PETA 2023 Financial Statement Review
Introduction
I have worked as a professional auditor and am a currently licensed CPA since forever, so I am qualified to review PETA’s financial statements and comment on what items stick out as notable. I’m obviously biased because I don’t like PETA but am curious to see what they have in their financial statements. So that’s what we’ll be doing today, reviewing PETA’s financial statements:
PETA’s Auditor
PETA was audited by Saggar & Rosenberg PC which is a public accounting firm on the east coast. It does not appear to be in the top 500 accounting firms and some unverified websites lists their revenue as about $8.1M which may or may not be accurate but it is definitely a very small firm so PETA is a big/medium size client for them. In my experience, an audit this size would cost anywhere between $100,000 at a small firm to $500,000 at a big four firm depending on what the market looks like.
Note 1 to the financial statements
It is very apparent from their financial statements that management wrote the majority of note 1 to the financial statements (often the management of small/medium sized organizations will rely on the auditor to write the financial statements – PETA is large enough to heavily be involved in writing their own financials). The reason I say that is note 1 has a lot of items in it that an auditor would not have put their such as several sagas that have occurred in the past and random information about investigations they’ve done that aren’t key to what we would generally put in note 1. Note one is generally just a description of the organization; that should not take 6 pages like it does for PETA.
Note 2 to the financial statements
Advertising expense was approximately $8.3 million which is over 10% of total revenues. This is extremely high for most organizations but not out of the realm of reasonable since PETA seems to be mostly a lobbying organization.
Note 7 to the financial statements
They have about $25 million in total investments. This is an appropriate amount for an organization this size with as many potential legal pitfalls as they could have. The investments are in primarily equities and bonds which is reasonable.
Note 10 Related-Party Transactions
The primary related party transaction that is significant is with FSAP (Foundation to Support Animal Protection) which is an affiliated entity. This will be another good organization to look into in this odd animal rights sub industry.
Commitments and contingencies
Normally there’s a note for commitments and contingencies that, at a minimum, says that management evaluates the need for disclosure/accrual for legal and similar liabilities. It’s hard to believe PETA has no material litigation/commitments. All the lawsuits I see online appear to be PETA suing others so that could be right. I do think I would count this maybe not as an omitted disclosure but an opportunity to describe their risk management and that management has not identified any material litigation requiring accrual/disclosure.
Balance Sheet
They have cash and investments that are adequate. That’s it from looking at the balance sheet.
Income Statement
About half of their expenses are advertising/public eduction type items and half actually goes to helping animals or harassing people and organizations.
Conclusion
PETA is actually not nearly as big as I would have assumed given their notoriety. People know about them because they spend half their budget on promoting themselves and media type stuff. How does such a small entity have such a big stick? Probably volunteers. Nothing too remarkable in their actual financial statements besides the fact that the financials are way too detailed about non financial/peripheral information and sparse/potentially incomplete in the legal arena.