EC09 – A – 0
Call to Order

EC09 – A – 1
Minutes

a. Approval of Minutes of November 11, 2008, Executive Committee Meeting

Ms. Fierstein asked the Executive Committee if members had any changes or comments to the November 11, 2008, Executive Committee meeting minutes. Ms. Dwyer noted an error in section EC08 – E – 7 (Practice Management Oversight Committee). No further questions or comments were raised. Mr. Piluso moved to approve the minutes, subject to correction, and Ms. Dwyer seconded the motion. The motion passed with one abstention by Mr. Adair.

b. Draft Minutes of December 18, 2008, Board of Directors’ Meeting (for information only)

Ms. Fierstein noted that the draft December 18, 2008, Board of Directors’ meeting minutes were attached for the Executive Committee’s information. Ms. Dwyer noted that there was an error in section B08 – E – 12 (Membership Report).

a. AICPA Update

Ms. Fierstein described a meeting at which she and Messrs. Moynihan and Grumet had met with AICPA leadership and senior staff at AICPA headquarters in New York City on January 30, 2009. Discussion at this meeting had included the new Accounting Reform Law.

b. Appointment to Standing Advisory Group of PCAOB

Ms. Fierstein indicated that she had been appointed by the PCAOB to its Standing Advisory Group.

c. Chapter Town Hall Meetings Update

Ms. Fierstein reported that all chapter town halls had been completed.

d. FAE Update

Ms. Fierstein noted that FAE registrations had progressed well since January 1, 2009.

e. PAC Update

Ms. Fierstein reported that the Political Action Committee (PAC) had reaffirmed its allocation decisions during a meeting held during the week of February 9, 2009.

a. Quality Enhancement Policy Committee

President-Elect Moynihan informed members that the Quality Enhancement Policy Committee was scheduled to meet on February 18, 2009 to continue their discussion of a thought paper on why quality matters to the profession.

b. Leadership Conference

Mr. Moynihan noted that the upcoming Leadership Conference would be held at Turning Stone in Verona, New York, between July 12 and July 14, 2009. Mr. Moynihan would be working with Mr. Schmelkin on the proposed agenda.

c. Chapter Town Hall Meetings during 2009-2010

Mr. Moynihan reported that all 2009-2010 chapter town hall meetings have now been scheduled. He further advised that such chapter town hall meetings would focus on the new Accounting Reform Law and regulations, rather than on the traditional focus of ethics. These events would provide two CPE credits. Camico and FAE had been asked to regionalize ethics courses for CPE credit in New York in place of the chapter town hall presentations. A committee member stated that certain chapter presidents had voiced concerns that fewer ethics CPE credits were being offered.

a. Chapters Update

Vice Presidents Falbo and Dwyer reported on recent chapter matters. One chapter had raised concerns about the handling of contract reviews by the Society. In one instance, the chapter had not received notification from the Society regarding the approval of a contract, but the vendor had been notified. The issue of ethics CPE offerings that had been raised during the President-Elect’s report discussion was reiterated.

b. Recent Society Comments

Vice President Wood noted that the Society had completed 34 comment letters to date, which was a new record for the Society. It was indicated that several new Society members had been part of recent submissions.

Since the December 2008 Board of Directors’ meeting, the following comments had been submitted:

• 2/12/09 – Comments on an exposure draft of a proposed statement on auditing standards that would supersede Statement on Auditing Standards No. 70, Service Organizations, which contains guidance for auditors auditing the financial statements of entities that use a service organization and for auditors reporting on controls at a service organization. Prepared by the Auditing Standards Committee, chaired by Mr. Robert N. Waxman. Principal drafters were Mr. Robert W. Berliner, Mr. William J. Prue, and Mr. Paul D. Warner.
• 2/12/09 – Comments on an exposure draft of a proposed statement on standards for attestation engagements that would supersede the requirements and guidance for auditors reporting on controls at service organizations (service auditors) in AU section 324, Service Organizations (AICPA, Professional Standards, vol. 1). Prepared by the Auditing Standards Committee, chaired by Mr. Robert N. Waxman. Principal drafters were Mr. Robert W. Berliner, Mr. William J. Prue, and Mr. Paul D. Warner.
• 2/11/09 – Comments to the Public Company Accounting Oversight Board on Release No. 2008-006, specifically addressing Appendix 4, The Auditor's Responses to the Risks of Material Misstatement, page A4–13–37. Prepared by the Technology Assurance Committee, chaired by Mr. Bruce I. Sussman. Principal drafters were Mr. Michael A. Pinna, Mr. Yigal Rechtman, and Mr. Bruce I. Sussman.
• 2/10/09 – Comments to the IRS on Proposed Amendments of Regulations §1.108-7, Reduction of Attributes. The purpose is to explain how an S corporation can reduce its NOL tax attribute under IRC § 108(b) for tax years in which the S corporation has COD income which is excluded from gross income. Prepared by the Closely Held and S Corporations Committee, chaired by Mr. Stewart Berger. Principal drafter was Mr. David S. Gibson.
• 1/21/09 – Comments on FASB's proposed FSP 144-d that would amend the definition of a discontinued operation and the disclosure requirements of Statement 144. Prepared by the Financial Accounting Standards Committee, chaired by Mr. Edward P. Ichart. Principal drafter was Mr. Abraham E. Haspel.
• 1/9/09 – Comments to AICPA on Proposed Preface to Codification of Statements on Auditing Standards, Principles Governing an Audit Conducted in Accordance With Generally Accepted Auditing Standards, and Proposed Statement on Auditing Standards, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance With Generally Accepted Auditing Standards. Prepared by the Auditing Standards Committee, chaired by Mr. Robert N. Waxman. Principal drafters were Mr. Gillad C. Avnit, Mr. Robert W. Berliner, Ms. Jan C. Herringer, Mr. Neal B. Hitzig, Mr. Michael R. McMurtry, and Mr. Robert N. Waxman.

c. Committees

Vice President Hendler reported on recent committee activities. New members had been joining committees. The Tax Division Oversight Committee would be sponsoring a breakfast briefing on tax issues related to the Madoff matter on February 26, 2009. The Committee Chairs’ evaluation process had begun. On January 28, 2009, the Banking Committee had sponsored an evening session with a live webcast entitled “Accounting Opportunities in Financial Services,” and the attendance was excellent. Mr. Grumet and Mr. O’Leary had attended the Industry Division Oversight Committee on February 5, 2009, and had discussed the new Accounting Reform Law to members. On February 23, 2009, the CFO Committee would be sponsoring an evening session with a live webcast to inform participants about the new Accounting Reform Law. Messrs. Grumet and O’Leary and Ms. Joanne Barry would represent the Society in discussing the new law to an audience of industry members and CPA guests. An article regarding committee membership appeared in the February 1, 2009, issue of The Trusted Professional and included a letter from President-Elect Moynihan. Mr. Moynihan had been working on the review and appointment process for new Chairs and Vice Chairs for fiscal year 2009-2010. A new online committee brochure would be developed, which would include video testimonials on the Society website. The Society had plans to purchase two additional Roundtable webcams for usage by committees.

a. Legislative and Regulatory Update

Mr. Grumet stated that the Society had continued to work with the New York State Education Department on drafting the regulations for submission to the Board of Regents in May 2009 pertaining to the new Accounting Reform Law. Mr. O’Leary had been dedicating a majority of his time to this effort.

b. Member Benefits Program Update

The matter was deferred to a future meeting.

c. Implementation of New Accounting Law

Mr. Grumet informed members that he, Mr. O’Leary, and Ms. Joanne Barry would brief oversight committees, general committees, and chapters about the new Accounting Reform Law. Mr. Grumet noted that a 4,000-word article co-authored by Mr. Tom Riley and Mr. Kevin McCoy—Chair and past Chair of the Legislative Task Force Committee, respectively—detailing the new Accounting Reform Law would appear in the March 2009 issue of The CPA Journal.

d. FAE/Benevolent Fund Proposed Merger

The matter had been submitted to the New York Charities Bureau of the Office of the New York State Attorney General for approval, prior to submission to the court.

e. Dues Update

Mr. Grumet indicated that dues had been tracking at the same rate as the same time in 2008.

Mr. Grumet discussed the effort made in drafting the emergency regulations that would be presented to the Board of Regents in May 2009.

Mr. Grumet sought the advice of the Executive Committee in defining the scope of practice and experience given the new Accounting Reform Law.

The Executive Committee advised that relevant CPA experience could be granted if the candidate had worked under the supervision of a CPA in an area where the skills of a CPA had been performed in public practice, private industry, government, or academia. The Executive Committee agreed further that the relevant functional areas and functions could include (but not be limited to):

• Internal auditing,
• Financial analysis,
• Budgeting,
• Preparation of financial statements, and
• Organizing data.

One committee member stated that job functions that “…were out of scope within the business environment …” would need to be avoided. Another committee member stated that relevant experience needed to be “beyond the base level” of accounting and finance functions.

Mr. Piluso discussed the background and process that had been undertaken by the Finance Committee and NYSSCPA staff in preparing the 2009-2010 NYSSCPA Budget. This included the initial budget that had been presented to the Finance Committee in early January 2009, in the 2008-2009 formats, followed by the new format that had been reflective of the 2009 NYSSCPA Strategic Plan, which was presented to the Finance Committee in late January 2009. At the request of and with guidance from the Finance Committee, summary pages had been added to the 2009-2010 budget package which reflected the combined Society and FAE statement of activities and summary of net revenue in excess of expenses. In the 2009-2010 budget, budgeted revenue and expenses of FAE, which had been previously approved by the FAE Trustees, had been incorporated.

During the ensuing discussion, one committee member raised the issue that, during fiscal year 2009-2010, given the new budget format, a comparison with past years would prove difficult and, therefore, it would make sense to produce and report on quarterly financial statements during fiscal year 2009-2010. Mr. Piluso agreed that comparison with prior years would be difficult during fiscal year 2009-2010. Mr. Piluso stated that the Finance Committee had approved the 2009-2010 budget, subject to the satisfaction of four criteria, which had been previously addressed to the Finance Committee’s satisfaction by Mr. Banerjee.

Mr. Moynihan moved to recommend the 2009-2010 NYSSCPA Budget to the Board of Director for approval, and Ms. Jaeckle seconded the motion. After discussion, the motion passed unanimously.

Mr. Kawa discussed the Professional Ethics Committee’s (PEC) proposed revisions to Interpretations in the NYSSCPA’s Code of Professional Conduct (“Society’s Code”) and the PEC’s stated preference to achieve conformity between the Society’s Code and the AICPA’s Code of Professional Conduct (“AICPA’s Code”).

Mr. Kawa noted the items that had been revised pertained to

1) Interpretation 101-3: Performance of other services,
2) Interpretation 501-1: Retention of client records, and
3) Interpretation 501-2: Discrimination in employment practices.

Mr. Kawa indicated that the revisions had been made only to the interpretations and not the rules themselves.

Mr. Kawa requested that, upon approval by the Executive Committee, these revisions would be publicized in The Trusted Professional sometime between September 1, 2009, and December 1, 2009.

Mr. Grumet recommended to Mr. Kawa that the PEC should review the Society’s Code in relation to statutory revisions in the new Accounting Reform Law.

Ms. Cynthia Barry moved to approve the proposed revisions to the interpretations of the Society’s Code, and Ms. Wood seconded the motion. After discussion, the motion passed unanimously.

a. Membership Report

Mr. Pape presented the membership report noting that, as of February 13, 2009, there were 27,972 members compared to 28,536 at approximately the same time in the previous year. The members included the following (based on changes since June 1, 2008): 1,302 total applicants, 262 reinstatements and readmissions, 119 readmitted students and candidates, 86 deaths, 348 resignations, 1,553 dues-related terminations, and 5 ethics-related terminations. Mr. Falbo moved to accept the report, and Ms. Jaeckle seconded the motion. After discussion, the motion passed unanimously.

b. Membership Dues Late Fee Proposal

Mr. Pape raised the Membership Committee’s request for the approval of the membership dues late fee of $25 after 60 days past dues date. Ms. Dwyer moved to approve the request, and Mr. Meinberg seconded the motion. During the ensuing discussion, it was recommended that the Society be prepared to apply the late fees rule with some flexibility. After discussion, the motion passed unanimously.

c. Summary of Chapter Financial Policy

Mr. Falbo reported on the efforts of a group consisting of himself, Ms. Dwyer, Ms. Cynthia Barry, and Mr. Pryba to review policies relating to chapter funds. They had produced a document that was intended to focus on financial policies specific to chapter activities and then be included as part of the Chapter Manual; the document produced was not intended to be all inclusive of Society policies. Mr. Falbo noted that Ms. Fierstein and Mr. Moynihan had reviewed the policy.

During the ensuing dialogue, there was some discussion of how the word “should” should be interpreted. Mr. Grumet advised that the word “should” was to be interpreted in a manner similar to that traditionally employed by the Society in order to provide flexibility to chapters (i.e., not as an absolute, but with the possibility of flexibility under certain circumstances). The word “must” was to be used where something was absolutely required.

After discussion, it was the consensus of the Executive Committee that the principles of the document were agreed by members such that Mr. Falbo and Ms. Cynthia Barry had the authority of the Executive Committee to continue drafting and revising the document for eventual insertion into the Chapter Manual. In addition, there was no need to return to the Executive Committee or Board of Directors for further approval.

Mr. Falbo noted that there was a need to review the Society’s policies, perhaps, to accommodate payments to charities in lieu of speaker honoraria. The matter had been referred to Mr. Pryba, chair of the Board Governance Subcommittee, to develop a recommendation.

Mr. Woehlke discussed the Mediation and Arbitration Committee’s request for the approval of two initiatives.

a. Request to Conform NYSSCPA ADR Program’s Mediator Fees to Those Allowed for Arbitrators

Mr. Woehlke noted the Mediation and Arbitration Committee’s request to amend the Society Mediation program’s rules to conform the permitted mediator fees to those allowed for arbitrators. Mr. Adair moved to approve the requested mediation rules change, and Mr. Moynihan seconded the motion. After discussion, the motion passed unanimously.

b. Request for Limited Reimbursement to Members for Costs Incurred in Arbitration Training

Mr. Woehlke reported on the Mediation and Arbitration Committee’s request for limited reimbursement to members for costs incurred in arbitration training.

There was some concern expressed by a committee member that this would create precedent that could affect other committees.

After this introductory discussion, Ms. Fierstein asked if any Executive Committee members wished to move approval of the requested reimbursement. The item failed for lack of a motion.

Mr. Woehlke reported on the Consulting Services Oversight Committee’s request to conduct a survey to identify the consulting services billing rates of survey respondents. During the ensuing discussion, several key points were noted:

• Possible violation of antitrust practices if this survey were incorrectly designed and implemented,
• Suggestion that the committee turn its attention to development of an informational flyer or pamphlet regarding the value of choosing a CPA for consulting services, and
• Emphasis on the need to focus on quality and not price.

After the discussion, Ms. Fierstein asked if any Executive Committee members wished to move approval of the request for the member survey. The item failed for lack of a motion.

Mr. Moynihan proposed that a letter from the Executive Committee be drafted informing the Consulting Services Oversight Committee of the lack of approval and the idea of an informational flyer or pamphlet instead.