SCOPE The following is a transcript of the financial report provided by ASNT Treasurer Brad Pence at the Annual Meeting of the Members, which took place at ASNT 2022: The Annual Conference in Nashville, Tennessee, on Monday, 31 October 2022. The information I am presenting is from the audited financial statements for fiscal year 2022, which ended 30 June 2022. I am pleased to report the auditors presented an unqualified opinion, which represents the highest standard for audit of financial systems, and no significant findings were reported. Fiscal year 2022 will be remembered as the year the volatile markets took back some of the value of our invest- ments. ASNT enjoyed the extended bull market since 2009 like everyone else: our investments grew from $24,315,443 in 2018 to $33,008,765 in 2021. If you recall, the S&P 500 total returns for those years was between 18% to 31% annu- ally. In 2022, the markets dropped and remain depressed. The ASNT investment balance declined around $5.6 million in value during fiscal year 2022. Despite the reduced value of the investments, ASNT’s balance sheet remains strong. ASNT assets are more than $32 million. This includes invest- ments of $27.4 million, long-term assets that include the Columbus property of $2.0 million, and current assets of $2.5 million. A key indicator of fiscal health is the level of an organization’s financial reserves. Benchmark for nonprofit asso- ciations is 12 months of operating capital in reserve. Given ASNT’s annual oper- ating activity of $9.4 million, ASNT has almost three years of operating capital in reserve, or three times the recom- mended level. ASNT has Board-designated net assets of $20 million, which includes our oper- ating reserves and opportunity reserves. The remaining $6.3 million in reserves is available for operations. All net assets are without donor restrictions. The oppor- tunity reserves are to be used to fund new business opportunities, such as ASNT PRESENTS FIN A ASNT Treasurer Brad Pence presented the Society’s financial report at ASNT 2022: The Annual Conference in Nashville, Tennessee. 76 M AT E R I A L S E V A L U AT I O N • J A N U A R Y 2 0 2 3 2301 ME Jan New.indd 76 12/20/22 8:15 AM

new programs and new products. ASNT has never had to tap our opportunity reserves. This is most likely due to the large balance of undesignated reserves available. This will continue to be the case for the foreseeable future. With the adoption of the ASNT Strategic Plan for 2022–2026, ASNT antic- ipates a period of significant financial investments to fund strategic initiatives designed to grow and enhance the asso- ciation. The plan contemplates a total investment of as much as $14 million over five years. Rest assured that each and every initiative is closely considered, analyzed, and justified before the Board of Directors approves its funding. The Board of Directors then closely oversees progress against the initiatives to ensure the funds are spent appropriately. The investments in these initiatives show up as expenses on the Statement of Activities. For the fiscal year 2022, we recorded more than $560,647 in expen- ditures to support strategic initiatives. ASNT’s revenues for the year were $7.35 million, which was an improve- ment of 11% over the prior year. While revenues in conferences rebounded somewhat due to the running of the Annual Conference, revenues in all areas remained somewhat depressed following the pandemic. This is consistent with what we are seeing across the association community the discussion has turned toward recognizing this may be our new normal. With the return of in-person meet- ings, costs to support our governance and volunteer activities returned to pre-pandemic levels. The main difference from prior years is due to a change in our accounting practices: we now record staff labor costs in the program area they support. In this case, the governance and volunteer expenses are about $130,000 higher than 2019 due to the allocation of labor costs to these accounts. Other costs in this area include volunteer travel and board and committee meeting costs that were lower than pre-pandemic levels. Administrative expenses are those expenses related to operating the company, but not directly related to programs in support of volunteer and governance activities. They are over- head-type costs. Our total costs returned to pre-pandemic levels, although what we spent money on shifted in some areas. For example, whereas deprecia- tion expenses for software acquisition and software development investments averaged $625,000 annually between 2018 and 2021, those costs have been cut in half as we change out obsolete IT systems. This is offset by increased expenses in contracted services as we develop, configure, and implement the new association management system and certification management system. When the strategic initiative expendi- tures are included, ASNT’s net deficit for the year was $2 million. Lastly, members should be aware that the Business and Finance Committee, which is well represented here today, is deeply engaged in the financial oversight of the association. The committee meets monthly to review financial reports and to question management on the details. Business cases providing financial analysis and justification for any new projects are required the committee closely evaluates these business cases before providing its assessment and recommendations to the Board of Directors. We realize that we cannot rely on gains from our invest- ments to cover operating losses indefi- nitely, and we continue to work to identify ways to mitigate the financial impact from the pandemic while at the same time providing the resources needed to operate and grow the association. SOCIETYNEWS | SCOPE ANCIAL REPORT FOR FY2022 STATEMENT OF FINANCIAL POSITION Assets 2022 2021 Cash 208,741 1,062,706 Accounts receivable* 300,996 249,669 Inventories, net 1,219,628 1,170,512 Prepaid expenses 476,287 230,741 Employee Retention Credit receivable 263,466 –- Total current assets 2,469,118 2,713,628 Property and equipment, net 2,042,624 1,410,162 Investments 27,446,632 33,008,765 Other assets 86,406 49,937 TOTAL 32,044,780 37,182,492 Net Assets without Donor Restrictions 2022 2021 Available for operations 6,260,131 12,838,683 Board designated 20,020,872 18,925,216 Total net assets 26,281,003 31,763,899 Revenue 2022 2021 Membership 883,253 846,513 Subscriptions and advertising 689,398 710,570 Book sales 1,351,770 1,444,466 Conferences 1,322,365 263,605 Learning programs 261,629 323,688 Technical services and certification 2,839,542 3,038,360 TOTAL 7,347,957 6,627,202 Expenses 2022 2021 Program expenses 5,219,532 4,869,244 General, admin, and fundraising 4,172,339 3,531,026 TOTAL 9,391,871 8,400,270 CHANGE IN NET ASSETS FROM OPERATIONS (2,043,914) (1,773,068) Other Income Miscellaneous 54,658 35,050 Net investment return (4,562,133) 6,886,049 Paycheck Protection loan forgiveness 805,027 770,952 Bureau of Worker’s Compensation refund – 11,473 Employee Retention Credit income 263,466 – TOTAL (3,438,982) 7,703,524 CHANGE IN NET ASSETS WITHOUT DONOR RESTRICTIONS (5,482,896) 5,930,456 *net of allowance for doubtful accounts J A N U A R Y 2 0 2 3 • M AT E R I A L S E V A L U AT I O N 77 2301 ME Jan New.indd 77 12/20/22 8:15 AM