Association for the Advancement of Artificial Intelligence (A California Nonprofit Corporation) Financial Statements December 31, 2009 with Independent Auditor's Report

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Independent Auditor's Report

The Board of Directors Association for the Advancement of Artificial Intelligence Menlo Park, California

We have audited the accompanying statement of financial position of the Association for the Advancement of Artificial Intelligence (a California nonprofit corporation) as of December 31, 2009, and the related statements of activities, cash flows and functional expenses for the year then ended. These financial statements are the responsibility of the Association for the Advancement of Artificial Intelligence's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Association for the Advancement of Artificial Intelligence as of December 31, 2009, and the changes in net assets and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Vavrinek, Trine, Day & Co., LLP

Palo Alto, California

April 8, 2010

Notes to Financial Statements December 31, 2009

Note #1. Nature of Organization and Significant Accounting Policies

Organization. The Association for the Advancement of Artificial Intelligence (the "Association") was incorporated in the State of California in 1979 as a nonprofit scientific society to encourage the basic knowledge of what constitutes intelligent thought and behavior and how it can be exhibited in computers. This is accomplished primarily by the Al Magazine, the publications of AAAI Press, the AAAI Conference on Artificial Intelligence (AAAI), the Conference on Innovative Applications of Artificial Intelligence (IAAI), the conference on Artificial Intelligence and Interactive Digital Entertainment (AIIDE), the AAAI Conference on Weblogs and Social Media (ICWSM), the AAAI Spring and Fall Symposium Series, the AAAI Workshop program, AAAI student programs, and a series of AI-related annual competitions and exhibitions, including those on robotics, poker, general game playing, and AI videos. In addition, AAAI awards grants, scholarships, and other honors. Finally, AAAI's World Wide Web Site serves as a central resource for individuals involved in AI research.

Financial Statement Presentation. The Association presents its financial statements in accordance with Statement of Financial Accounting Standards (SFAS) No. 117, "Financial Statements of Not-for-Profit Organizations." Under SFAS No. 117, the Association 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. The Association only has unrestricted net assets. Contributions received with donor-imposed restrictions that are met in the same year in which the contributions are received are classified as unrestricted contributions. In addition, the Association is required to present a statement of cash flows. As permitted by the statement, the Association does not use fund accounting. Revenues and expenses are recorded when incurred in accordance with the accrual basis of accounting. …