02 – I – 00

Call to Order

02 – I – 01

Minutes of May 9, 2002 Executive Committee Meeting

02 – I – 02

President’s Report

a. Revised Meeting Schedule

Ms. Golden drew committee members’ attention to the revised meeting schedule for the Board of Directors and Executive Committee for 2002/2003, distributed to members prior to the meeting.

She noted that AICPA President and CEO, Barry C. Melancon had been invited to, and is believed will attend, the September 24, 2002 Board dinner meeting. Ms. Golden stated that the meeting would open an opportunity for NYSSCPA Board leadership to interact with Mr. Melancon and promote communication between the NYSSCPA and AICPA. She stressed the importance of creating an environment of open communication with the AICPA, noting that the NYSSCPA represents the largest state society membership with roughly 10% of the total AICPA membership. Ms. Golden added that Mr. Melancon has reciprocated with an open invitation for NYSSCPA leaders to tour the AICPA’s offices.

Several members opined that there appears to be a disconnect between AICPA Council, the AICPA governing body, and its members, as evidenced by issues such as the global credential initiative, which was substantially defeated by AICPA membership despite its strong support by AICPA leaders. Several committee members expressed a desire for Mr. Melancon to address the AICPA’s apparent disconnect with its members and discuss what steps the AICPA may take to alleviate the rift.

b. Bylaws Task Force

Ms. Golden announced that the Bylaws Task Force would be chaired by Sharon Sabba Fierstein, and would include Board member Sandra A. Napoleon-Hudson. She also stated that she would ask Brian A. Caswell and Louis C. Grassi, among others, to serve on the task force. The task force will address the nominating committee structure, as well as any other areas needing clarification or revision.

c. AICPA Council Update

Ms. Golden gave an update on the AICPA Spring meeting of Council, held on May 19-21 in Savannah, Georgia. She stated that prior to the meeting, immediate past Society President Nancy Newman-Limata, in her capacities as then-NYSSCPA President and AICPA Council member, wrote a letter to Kathy Eddy, the immediate past chair of the AICPA and a member of the CPA2Biz board of directors, in which Ms. Newman-Limata requested written answers to questions on issues relating to CPA2Biz, the computerized CPA exam, and the AICPA’s financial situation in general. Ms. Golden noted that the AICPA designated its Finance Committee Chair, Michael Mountjoy to directly address some of the issues raised by Ms. Newman-Limata’s letter, while the AICPA directed attention to the Council presentations during the three-day meeting for answers to the remaining issues. Mr. Hoops opined, however, that it was at times difficult to match up the presentations with Ms. Newman-Limata’s questions.

A discussion then ensued with respect to Societal support of AICPA programs in general. One Executive Committee member suggested that the Society purchase AICPA recruitment materials for presentation and dissemination to high schools and colleges. He opined that the AICPA produces excellent recruitment materials and urged the Society to show its support for the AICPA while furthering CPA recruitment. Ms. Barry, director of communications, noted that the Society currently utilizes these materials in its recruitment efforts. The Executive Committee member proposed that Chapters be informed of the availability of the AICPA recruitment materials and given access to them. Mr. Grumet responded that he would follow up on this issue and make sure the Chapters would be informed.

d. Leadership Conference

Ms Golden reminded members that the Leadership Conference would be held from July 14-16 at the Mohegan Sun Resort and Casino in Connecticut. She recounted for the committee her March tour of the conference venue, which was under construction at the time but has since been completed. Invited to the conference are all those members involved in the leadership of the Society, including 2001-2002 and 2002-2003 Board members, FAE trustees, chapter officers, committee chairs, PAC board members, AICPA Council representatives from the Society, past presidents and young CPA chairs, among others.

e. Recent Society Comments

Ms. Golden commended the two recently issued Society comments to the committee and expressed her appreciation to the Auditing Standards and Procedures Committee for its efforts in crafting the comments.

f. Update on Strategic Planning

Ms. Golden noted that strategic planning would be an integral portion of the Leadership Conference. Glenn Tecker Associates will be facilitating the strategic planning sessions covering four areas: 1) Chapters; 2) Committees; 3) Education; and 4) Public Advocacy.

In preparation for the sessions, Ms. Golden asked members to review the strategic planning resolutions passed by the Board on February 2, 2002. Mr. Schmelkin was directed to disseminate the resolutions to Board members prior to the conference.

g. Update on Relocation

Ms. Golden asked Mr. Schmelkin, director of operations, to report on the activities of the Relocation Task Force. He noted that the task force was comprised of several members of the Real Estate Committee as well as former Society President Steve Baum, who was instrumental in the acquisition of the current office space. He then briefly summarized the process by which the Relocation Task Force chose to recommend the Williams firm as the Society’s real estate broker with respect to a possible office relocation. He noted that several other firms were considered, including Newmark, Cushman & Wakefield and William Weinbaum.

Mr. Schmelkin stated that the Society’s lease for its current offices expires in October 2004. Mr. Grumet added that, before September 11, 2001, it was not likely that the Society would have been offered an option to renew its current lease due to interest in the space by a large national concern; however, post-9/11 market conditions may make renewing the current lease a possibility. He cautioned, however, that the rent upon renewal would not likely be as favorable as is currently enjoyed by the Society.

Mr. Grusd, who is a member of the relocation task force, noted that the Board’s strategic decisions regarding the Society’s education programs would govern space requirements under the next lease.

Mr. Grumet stated that additional considerations include staff offices and committees. He added that some areas being looked at, such as the Penn Station area, might provide more favorable rents; however, those locations may not be as prestigious or desirable.

Mr. Langowski requested that Mr. Schmelkin draft a detailed memo outlining why the committee chose to recommend Williams, what issues and options are involved in the relocation, and what the process will entail going forward.

h. Chapters Report Card

Ms. Golden referred the committee to the distributed materials regarding the chapters’ report card.

i. CPA Exam

Ms. Golden stated that the computerized CPA exam would be administered in 2004 by Prometric, a subsidiary of Thomson Publishing, in cooperation with the National Association of State Boards of Accountancy (NASBA). She noted that although the AICPA, Prometric and NASBA have completed their negotiations, the state boards from New York and Michigan have not as yet ceded their examination authority to the venture. It was anticipated that the California board, which had expressed serious reservations with the venture, would soon sign on, as it has expressed a desire to be part of a national exam. New York had not, however, made a decision, but was expected to sign for the same reasons as California.

Mr. O’Leary summarized the logistics involved with the computerized exam. He noted that it is, in total, a 14-hour exam, consisting of four parts: Auditing and Attestation, Financial Accounting and Reporting, Regulation, and Business Environmental Concepts, all of which test-takers must complete within an 18-month period. Any failed portion of the test could not be retaken unless a two-month period had elapsed since the failed portion was taken.

j. Executive Director Evaluation Process

See Executive Session, below.

02 – I – 03

Executive Director’s Report

a. Insurance Update

Mr. Grumet presented the policy and premium statistics of the Society’s professional liability insurance program with CAMICO Mutual Insurance Company. He also noted that the Members Insurance Committee had received three proposals for a health insurance plan for members, which the committee would be considering in July.

b. COAP (Career Opportunities in the Accounting Profession)

Mr. Grumet gave an update on the COAP program, a residential learning experience developed by the Society to expose promising minority high school students to accounting and business careers. The program had been presented at Pace University and Hofstra University in the past. He announced that, the program had been expanded to include Long Island University and Westchester Community College. Originally, staff had expected Baruch College also to participate, but Baruch had recently pulled out of the program.

c. eMind Update

Mr. Grumet stated that eMind is the successor name given to Yipinet, with whom the Society has a three-year exclusive contract for the provision of online CPE to Society members. He noted that the contract contained a guaranteed royalty of $150,000 and since FAE had received relatively few royalty payments to date, eMind will have a large payment due at the October 2002 end of the contract term. He advised committee members, however, that eMind has exchanged a number of letters with FAE, asserting that FAE and the Society had defaulted under the agreement. FAE and the Society have strenuously objected to eMind’s assertion. Mr. Grumet noted that it appears FAE and the Society will have to fight for their rights under the agreement. He said that he would keep the committee apprised as the situation develops.

02 – I – 04

Society Policies

a. Succession Plan

Ms. Golden reviewed the succession plan, which had been approved by the Executive Committee on May 3, 2000. That plan called for the Executive Committee, at its first meeting each fiscal year, to designate a person to serve as acting executive director in the event the executive director becomes unable or unwilling to serve. Mr. Grumet proposed that Mr. Woehlke, who had been so designated during each year since the policy was put into effect, be again designated by the Executive Committee. Mr. Nowicki moved and Mr. Hoops seconded a motion to re-approve the succession policy and to designate Mr. Woehlke to serve as acting executive director in the event Mr. Grumet is unable or unwilling to serve. Following discussion, the motion was unanimously approved.

b. Authorization of Staff Compensation Committee

Ms. Golden directed committee members’ attention to a prior resolution of the Executive Committee, dated September 19, 2000, which authorized the establishment of a Staff Compensation Committee for the 2000-2001 fiscal year.

The Executive Committee discussed the September 19, 2000, resolution and determined that it would be advisable to include two rather than three past presidents and add the Treasurer. Mr. Love then moved, and Mr. Nelson seconded, a motion to approve the following resolution:

RESOLVED, that each year, the Executive Committee shall determine whether to establish a committee charged with (1) recommending the total compensation cost to be included in the subsequent year’s budget, and (2) ratifying the Executive Director’s recommendation of staff compensation levels for such year after the final budget number is approved by the Board.

RESOLVED, FURTHER, that for the 2002-2003 fiscal year, the Staff Compensation Committee shall be composed of the President, the President-Elect, the two most immediate past Presidents who are willing to serve on the committee, and the Treasurer.

Following discussion, the revised resolution passed unanimously.

c. Contract Approval Policy

Mr. Woehlke noted that on February 4, 1999, the Board passed a contract approval policy that empowers the President and Executive Director to sign contracts involving revenue or expenses up to $10,000. Contracts in excess of that amount up to $100,000, contracts must be reviewed and approved by the President, President-elect, and the Treasurer, before the Executive Director is empowered to sign. Finally, contracts of $100,000 or more must be approved by either the Board or the Executive Committee before signature.

Mr. Woehlke continued that some expenditures in excess of $10,000 are directly included in the Society’s budget, which in turn is approved by Board resolution. He noted that some staff members are unclear as to whether the contract approval policy applies to expenditures approved in the budget.

A discussion ensued with respect to this issue. Mr. Hoops suggested that the rules be followed regardless of budget approval to promote communication concerning such contracts. He added that because the approval process only involves the President, President-elect and Treasurer, it should not be unduly burdensome. Another member suggested that there was a need to distinguish contracts that do not arise in the normal course of business, which should be approved regardless of amount. Mr. Woehlke responded that this would leave in the staff’s hands a determination of exactly what is “in the ordinary course of business.”

The Executive Committee briefly discussed the propriety of the dollar thresholds contained in the policy and determined that they remained appropriate.

One member expressed concern about how staff determined when the policy’s threshold limits are exceeded. Mr. Woehlke noted that a good faith effort is used to determine contract amounts. Ultimately, there needed to be reliance on staff professionalism, which, if circumvented, should result in employee discipline. Another committee member quoted the currently effective resolution as pertaining to amounts “reasonably expected to result from such contract during the twelve-month period following the contract’s effective date.” He said he felt this language to be sufficient.

Mr. Woehlke noted another issue that had arisen, that is, whether the three officers could approve contracts in the category from $10,000 up to $100,000 independently or whether they needed to enter into discussion prior to approval. One member suggested that the decision should be made following discussion by the officers. Since there was no objection to this suggestion, Ms. Golden directed that the current policy be rephrased to include such a communication requirement, and that the Executive Committee should revisit the matter at its next meeting.

d. Member Reimbursement Policies

Mr. Woehlke noted that there was confusion among staff as to whether a conflict existed between the two member reimbursement policies, one for committee members and the other for Board members, on the one hand and an item included in the Board approval of the 2002-2003 budget on the other. The 2002-2003 budget included an estimated savings of $14,000 through the use of a hotel, at which the Society and FAE had negotiated a favorable rate. The issue presented was whether committee members and Board members should be required to use the hotel as a prerequisite for reimbursement. Ms. Golden announced that she would appoint a task force to solve the possible discrepancy and in the process review the adequacy of the existing policies. Ms. Golden asked Mr. Nowicki if he would serve on the task force and he agreed.

e. Conflict of Interest

Ms. Golden announced that she would appoint a task force to propose new policies covering conflicts of interest and compliance with anti-trust laws, the former a recommendation of the Society’s auditors and Ms. Chambers, the latter a recommendation of Mr. Woehlke as being advisable for all nonprofit associations. Ms. Golden asked Mr. Keiser to participate on the task force and he agreed.

f. Anti-trust Policy

This matter was addressed in the previous section.

g. Leasing Policy

Ms. Golden provided background regarding the Society’s proposed leasing policy. She noted that the Executive Committee previously expressed concern over the Society subletting office space due to issues of confidentiality and security. After the discussion, Mr. Hoops moved, and Ms. Lapidus seconded the approval of the following resolution:

RESOLVED, that no office space within the Society’s offices shall be made available for rent or otherwise for a period of over one week to any person without prior approval of the Executive Committee or the Board, unless such person is an officer or employee of, or an independent contractor providing services to, the Society or FAE, in which case space will be made available in the discretion of the Executive Director or his or her designee.

02 – I – 05

Membership Report

The membership report was included with the Executive Committee’s agenda and included 153 new members (including 60 new associate members), 27 reinstatements and readmissions, 17 deaths, 41 resignations, and 2 ethics-related terminations. These changes reflected a total membership of 29,598.

A discussion ensued with respect to the accuracy of the membership information attached to the membership report. Mr. Grumet indicated that he would follow up with Mr. Pape, the associate director for member relations, regarding discrepancies in the report and have him update the committee at the next executive committee meeting.

A discussion then ensued with respect to the ethics terminations, and what was the basis for each termination. A member suggested that the committee defer its approval of the ethics termination portion of the Membership Report until this information is communicated to the committee.

Following this discussion, Ms Lapidus moved that the membership report be accepted and Mr. Langowski seconded a motion to approve the membership report except for that portion related to the ethics terminations. Following discussion of the motion, the resolution passed unanimously.

02 – I – 06

Report of Legislative Task Force

Mr. McCoy, chair of the legislative task force, gave the report of the task force. He noted that the task force has reviewed and suggested changes to the draft of New York State Senate bill 5628. A copy of the suggested changes was distributed to committee members.

Before going over the suggested changes, a discussion ensued with respect to a competing accountancy bill offered by Assemblyman Brodsky. Mr. McCoy stated that the Brodsky Bill had not garnered much attention or support in legislature and, therefore, neither the NYSSCPA nor the Big Four have taken a position on it. Mr. Langowski opined that taking a public position with respect to the Brodsky bill may be helpful to the Society on balance, and cautioned that the lack of response by the Society might be deemed a form of tacit support. Several members agreed with Mr. Langowski, indicating that the Society should not issue a press release of opposition, but submit a memorandum to the legislature stating in essence that it does not support the Brodsky bill.

Mr. Love moved, and Mr. Nowicki seconded, a resolution that the NYSSCPA submit to the legislature a memorandum signed off by the President, Joanne Golden, in opposition to the Brodsky bill. There being no objections, the motion passed unanimously.

Mr. Love moved, and Mr. Nelson seconded, a resolution to form a task force consisting of President Golden, Mr. Langowski, Mr. Hoops and Mr. McCoy to move forward, make decisions and negotiate to the extent necessary to advance the Society’s interests with regard to the legislation. There was some discussion about whether it was advisable to have a task force with an even number of members and, by consensus, the motion was amended to add Mr. Love as a fifth member. Following additional discussion, the motion, as amended, passed unanimously.

Mr. McCoy then proceeded to guide the committee through the legislation, line-by-line. After the committee discussed several additional suggested changes, Mr. O’Leary was directed to amend the draft accordingly and submit the changes to Senator LaValle’s office.

02 – I– 07

Financial Update

Ms. Golden asked Mr. Aquilino, the treasurer, to present a report on the Society’s financial position. Mr. Grumet reported that as of June 14, 62.95% of member dues billed had been collected, with 18% of that being collected via credit card. He noted that this was ahead of last year’s collections, perhaps indicating membership approval of the way the Society was handling its significant issues such as the response to the XYZ credential.

One Executive Committee member remarked at the website “hits” statistics, stating that the site had received 3 million per month in April and again more recently hits appeared quite high. Mr. Grumet responded that website staff attributed this website traffic to the availability of tax forms on the website and well as the site’s comprehensive updates regarding Enron.

02 – I – 08

FAE Report

Ms. Golden asked Messrs. Grumet and Schmelkin to report on the current financial status of FAE. Mr. Grumet noted that there were several indications that FAE would be having a significantly better year. Registrations had improved significantly. Cancellations were greatly reduced. Mr. Schmelkin added that subscriptions for POP passes and books-of-ten were significantly up over the prior year’s VIP pass. Beyond this it was not possible to predict FAE’s financial performance since the bulk of the programs for the year would be occurring in July and August and facilities bills tend to arrive during September, October, and November.

Ms. Golden expressed her concern with the financial situation of FAE and the ability to have an up-to-date understanding of its financial position throughout the summer. Grumet promised to provide additional information on FAE’s financial situation as it becomes available.

02 – I – 09

Executive Session

02 – I – 10

Adjournment