles Dorsey School of Business, Waterford/Pontiac

Dorsey School of Business, Wayne Montana

Minnesota Charter College, Missoula Academy College, Bloomington Duluth Business University, Duluth Art Institute of Las Vegas, Henderson Globe University - Minneapolis, Minneapolis Brightwood College, Las Vegas Globe University, Woodbury Euphoria Institute of Beauty Arts & Sciences - Summerlin, Las Vegas Globe University-Moorhead, Moorhead Everest College, Henderson Le Cordon Bleu College of Culinary Arts, Mendota Heights Le Cordon Bleu College of Culinary Arts, Henderson Minneapolis Business College, Roseville Sanford-Brown College, Henderson Minneapolis Media Institute, Edina Southern States University - Las Vegas, NV, Las Vegas EDP School of Computer Programming, Brooklyn Elmira Business Institute, Elmira Salter School of Nursing & Allied Health, Manchester Elmira Business Institute, Vestal Emerging Technologies Institute, Forest Hills Hunter Business School, Levittown New Jersey Hunter Business School, Medford American Institute - Somerset, NJ Long Island Business Institute, Commack American Institute, Clifton Long Island Business Institute, Flushing American Institute, Toms River Manhattan Institute of Management, New York Best Care College, East Orange Manhattan School of Computer Technology, Brooklyn Eastwick College, Hackensack Mildred Elley, Albany Eastwick College, Nutley Mildred Elley-New York City, New York Eastwick College, Ramsey Ridley-Lowell Business & Technical Institute, Binghamton Harris School of Business, Cherry Hill Ridley-Lowell Business & Technical Institute, Poughkeepsie Harris School of Business, Hamilton SAE Institute of Technology New York, New York Harris School of Business, Linwood Lincoln Technical Institute, Iselin Lincoln Technical Institute, Moorestown Lincoln Technical Institute, Paramus Brightwood College, Charlotte PC AGE Career Institute, Iselin King's College, Charlotte PC AGE Career Institute, Jersey City Living Arts College - School of Communication Arts, Raleigh Universal Training Institute, Perth Amboy Living Arts Institute - School of Communication Arts, Winston Salem Miller-Motte College, Cary Miller-Motte College, Fayetteville New Mexico Miller-Motte College, Greenville Brookline College, Albuquerque Miller-Motte College, Jacksonville Brown Mackie College-Albuquerque Miller-Motte College, Raleigh Charter Institute A Division of Charter College, Farmington Miller-Motte College, Wilmington New York Virginia College, Greensboro

Art Institute of New York City, New York Branford Hall Career Institute, Albany Branford Hall Career Institute, Amityville American National University, Kettering Branford Hall Career Institute, Bohemia American National University, Youngstown Cheryl Fell's School of Business, Niagara Falls Beckfield College, Springdale Cope Institute, Brooklyn Bradford School, Columbus Brightwood College, Dayton Le Cordon Bleu College of Culinary Arts, Portland Brown Mackie College - Akron, Akron Process Work Institute, Portland Brown Mackie College - Cincinnati, Cincinnati Brown Mackie College - Findlay, Findlay Pennsylvania Daymar College, Columbus Berks Technical Institute, Wyomissing Felbry College - School of Nursing, Columbus Bradford School, Pittsburgh Fortis College, Ravenna Brightwood Career Institute, Broomall Gallipolis Career College, Gallipolis Brightwood Career Institute, Harrisburg GROOVE U, Columbus Brightwood Career Institute, Philadelphia Hondros College of Business, Westerville Brightwood Career Institute, Philadelphia Hondros College of Nursing, Fairborn Brightwood Career Institute, Pittsburgh Hondros College of Nursing, Independence Consolidated School of Business, York Hondros College of Nursing, Maumee Douglas Education Center, Monessen Hondros College of Nursing, West Chester Fortis Institute, Erie Hondros College of Nursing, Westerville Harris School of Business, Upper Darby Miami-Jacobs Career College, Columbus Lansdale School of Business, North Wales Miami-Jacobs Career College, Dayton Laurel Business Institute, Uniontown Miami-Jacobs Career College, Independence Laurel Technical Institute, Meadville Miami-Jacobs Career College, Springboro Laurel Technical Institute, Sharon Miami-Jacobs Career College, Troy Lincoln Technical Institute, Philadelphia Ohio Business College, Sandusky Lincoln Technical Institute, Philadelphia Ohio Business College, Sheffield Village McCann School of Business & Technology, Carlisle Ohio Medical Career College, Dayton McCann School of Business & Technology, Allentown Ohio Valley College of Technology, East Liverpool McCann School of Business & Technology, Dickson City Stautzenberger College, Brecksville McCann School of Business & Technology, Hazle Township Stautzenberger College, Maumee McCann School of Business & Technology, Lewisburg

Oklahoma McCann School of Business & Technology, Pottsville McCann School of Business & Technology, Wilkes Barre Brown Mackie College - Tulsa Penn Commercial Business/Technical School, Washington Clary Sage College, Tulsa Pennsylvania Institute of Health and Technology, Mount Braddock Community Care College, Tulsa PITC Institute, Wyncote Oklahoma Technical College, Tulsa Pittsburgh Career Institute, Pittsburgh Virginia College, Tulsa South Hills School of Business and Technology, Altoona South Hills School of Business and Technology, State College Oregon The Art Institute of York - Pennsylvania, York Everest Institute - Tigard Puerto Rico Universal Technology College of Puerto Rico, Camuy

American Educational College, Bayamon Rhode Island American Educational College, Toa Alta Lincoln Technical Institute, Lincoln American Educational College, Vega Alta Ridley-Lowell Business & Technical Institute, West Warwick Atlantic University College, Guaynabo

Colegio Tecnologico y Comercial de PR, Aguada South Carolina Dewey University- Bayamon Campus, Bayamon Dewey University- Carolina Campus, Carolina Brown Mackie College - Greenville, Greenville Dewey University- Farjardo Campus, Fajardo Forrest College, Anderson Dewey University- Hato Rey Campus, Hato Rey Golf Academy of America, Myrtle Beach Dewey University- Juana Diaz Campus, Juana Diaz Miller-Motte Technical College, Charleston Dewey University- Manati Campus, Manati Miller-Motte Technical College, Conway Dewey University Mayaguez, Mayaguez National Center For Credibility Assessment, Columbia EDIC College Bayamon, Bayamon Professional Golfers Career College-Hilton Head, Bluffton EDIC College, Caguas Virginia College, Columbia EDIC College, Carolina Virginia College, Florence Humacao Community College, Humacao Virginia College, Greenville Instituto de Banca y Comercio, Aguadilla Virginia College, North Charleston Instituto de Banca y Comercio, Arecibo Virginia College, Spartanburg Instituto de Banca y Comercio, Bayamon South Dakota Instituto de Banca y Comercio, Caguas Instituto de Banca y Comercio, Fajardo Globe University - Sioux Falls, Sioux Falls Instituto de Banca y Comercio, Guayama Instituto de Banca y Comercio, Hato Rey Instituto de Banca y Comercio, Humacao Brightwood College, Nashville Instituto de Banca y Comercio, Los Colobos, Carolina Daymar College, Clarksville Instituto de Banca y Comercio, Manati Daymar College, Murfreesboro Instituto de Banca y Comercio, Mayaguez Daymar College, Nashville Instituto de Banca y Comercio, Moca Miller-Motte Technical College, Chattanooga Instituto de Banca y Comercio, Ponce Miller-Motte Technical College, Clarksville Instituto de Banca y Comercio, Yauco Miller-Motte Technical College, Madison Instituto de Banca y Comercio-Escorial, San Juan National College, Bartlett PPG Technical College, Caguas National College, Bristol The Puerto Rico School of Nurse Anesthetists, San Juan National College, Memphis Trinity College of Puerto Rico, Ponce National College, Nashville Universal Technology College of Puerto Rico, Aguadilla Virginia College, Chattanooga Virginia College, Knoxville Virginia College, Austin West Tennessee Business College, Jackson Virginia College, Lubbock

Utah Texas Art Institute of , Draper Brightwood College, Arlington Broadview Entertainment Arts University, Salt Lake City Brightwood College, Beaumont Broadview University-West Jordan, West Jordan Brightwood College, Brownsville , Layton Brightwood College, Corpus Christi Eagle Gate College, Murray Brightwood College, Dallas Neumont College of Computer Science, Salt Lake City Brightwood College, El Paso , Provo Brightwood College, Fort Worth

Brightwood College, Friendswood Virginia Brightwood College, Houston Altierus Career College, Chesapeake Brightwood College, Laredo Altierus Career College, Woodbridge Brightwood College, McAllen American College of Commerce and Technology, Falls Church Brightwood College, San Antonio American National University, Charlottesville Brightwood College, San Antonio American National University, Danville Brown Mackie College - Dallas/Ft. Worth, Bedford American National University, Harrisonburg Brown Mackie College - San Antonio, San Antonio American National University, Lynchburg Center For Advanced Legal Studies, Houston American National University, Salem Everest College, Arlington Bon Secours Memorial College of Nursing, Richmond Everest College, Fort Worth California University of Management and Sciences, Arlington Florida Career College - Houston, Houston Columbia College, Vienna Golf Academy of America, Farmers Branch Fortis College, Norfolk Houstons Training and Education Center, Houston Fortis College, Richmond Le Cordon Bleu College of Culinary Arts, Austin Global Health College, Alexandria Le Cordon Bleu College of Culinary Arts, Dallas Iglobal University, Vienna North American University, Stafford Miller-Motte Technical College, Lynchburg Peloton College, Arlington Miller-Motte Technical College, Roanoke Peloton College, Dallas Sentara College of Health Sciences, Chesapeake Sanford-Brown College, San Antonio Stratford University - Alexandria Campus, Alexandria Texas Health and Science University- San Antonio Stratford University - Glen Allen, Glen Allen Texas Health and Science University, Austin Stratford University - Virginia Beach, Virginia Beach The Recording Conservatory of Austin, Austin Stratford University, Falls Church Vet Tech Institute of Houston, Houston Stratford University, Newport News Stratford University, Woodbridge Wyoming Tysons Institute, Vienna IBMC College, Cheyenne University of North America, Vienna Virginia College, Richmond Virginia International University, Fairfax

Washington

Altierus Career College, Everett Altierus Career College, Tacoma Charter College - Pasco Washington, Pasco Charter College - Vancouver, Vancouver Charter College, Fife, WA, Fife Le Cordon Bleu College of Culinary Arts, Tukwila Sanford-Brown College, Seattle

Seattle Film Institute, Seattle

West Virginia

American National University, Parkersburg American National University, Princeton Mountain State College, Parkersburg

Valley College, Beckley

Valley College, Martinsburg Valley College, Princeton West Virginia Junior College, Bridgeport West Virginia Junior College, Charleston West Virginia Junior College, Morgantown

Wisconsin

Broadview University - Appleton, Grand Chute Broadview University - Eau Claire, Eau Claire Broadview University - Madison East, Madison Broadview University - Wausau, Rothschild Globe University - La Crosse, Onalaska Madison Media Institute, Madison The Art Institute of Wisconsin, Milwaukee

International

American International College of Arts and Sciences-Antigua, St. John's American University In Bosnia and Herzegovina, Tuzla California Miramar University-Kenya, Nairobi Guglielmo Marconi University, Rome Niels Brock Copenhagen Business College, Copenhagen K Schiller International University, Heidelberg Schiller International University, Madrid Schiller International University, Paris Stratford University - New Delhi, New Dehli Trillium College Kingston, Kingston Universidad San Ignacio De Loyola S.A., Lima Universidad San Ignacio Loyola, Lima

Financial Audit Report ACCREDITING COUNCJL FOR INDEPENDENT COLLEGES AND SCHOOLS

FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION J'UNE 30, 2016 ACCREDITING COUN CU. FOR INDEPENDENT COLLEGES AND SCHOOLS

TABLE OF CONTENTS JUNE 30, 2016

Pages

Independent Auditors' Report 3-4

Financial Statements

Statement of Financial Position...... 5

Statement of Activities and Changes in Net Assets...... 6

StatementofCash Flows ...... 7

Notes to Financial Statements ...... 8-13

Supplementary Information

Schedule of Functional Expenses 15 7910 WOODMONT AVENUE 1901 L STREET, NW SUITE SOO SUITE 7SO BETHESDA, ~1 D 20814 WASHINGTON, DC 20036 @CBM (T) 30 1.986.0600 (T) 202.822.0717 (F) 30 I.986.0432 (F) 202.822.0739 CENTERED ON YOUR SUCCESS

Independent Auditors' Report

To the Board ofDirectors Accrediting Council for Independent Colleges and Schools

We have audited the accompanying financial statements of Accrediting Council for Independent Colleges and Schools (ACICS) (a nonprofit organization), which comprise the statement of fmancial position as of June 30, 2016, and the related statements of activities and changes in net assets, and cash flows for the year then ended, and the related notes to the financial ~tatement:;.

Management's Responsibility for t!te Fi110ncial Statements

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

Auditors' Responsibility

Our responsibility is to express an opinion on these fmancial statements based on our audit. We conducted our audit in accordance with auditing standards generaUy accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fmancial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made my management, as well as evaluating the overaU presentation of the fmancial statements.

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

Opinio11

In our opinion, the financial statements referred to above present fairly, in aU material respects, the financial position of Accrediting Council for Independent Colleges and Schools as of June 30, 2016, and the change in its net assets and its cash flows for the year then ended, in accordance with accounting principles generally accepted in the United States of America. ------::A ·: COUNCILOR, BUCHANAN & MITCHELl, P.C. - CPAs AND BUSINESS ADVISORS ~, tJUUV&RSARt www.cbmcpa.com -,"-.·~~v, To the Board of Directors Accrediting Council for Independent Colleges and Schools

Report on Supplementary Infonnation

Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The supplementary schedule of functional expenses is presented for purposes of additional analysis and is not a required part of the fmancial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.

Report on Summarized Comparative ltiformatioll

We have previously audited Accrediting Council for Independent Colleges and Schools' 2015 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated October l, 2015. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2015, is consistent, in all material respects, with the audited financial statements from which it has been derived.

~~~4~/!e. Bethesda, Maryland Certified Public Accountants November 7, 2016

- 4- ACCREDITING COUN CU. FOR INDEPENDENT COLLEGES AND SCHOOLS

STATEMENT OF FlNANCIALPOSmON JUNE 30, 2016 (WITH COMPARATIVE TOTALS AS OF JUNE 30, 2015)

2016 2015 Assets

Current Assets Cash and Cash Equivalents $ 1,207,177 $ 1,537,176 Accounts Receivable, Net 1,363,147 1,437,437 Prepaid Expenses 313,491 107,341

Total Current Assets 2,883,815 3,081,954

Investments 12,452,200 13,716,446

Property and Equipment, Net 1,926,623 1,955,471

Other Assets Deposits 11,273 11,273 Total Assets $ 17,273,911 $ 18,765,144

Liabilities and Net Assets

Current Liabilities Accounts Payable and Accrued Expenses $ 633,756 $ 676,402 Accrued Compensation 792,151 889,818 Deferred Revenue 53,297 89,350

Total Current Liabilities 1,479,204 1,655,570

Long-Term Liabilities Accrued Rent, Noncurrent Portion 82,016 132,408

Total Liabilities 1,561,220 1,787,978

Net Assets Unrestricted 15,712,691 16,977,166 Total Liabilities and Net Assets $ 17,273,911 $ 18,765,144

See accompanying Notes to Financial Statements. - 5- ACCREDITING COUNCU. FOR lNDEPENDENf COLLEGES AND SCHOOLS

STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS FOR THE YEAR ENDED JUNE 30, 2016 (WITH COMPARATIVE TOTALS FOR THE YEAR ENDED JUNE30, 2015)

2016 2015

Support and Revenue Sustaining Fees $ 4,590,228 $ 4,999,352 Accreditation Visits 3,559,010 3,812,756 User Fees 2,889,700 3,589,000 Workshop Registration Fees 637,280 652,555 Investment Income (Loss) (175,467) 523,763 Other Revenue 47,029 37,701

Total Support and Revenue 11,547,780 13,615,127

Expenses Program Services Accreditation Expense 5,890,477 6,648,839 Education 3,075,699 3,141,903 Supporting Services Management and General 3,846,079 3,439,613

Total Expenses 12,812,255 13,230,355

Change in Unrestricted Net Assets (1,264,475) 384,772

Net Assets, Beginning of Year 16,977,166 16,592,394

Net Assets, End of Year $ 15,712,691 $ 16,977,166

See accompanying Notes to Financial Statements. -6- ACCREDITING COUNCIL FOR INDEPENDENT COLLEGES AND SCHOOLS

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2016 (WITH COMPARATIVE TOTALS FOR THE YEAR ENDED JUNE 30, 2015)

2016 2015

Cash Flows from Operating Activities Change in Unrestricted Net Assets $ (1,264,475) $ 384,772 Adjustments to Reconcile Change in Unrestricted Net Assets to Net Cash (Used in) Provided by Operating Activities Depreciation 808,346 646,137 Loss on Investrnc:nts 175,467 403,710 (Gain) Loss on Disposal of Property and Equipment 16,096 (4,072) (Increase) Decrease in Assets Accounts Receivable 74,290 (416,450) Prepaid Expenses (206,150) 1,027,642 Increj!~e (Decrease) in Liabilities Accounts Payable and Accrued Expenses (42,646) (1,272,339) Accrued Compensation (97,667) 191,875 Deferred Revenue (36,053) (35,431)

Accrued Rent {50 1392} {34,554)

Net Cash (Used in) Provided by Operating Activities (623,184) 891,290

Cash Flows from Investing Activities Purchases oflnvestments (2 , 784,400) (5,844,329) Sales oflnvestments 3,873,179 5,808,610

Purchases of Furniture and Equipment {795 1594} {1,117,902)

Net Cash Provided by (Used in) Investing Activities 293,185 (1,153,621)

Net Decrease in Cash and Cash Equivalents (329,999) (262,331) Cash and Cash Equivalents, Beginning of Year 1,537,176 1,799,507

Cash and Cash Equivalents, End of Year $ 1.207.177 $ 1,537,176

See accompanying Notes to Financial Statements. - 7- ACCREDITING COUNCIL FOR INDEPENDENT COLLEGES AND SCHOOLS

NOTES TO FINANCIAL STATEMENTS JUNE30, 2016

1. ORGANIZATION Accrediting Council for Independent Colleges and Schools (ACICS) was founded in 1912 to establish and advance the quality of education of independent, non-public career schools, career institutions, and colleges. ACICS accomplishes these objectives by performing the accreditation function for its members. 2. SUMMARY OF SIGNIFICANT ACCOUNTING P OLICIES

Basis ofPrese~~tatiott

Financial statement presentation follows accounting principles generally accepted in the United States of America in relation to net asset classification. ACICS is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. There are no temporarily or permanently restricted net assets at June 30, 2016. Cas!t ami Cas!t Equivalents ACICS considers all short-term, highly liquid investments with initial maturities of three months or less to be cash equivalents. Since all such cash equivalents are contained in ACICS's investment portfolio and are not used in current operations, they are reported as investments.

Accounts Receivable Accounts receivable includes program related revenue that has not been received as of June 30, 2016. No interest is accrued on receivables. Accounts receivables are reported at their unpaid balances, reduced by an allowance for doubtful accounts, if necessary. At June 30,2016, the allowance for doubtful accounts amounted to $75,000. Receivables are considered impaired if full principal payments are not received in accordance with the contractual terms. Management periodically evaluates the adequacy of the allowance for doubtful accounts by considering ACICS's past receivables loss experience, known and inherent risks in the accounts receivable population, adverse situations that may affect the client's ability to pay, and current economic conditions. The allowance for doubtful accounts is increased by charges to bad debts expense and decreased by charge offs of the accounts receivable balances. Accounts receivable are considered past due based on management's determination. Accounts receivable are reduced based on management's case-by-case determination that they are uncollectible.

lnvestme11ts ACICS invests in a professionally managed portfolio. All investments are carried at fair value. Such investments are exposed to various risks such as market and credit. Due to the level of risk associated with such investments, and the level of uncertainty related to changes in the value of such investments, it is at least reasonably possible that changes in risk in the near term could materially affect investment balances and the amounts reported in the financial statements. Realized and unrealized gains and losses are reported as investment income in the statement of activities and changes in net assets. -8- ACCREDITING COUNCIL FOR INDEPENDENT COLLEGES AND SCHOOLS

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

2. SUMMARY OF SIGNIFICANT ACCOUNTING P OUCffiS (CONTINUED)

Property and Equipment

Property and equipment are recorded at cost. All acquisitions in excess of $1 ,000 are capitalized. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets. Artwork is not considered a collection and is a non-depreciable asset. Property and equipment are reviewed for impairment whenever changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The cost of property and equipment retired or disposed of is removed from the accounts along with the related accumulated depreciation, and any gain or loss is reflected in income.

Revenue Recognition

Sustaining fees are recognized in the year to which they apply. Sustaining fees received in advance are recorded as deferred revenue and are recognized in subsequent periods when they are earned.

User fees are charged to cover the administrative costs of processing forms and are recognized when the forms have been processed.

Substantially all receivables are derived from institutions that ACICS accredits. All receivables to these institutions are made on an unsecured basis. Historically, ACICS has not incurred significant credit related losses.

Ftmctional Allocation ofExpenses

The costs of providing programs and other activities have been summarized on a functional basis in the statement of activities and changes in net assets. Accordingly, certain costs have been allocated among the programs and supporting services benefited.

Use ofEstimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Financial Information as ofJune 30, 2015

The financial information as of June 30, 2015, is presented in the statement of fmancial position, statement of activities and changes in net assets, and statement of cash flows for comparative purposes only and is not intended to represent complete financial statement presentation.

-9- ACCREDITING COUN CU. FOR INDEPENDENT COLLEGES AND SCHOOLS

NOTES TO Fl:NANCIAL STATEMENTS JUNE 30, 2016

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Advertising Costs

ACICS expenses advertising costs as they are incurred.

Income Taxes attd Uncertainty i11ltzcome Taxes

ACICS is exempt from federal income taxes under Section 50l(c)(3) of the Internal Revenue Code as an organization that is not a private foundation. ACICS is, however, subject to income tax on any net profits generated by unrelated business activities as defined under the tax Jaws. To date, ACICS has not engaged in such activities. As of June 30, 2016, ACICS's information returns flied with the Internal Revenue Service remain open for examination for the tax years ended June 30, 2015, 2014, and 2013 generally for three years after they were ftled.

ACICS follows the Financial Accounting Standards Board Accounting Standards Codification (FASB ASC), which provides guidance on accounting for uncertainty in income taxes recognized in an organization's financial statements. The guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Examples of tax positions include the tax-exempt status of ACICS and various positions related to the potential sources of unrelated business taxable income (UBTI). As of June 30, 2016, ACICS had no uncertain tax positions that qualified for either recognition of an unrecognized tax benefit or disclosure in its fmancial statements.

ACICS's policy is to recognize interest and penalties, if any, on tax positions related to its unrecognized tax benefits in income tax expense in the fmancial statements. No interest and penalties were assessed or recorded during the year ended June 30, 2016.

3. CONCENTRATION OF CREDIT RisK

ACICS maintains its cash balances at one fmancial institution in the Washington, D.C., area. The balances are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. At June 30, 2016, the uninsured balance for all cash accounts was approximately $1,046,000.

ACICS maintains its investments at one financial institution in the Washington, D.C., area. The cash equivalents and certificates of deposit held at this institution are insured by the FDIC up to $250,000. At June 30, 2016, there was no uninsured balance for these cash equivalents and certificates of deposit. All other investments held in this institution are insured by the Securities Investor Protection Corporation (SIPC) for up to $500,000. At June 30, 2016, the uninsured balance for these investments was approximately $11,706,000.

- 10 - ACCREDITING COUN CU. FOR INDEPENDENT COLLEGES AND SCHOOLS

NOTES TO FINANCIAL STATEMENTS JUNE 30, 2016

4. PROPERTY AND EQUIPMENT

Property and equipment as of June 30, 2016, consisted of the following:

Furniture and Fixtures $ 6,448,902 Leasehold Improvements 571,609 Artwork 4,006 7,024,517 Less Accumulated Depreciation and Amortization (5,097,894) $ 1,926,623

Depreciation and amortization expense was $808,346 for the year ended June 30, 2016.

5. INVESTMENTS AND FAIR VALUE MEASUREMENTS

ACICS's investments constitute its only assets or liabilities measured at fair value on a recurring basis as of June 30, 2016. These investments and their fair value measurements are summarized below:

Fair Value Level 1 lnEUtS Level 2 lnEuts Level 3 lnEuts Cash and Short-Term Investments $ 246,302 s 246,302 $ $ Corporate Bonds 3,476,822 3,476,822 Corporate Bond Mutual Funds 617,779 6 17,779 U.S. Equities 4,740,302 4,740,302 U.S. Equity Mutual Funds 1,225,288 1,225,288 International Equities 2,145,707 2,145,707 - 12,452,200 s 8,975,378 s 3,476,822

Accounting principles generally accepted in the United States of America provide a common definition of fair value, establish a framework for measure of fair value and expand disclosures about fair value measurements, but do not require any new fair value measurements. All assets and liabilities required to be measured at fair value by these accounting principles have been assessed with the following three-tier hierarchy of inputs:

Financial assets measured using Level I inputs are based on unadjusted quoted market prices in active markets for identical assets.

Level 2 inputs, if any, include quoted prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from observable market data.

Level 3 inputs, if any, are obtained from ACICS's own assumptions.

- 11- ACCREDITING COUNCIL FOR INDEPENDENT COLLEGES AND SCHOOLS

NOTES TO F INANCIAL STATEMENTS J UNE 30, 2016

5. INVESTMENTS AND F AIR VALUEMEASUREMENTS {CONTINUED)

Investment income consisted of the following for the year ended June 30, 2016:

Interest and Dividends $ 320,704 Realized Gains 253,634 Unrealized Loss (749,805) Net Investment Loss $ (175.467)

ACICS incurred investment fees of approximately $88,000 for the year ended June 30,2016.

6. COMMITMENTS AND CONTINGENCIES

ACICS leases office space in Washington, D .C., which has a term that expires September 30, 2017. Minimum monthly rent is currently $55,041. The total of all rental payments due under the lease are being recognized on a straight-line basis in the statement of activities and changes in net assets. Accordingly, there is a liability recorded for accrued rent equal to the difference between the rent expense and the actual cash payments required by the lease.

The following is a schedule of future minimum lease payments as of June 30, 2016:

For the Years Ending June 30, 2017 $ 729,749 2018 183,344 $ 913,093

The total expense incurred under all operating leases during the year ended June 30, 2016, was $825,428.

ACICS has contracted various consultants and insurance providers. ACICS is obligated to pay fees for these relationships. ACICS has an employment contract with its Interim President expiring on July 31, 2017, unless renewed by both parties.

7. PENSION PLANS

ACICS has a defmed contribution pension plan, ACICS retirement/savings plan, as regulated by the Internal Revenue Service Code 401(a). Employees become eligible after one year of service, and become 25% vested for every year of employment Contributions to the Plan are discretionary and ACICS contributed 10% of eligible employees' salaries. $377,745 was contributed for the year ended June 30, 2016. ACICS's employees are also eligible to participate in a 403{b) tax deferred annuity plan through which they can defer a portion of their annual salary. These voluntary contributions immediately vest to the employees.

- 12- ACCREDITING COUN CU. FOR INDEPENDENT COLLEGES AND SCHOOLS

NOTES TO FINANCIAL STATEMENTS JUNE 30,2016

8. ACCREDITATION AUTHORITY

The Secretary of the United States Department of Education had extended the recognition of ACICS as an accrediting body through July 2016. ACICS must reaffirm this authority every five years. See Subsequent Events in Footnote 9 for further information.

9. SUBSEQUENT EVENTS

ACICS has evaluated subsequent events through November 7, 2016, the date on which the financial statements were available to be issued.

ACICS was notified in September 2016 that ITT Technical Institute would be closing all of its campuses and filing for bankruptcy. As such, ACICS expects to see a twenty percent loss in revenue for the year ending June 30, 2017. ACICS will adjust its fiscal year 2017 budget accordingly. As of July 30, 2016, ACICS reduced its workforce by seven employees, resulting in total severance payouts of approximately $514,000.

ACICS was also notified in September 2016 that the Senior Department Official at the U.S. Department of Education had accepted the recommendation of the Department of Education staff and the National Advisory Committee on Institutional Quality and Integrity (NACIQI) to deny renewal of recognition to ACICS. As such, ACICS has notified the U.S. Secretary of Education that it will appeal this decision.

- 13-

ACCREDITING COUN CU. FOR INDEPENDENT COLLEGES AND SCHOOLS

SCHEDULE OF FUNCTIONAL EXPENSES FOR THE Y EAR ENDED J UNE 30,2016

Supporting Pro&am Services Services Aa:redttaiiOn Managemenr E~nse Education and General Toral

Salaries and Benefirs $ 1,822,018 s 1,717,903 s 1,665,845 s 5,205,766 Travel and Meals 2,760,019 25,735 52,250 2,838,004 Depreciation 282,921 266,754 258,671 808,346 Occupancy 270,608 255,144 247,413 773,165 Professional Fees 230,810 217,621 211,027 659,458 Meerings 215,924 203,586 197,417 616,927 Legal and Accounting 518,708 518,708 Inreresr and Fees 342,341 342,341 Payroll Taxes 94,679 89,269 86,563 270,511 Compurers 74,979 70,694 68,552 214,225 Uriliries 38,278 36,092 34,997 109,367 Workshops 98,386 98,386 Bad Debr Expense 68,211 68,211 Training 21,533 20,303 19,687 61,523 Office Supplies 21,015 19,815 19,214 60,044 Equipmenr Renrals and Mainrenance 20,830 19,640 19,Q45 59,515 Insurance 18,460 17 ,406 16,878 52,744 Miscellaneous 8,287 7,8 13 7,576 23,676 Dues and Subscriptions 5,248 4,948 4,798 14,994 Prinring and Posrage 4,868 4,590 4,451 13,909 Advertising 2435 2,435 5,890,477 s 3,075,699 s 3,846,079 s 12,812,255

- 15-