| |
|
Governance
| Minutes
of: |
Executive
Committee Special Meeting |
|
| Date
& Time: |
Wednesday,
October 15, 2003, 9:04 a.m. to 11:25 a.m. |
| Location: |
NYSSCPA
Offices, 530 Fifth Avenue, Room 1 |
| Presiding Officer: |
Jeffrey
R. Hoops, President |
| Committee
Members Present: |
John
J. Kearney, President-Elect*
Vincent J. Love, Vice President
Sandra A. Napoleon-Hudson,
Vice President
Raymond M. Nowicki, Vice President*
Steven Rubin, Vice President
|
Katharine
K. Doran
Neville Grusd
Raymond P. Jones
Richard E. Piluso
Louis Grumet, Executive
Director |
| Executive
Committee Members Absent |
Arthur
Bloom, Treasurer
Thomas E. Riley, Secretary
* participated
by phone
|
Nancy
A. Kirby
|
| Guests: |
Brian
Caswell |
Carol
Lapidus |
| Staff
Present: |
Joanne
S. Barry
Lynn T. Chambers
Robert H. Colson
Ernest J. Markezin
Thomas Morris
|
Dennis
M. O’Leary
Alan Schmelkin
Paul L. Sinegal
James A. Woehlke
|
M I N U T E S
| 03–
I – 0
Call to Order
|
Noting
that a quorum was present, President Jeffrey Hoops called
the meeting to order at 9:04 a.m. |
| 03
– I – 1
Minutes
|
Mr.
Hoops asked Executive Committee members if they had any
changes to the minutes of the August 13, 2003 meeting. There
being none, Mr. Rubin moved to approve the minutes, and
Mr. Piluso seconded the motion. The motion passed unanimously.
|
| 03
– I – 2
President’s Report
|
a.
AICPA Fall Council Meeting
Mr.
Hoops reminded Executive Committee members that the AICPA
Fall Council Meeting would be held October 19 to 22 in New
Orleans, Louisiana.
Mr. Piluso noted that former Society President, Stuart Kessler
(’84-’85), would be receiving a gold medal for
distinguished service from the AICPA at the Council meeting.
The committee by consensus agreed to recognize Mr. Kessler’s
accomplishment and to invite him to the upcoming Board dinner.
A discussion
then ensued regarding a letter dated October 7, 2003, which
the NYSSCPA Board of Directors sent to AICPA Chairman William
Ezzell. Mr. Hoops reported that although a small number
took issue with the letter’s New York Stock Exchange
comparison, the letter was generally well-received.
b.
COAP Fundraising
Mr.
Hoops reported on the formation of a task force to examine
ways to increase fundraising for the Career Opportunities
in the Accounting Profession (COAP) program. He announced
that the Task Force would be chaired by Mr. Frank Fusaro.
c.
Officers’ Visitations
Mr.
Hoops reported that the Officers’ Visitations conducted
thus far had been well-attended and well-received by members.
d.
Real Estate Task Force
Mr.
Hoops reported on the status of lease negotiations for the
Society’s new offices. For some details, he turned
to Mr. Grumet, who stated that while he felt the negotiations
over the space currently occupied by the American Institute
of Chemical Engineers might well be successful in the end,
for the present, several important issues had arisen. Mr.
Grumet reported that, out of prudence, the real estate broker
agreement with GVA Williams was extended by six months,
and alternative locations were being explored.
e.
Committee Reimbursements
A discussion
ensued regarding the suggested dollar amount of reimbursement
for hotel stays associated with committee business, and
whether the suggested level was consistent with members’
experiences, particularly in Manhattan. It was noted that,
at the current time, the Yale Club was designated as the
Society’s approved facility, but that members could
nonetheless choose to stay at a different facility subject
to certain limitations. In response to a question regarding
the cost of the Yale Club, Mr. Schmelkin stated that the
Yale Club rate changed depending on the season, but averaged
approximately $200 per night.
After
discussion, Ms. Napoleon-Hudson moved that the reimbursement
amount for stays in hotels other than the Society’s
approved facility be set at $200 per night, exclusive of
tax. Ms. Doran seconded the motion, and the motion passed
unanimously.
A brief
discussion then ensued regarding the reimbursement amount
for daily incidentals. After discussion, Mr. Riley moved
that daily incidentals be reimbursed at the prevailing Internal
Revenue Service rate. Mr. Grusd seconded the motion. The
motion passed unanimously.
|
03
– I – 3
Treasurer’s Report
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a.
Financial Statements as of September 30, 2003
Ms.
Chambers gave the Treasurer’s Report in Mr. Bloom’s
stead. She noted that the Society and FAE combined revenue
for the first four months of the 2004 fiscal year was at
$691,000, $425,000 ahead of budget, and cash and cash equivalents
was $500,000 ahead of last year.
A committee
member asked for an explanation regarding a $35,000 decrease
in FAE rental income. Ms. Chambers responded that FAE had
stopped pursuing classroom rentals due to the level of uncertainty
regarding when the organization would relocate.
b.
Update on Internal Controls Review
Ms.
Chambers announced that the Finance Committee would be meeting
on October 29, 2003 to discuss the proposed Internal Controls
Review.
|
03
– I – 4
Vice Presidents’ Reports
|
a.
Report on Chapters
Vice
Presidents Napoleon-Hudson and Nowicki each gave a brief
report on Chapters.
b.
Legislative Update
Vice
President Love announced that Governor Pataki signed into
law a bill which authorized the New York State Education
Department’s Office of the Professions to issue “cease
& desist” letters to persons practicing a covered
profession, including public accounting, without a license.
Staff agreed to look into the geographic reach of the new
law and report back to the Executive Committee at a later
time.
c.
Recent Society Comments
Vice
President Rubin commended several committees and authors
for their work on issuing Society comments as follows:
Comments
submitted to the Internal Revenue Service by the NYSSCPA
Taxation of Financial Institutions and Products Committee,
chaired by Stephen P. Valenti, on Internal Revenue Service
and Treasury Proposed and Temporary Regulations under Section
752, September 15, 2003; Israel A. Press, CPA and Leon M.
Metzger, CPA, principal drafters.
Comments submitted to the AICPA by the NYSSCPA Financial
Accounting Standards Committee, Chaired by Rober Dyson,
on AcSEC Exposure Draft, Proposed Statement of Position:
Allowance for Credit Losses, September 17, 2003; John McEnerney,
Roseanne Farley, David C. Ashenfarb (Issue 2), Howard Becker
(Issue 2) Allen Fetterman (Issue 2), principal drafters.
Issue 2 was prepared in conjunction with the NYSSCPA Not-for-Profit
Organizations Committee, chaired by Mr. Ashenfarb.
Comments
submitted to the International Auditing and Assurance Standards
Board by the NYSSCPA International Accounting and Auditing
Committee, Chaired by Robert N. Waxman, on Proposed IAASB
Exposure Draft, Review of Interim Financial Information
Performed by the Auditor of an Entity, October 1, 2003.
|
03
– I – 5
Executive Director’s Report
|
a.
COAP Update
Mr.
Grumet announced that the COAP program was looking at two
new locations for next year’s programs and several
other locations had expressed interest for later
years, including SUNY Brockport and the Northeast Chapter.
b.
FOIL Appeal to State Education Department
Mr.
Grumet reported that the State Education Department (SED)
had rejected the Society’s Freedom of Information
Law request for the names and addresses of newly certified
accountants, reportedly due to privacy concerns. Mr. Grumet
then noted that he had spoken to his colleagues at other
New York professional associations, and found that the same
SED policy was being similarly enforced. As a result, Mr.
Grumet recommended that a law suit for the information not
be pursued at this time.
c.
Benevolent Fund
The
Executive Committee discussed a FAE Trustee recommendation
that the Benevolent Fund be dissolved due to the lack of
applications for aid. Mr. Grumet noted that a dissolution
of the fund required a court order, and suggested that post-dissolution
funds be paid into the Society’s scholarship fund.
d.
Dues Update
Mr.
Grumet reported that as of the meeting date, 91% of membership
dues had been collected, which was 1% higher than last year.
e.
Peer Review Update
Mr.
Grumet reported that a member of staff had recently been
promoted to the newly created position of Quality Assurance
Administrator, which would have the responsibility of overseeing
the records management for the peer review program and ethics
program, as well as legal contracts. He added that another
member of staff had been named to the position of Peer Review
Manager, and the search for a CPA for the Ethics division
was continuing.
|
03
– I – 6
401(k) Plan Safe Harbor Election for 2004
|
Mr.
Woehlke summarized the proposed 401(k) Plan Safe Harbor
Election for 2004, noting that the impact of the election
would be the immediate 100% vesting of an employee’s
Society matching contribution.
After
a brief discussion, Ms. Doran moved to approve the
election, and Ms. Napoleon-Hudson seconded the motion. The
motion passed unanimously.
|
03
– I – 7
Membership Report
|
Mr.
Pape presented the Membership Report, which included 228 new
members (including 130 new associate members), 5 reinstatements,
6 deaths and 38 resignations. These changes reflected a total
membership of 30,280 as compared with 29,929 at the same time
as the previous year.
Mr. Piluso moved
to accept the Membership Report, and Ms. Napoleon-Hudson
seconded the motion. The motion passed unanimously.
|
03
– I – 8
Proposed Communications Policy
|
Mr.
Hoops summarized the proposed communications policy. Mr.
Love suggested a minor editorial change. A copy of the proposed
policy is attached hereto as Exhibit
A.
Ms.
Napoleon-Hudson moved to recommend the proposed communications
policy as amended by Mr. Love for approval by the full Board
of Directors. Mr. Nowicki seconded the motion. The motion
passed unanimously.
|
03
– I – 9
Report of Peer Review and Ethics Task Force
|
Brian
Caswell gave a brief report on the recommendations of the
Task Force on Quality Control and Ethics, which he chairs.
Others on the task force include Ron Benjamin, Rona Cherno,
Allen Fetterman, Sharon Fierstein, Henry Krostich, Steve
Langowski, Ian Nelson and Rob Roath.
After
discussion of the task force’s recommendations, Mr.
Piluso moved to disseminate the report to the membership
by e-mail, in order to solicit additional membership comments
for further Executive Committee review. Mr. Love seconded
the motion. The motion passed unanimously, and staff was
directed to implement.
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03
– I – 10
Rate Action Recommendation for “Frozen” Society
Group Term Life Plan
|
Mr.
Hoops introduced Carol Lapidus, a former Society Vice President
(’02-’03) and current chair of the Member Benefits
Committee.
Ms.
Lapidus reported that the Society’s frozen group-term
life insurance plan had suffered approximately $900,000
in underwriting losses during the previous year and, therefore,
the plan underwriter, U.S. Life Insurance Company, was requesting
authorization to increase premium rates or make coverage
reductions in order to stabilize the program, or both. Ms.
Lapidus noted that the life insurance program, among several
others, is brokered and administered by Marsh Affinity Group
Services which negotiates program rates on behalf of the
Society.
Ms.
Lapidus then asked the Society’s Insurance Manager
Paul Sinegal to provide a brief historical background of
the “frozen” term life insurance plan. Mr. Sinegal
noted that the “frozen” plan consisted of all
pre-1998 policyholders and currently had 1,450 participants,
but was no longer marketed to members. He added that since
1998, the Society had also maintained a “new”
group-term life plan that was currently marketed to members,
but which required no rate action. Mr. Sinegal reported
that the new program had 660 participants and offered somewhat
less generous coverage options, i.e., coverage to age 75
instead of 80 under the frozen plan.
Ms.
Lapidus then summarized the recommendations of the Member
Benefits Committee as follows:
1.
Authorize a 29% rate increase.
The US Life proposal called for a 34% increase; however,
if implemented in conjunction with the removal of the
“Waiver of Premium” benefit (below), US Life
agreed to a 29% increase.
2. Do not extend the plan Retention Agreement.
The retention agreement, which expired 5/31/03, provided
for a surplus reserve, based on a positive claims experience,
which might have been used by the plan to lower premiums
in the form of policyholder dividends or refunds. There
had never been such a surplus, and it was unlikely that
such a surplus would develop in the near future given
plan losses.
3. Remove “Waiver of Premium” Benefit from
the frozen plan.
This benefit waived premiums in the event a policyholder
became disabled. According to Marsh, only one participant
ever utilized the benefit. Removing the benefit would
allow US Life to free-up mandated reserves required to
maintain the benefit, and then use that reserve to address
the overall plan deficit. If removed, US Life agreed to
increase rates by 29%, instead of 34%.
Marsh
assured the Member Benefits committee that the sole policyholder
currently using the benefit would be allowed to continue
doing so.
In response
to a question, Ms. Lapidus noted that the insurance claims
in question were predominantly made by younger participants
in their 50’s, which was viewed as somewhat of an
anomaly. Ms. Lapidus added, however, that the Marsh representative
spoke of a “senior term life insurance program”
which might be marketed to Society members in 2004 to help
relieve any underwriting strain created by the aging, frozen
pool. Ms. Lapidus noted that a letter would be sent to plan
participants carefully explaining the reasons behind the
rate increase and offering more cost-effective options,
such as lowering the face amount of their policy.
Ms.
Napoleon-Hudson moved to accept the recommendation of the
Member Benefits Committee as presented, and Ms. Doran seconded
the motion. The motion passed unanimously.
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03
– I – 11
Adjournment
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Mr.
Piluso moved to adjourn the meeting, and Ms. Napoleon-Hudson
seconded the motion. All being in favor of the motion, the
meeting adjourned at 11:25 a.m.
Click
here to view Exhibit
2. |
Respectfully
submitted,
John
J. Kearney,
Acting Secretary
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