03– H – 0
Call to Order

03 – H – 1
Minutes

Mr. Hoops asked Executive Committee members if they had any changes to the minutes of the following meetings:

a. June 4, 2003 Conference Call
b. June 9, 2003 Conference Call
c. June 11, 2003 Meeting

There being none, Mr. Riley moved that all three sets of minutes be approved, and Ms. Kirby seconded the motion. The motion passed unanimously. Ms. Doran and Mr. Jones did not participate in the vote.

03 – H – 2
Treasurer’s Report

Financial statements as of July 31, 2003

Mr. Bloom presented the Treasurer’s Report. He noted that combined Society and FAE net income for the two-month period ending July 31 was $29,504, which was $25,688 behind budget. FAE revenue for the same period was $139,000 behind budget. This was due to approximately 600 fewer registrants in the current year. The gap with the budget was expected to close somewhat during August.

Mr. Schmelkin added that FAE POP course utilization continued at 34%, though it was budgeted at 40%, and was providing a favorable budget variance.

A lengthy discussion ensued regarding classroom sizes for the upcoming SEC Conference, and possible ways to maximize attendance capacity without detracting from participants’ overall course experience. An Executive Committee member suggested the use of audio-visual equipment in separate rooms to address attendance overflow issues. Mr. Schmelkin responded that he would look into the suggestion.

a. Leadership Conference Update

Mr. Hoops gave an update on the Leadership Conference, which was held in Saratoga Springs from July 13 to 15. He noted that conference feedback was good and commended Alan Schmelkin and others from staff for their efforts in organizing the event.

b. AICPA

Dinner with AICPA Chairman, William Ezzell – September 23, 2003
Mr. Hoops reported that William Ezzell, the AICPA Chair, accepted an invitation to join the NYSSCPA Board at its September dinner meeting. Mr. Hoops was asked by the committee to extend the invitation to Scott Voynich, the AICPA Vice-Chair, as well.

A discussion ensued whether to invite other AICPA representatives and representatives from larger states. Executive Committee consensus was that no additional invitations be extended.

Mr. Hoops requested that questions for Mr. Ezzell be submitted in advance of the dinner meeting, so that Mr. Ezzell would have a better opportunity to respond. He asked staff to send an e-mail to Society leaders reminding them of the opportunity to submit questions, and staff agreed to do so.

Governance Task Force Update

Mr. Hoops noted that the AICPA Governance Task Force had completed its preliminary report and submitted it to the AICPA Board of Directors. Mr. Hoops added that the AICPA Board asked the task force to consider several additional issues, and to incorporate them into its final submission to the AICPA Council in November.

Pending Bylaw and Ethics Code Amendments

No report given.

c. Policy Task Force Update

Mr. Hoops noted that he appointed several members to a policy task force to complete work on a conflict of interest policy, among other policies. The task force was being chaired by President-Elect John Kearney and included former Society Vice President, Steve Langowski (last year’s chair), Nancy Kirby (a member of last year’s task force) and current Vice President Vince Love. The first task force meeting had been scheduled for August 19 at 9:30.

d. Recent Society Comments

Mr. Hoops reported that the Society had submitted the following four sets of comments:

• Comments submitted to the United States Committee on Finance by the NYSSCPA Tax Oversight Committee Task Force on E-Filing, chaired by Maryann Winters, CPA, on Proposal to Extend Tax Filing Deadline to April 30 for Individuals Who File Electronically, July 17, 2003; Maryann M. Winters, CPA, Stephen R. Buschel, CPA, Henry A. Garris, CPA, Alexander Kleyman, CPA and Fred L. Slater, CPA, principal drafters.
• Comments submitted to the Internal Revenue Service by the NYSSCPA Exempt Organizations Committee, chaired by Martin S. Cantor, CPA, Pursuant to Internal Revenue Service Announcement 2003-29, Considering Further Guidance on how Charitable Groups Can Meet Internal Revenue Code Section 501(c)(3) Requirements with regard to Various International Grant-Making Activities, July 17, 2003; Paul E. Hammerschmidt, CPA, Martin S. Cantor, CPA, Brian P. Wheeler, JD, Brian N. Raeter, CPA, principal drafters.
• Comments submitted to the Financial Accounting Standards Board by the NYSSCPA Financial Accounting Standards Committee, chaired by Robert Dyson, on FASB Exposure Draft, Proposed Amendment to FASB Statement 140, Qualifying Special-Purpose Entities and Isolation of Transferred Assets, July 30, 2003; John McEnerney, Roseanne Farley, Lewis Shayne, principal drafters.
• Comments submitted to the AICPA Peer Review Board by the NYSSCPA Peer Review Committee, chaired by David C. Pitcher, on Exposure Draft – Proposed Revisions to the AICPA Standards for Performing and Reporting on Peer Reviews, August 1, 2003; David C. Pitcher, CPA, Thomas O. Linder, CPA and Burgman E. Connolly, CPA, principal drafters.

Mr. Hoops commended the authors and submitting committees for their excellent work.

e. Bylaws Update

Mr. Woehlke gave a brief update on the Society’s Bylaws, noting that all revisions had passed a recent Society membership vote.

The Executive Committee then reviewed the Board Standing Rules proposed by the Bylaws Revision Task Force. In the discussion which ensued, the Executive Committee agreed by consensus that there be two Vice Presidents for Chapters and one for Professional Issues.

Ms. Kirby moved that the Executive Committee submit the Standing Rules to the full Board for approval, and Ms. Doran seconded the motion. Following discussion, the motion passed unanimously.

The Executive Committee then reviewed the Nominating Committee Protocols proposed by the Bylaws Revision Task Force. Several members who had served on the Nominating Committee in the past noted the divergence of nominating practices that governed the deliberations of nominating committees from different years, and expressed the view that a set of protocols would alleviate such discrepancies.

In the discussion which ensued, the Executive Committee sought to restrict the nominating committee less than the Bylaws Task Force recommended, rephrasing several of the protocols as strong recommendations rather than mandates.

Upon a motion made by Mr. Riley, and seconded by Ms. Napoleon-Hudson, the Executive Committee unanimously recommended that the full Board approve the revised protocols at its September meeting.

f. Update on Internal Controls Audit

Mr. Bloom provided an update on the proposed internal controls audit, noting that a firm with specialty in this area had not yet been identified. After a brief discussion regarding a possible RFP process, Mr. Hoops suggested in the alternative that an e-mail be sent to Board members asking for recommendations of firms other than their own. Mr. Bloom agreed to draft a request and have staff disseminate it to the Board.

g. Officers’ Visitations

Mr. Hoops noted that the Chapter visitations had been scheduled. He said that CAMICO, the Society’s endorsed professional liability insurance carrier, would not be providing CPE in conjunction with the visitations this year; however, a two-hour ethics CPE program was occurring along with the visits.

f. Media Training

Mr. Hoops encouraged all committee members to participate in a media training session and to communicate their interest in attending to Ms. Barry or Mr. Grumet.

g. PAC Update

Mr. Hoops noted that the Political Action Committee (PAC) met during the leadership conference in Saratoga, New York. Former Society President Michael Borsuk had been named PAC President, and Kevin McCoy named Vice President. Among actions taken by the PAC during its meeting was the approval of a contribution to New York Attorney General Elliot Spitzer’s campaign.

h. Diversity Forum

Mr. Hoops spoke of a need to introduce the CPA profession to more persons of color and the underprivileged. In furtherance of this objection, Mr. Hoops announced that a diversity forum had been formed to discuss this issue, and noted that such groups as the National Association of Black Accountants and the Association of Latino Professionals in Finance and Accounting had been invited to participate.

a. Selection of Site for 2004 Annual Leadership Conference

President-Elect Kearney noted that bids had been received from the Gideon-Putnam in Saratoga Springs and the Sagamore in Bolton Landing on Lake George for the site of the 2004 Annual Leadership Conference. The cost of the Sagamore was quoted at approximately $40,000 more than the Gideon-Putnam.

Mr. Kearney asked Executive Committee members to share with him any additional suggestions for the site of the 2004 Annual Leadership Conference. He reminded the committee of the January 15, 2003, Executive Committee decision to use New York venues exclusively for future leadership conferences. One committee member suggested offering a multiple year commitment to get the Sagamore to lower its offer.

b. Peer Review and Ethics Task Force Update

Mr. Kearney noted that the Peer Review and Ethics Task Force had conducted a series of conference calls, and the last one was scheduled for the following week. He explained that the task force anticipated reporting to the Executive Committee in October and to the full Board in November. Among the issues the task force was looking at were mandatory practice monitoring, compulsory CPE for accounting and auditing, and a speakers’ bureau.

a. COAP Update

Mr. Grumet reported on the COAP program, which was held at five venues: Hofstra University, Pace University, Westchester Community College, Long Island University and Le Moyne College. He noted that one site changed the program date and lost participants, but overall, the programs proceeded very well. Mr. Grumet acknowledged and thanked Keyspan, the Long Island energy company, which had made possible a follow-up program in September for all COAP attendees to work on college applications and resumes. Mr. Grumet expressed a hope to expand the program to at least two additional sites by cutting down the costs associated with the residential aspects of the program. He noted that Brockport College was being looked at as a possible expansion venue, as well as some location in the Northeast Chapter.

In response to a question regarding post-program participant follow-up, Mr. Pape noted that a recent alumni reach-out did not result in a good response, but expressed hope that future efforts would yield better results.

b. Insurance Update

Mr. Grumet noted that the insurance marketplace had tightened significantly and had become a “hard” market. Despite this, CAMICO, the Society’s endorsed professional liability insurance carrier, was enjoying significant growth in New York recently, reaching $1.5 million in premiums and covering 958 professionals as of July 31, 2003.

Mr. Grumet said that the recent growth may be attributed to CAMICO’s conservative pricing methodology during the prior “soft” insurance market, which had allowed it to enjoy more stability than other carriers so far in the current “harder” market.

He explained that the Society’s Professional Liability Insurance Committee had a new Chair, former Board member Andrew Eassa. Mr. Eassa replaced G. William Hatfield, who recently resigned. In addition, Gerry Golub, of GGK, LLP, had replaced Mr. Hatfield as the Society’s representative to CAMICO’s Board of Directors.

c. Trade Show

Ms. Barry noted that the Society trade show, held July 22 and 23 garnered its highest attendance since Flagg Management was contracted to run the show, approximately 2,300 attendees. Ms. Barry noted that there were slightly fewer booths this year than last, due to several business consolidations by previously separate vendors. The event should bring in approximately $75,000 in revenue to the society.

Mr. Grumet expressed concern that Flagg Management may be planning to run a fall CPA trade show independent of the Society’s sponsorship. He advised the committee that staff will follow up regarding this and report back to the committee at its next meeting.

d. Update on Relocation

Mr. Grumet reported that two banks were competing to offer financing for the upcoming move, and an attorney had been retained to handle the paperwork. Mr. Schmelkin reported that the expected move-in date should be approximately February 15, 2004.

Vice President Ray Nowicki, suggested that a conflict of interest disclosure be obtained from those involved in the real estate transaction. After a brief discussion of the issue, it was suggested by committee consensus that Mr. Nowicki work directly with Mr. Woehlke and the Policy Task Force on his suggestion.

e. NYSSCPA Library

No report given.

f. Update on FAE Registration

(See Item 03-H-2, Treasurer’s Report, above.)

g. Update on 2003-2004 Dues Collection

Mr. Grumet reported that dues collection stood 1.5% ahead of last year. As of August 6, 2003, $6,113,058, or 83.11% had been collected, as compared to 81.65% in 2002. PAC contributions were ahead of last year, while COAP and scholarship contributions were down slightly.

h. Locations of 2004 Young CPA Symposium

Mr. Grumet presented information showing that attendees at the Young CPA Forums tended to come from the area in which the forum was offered. He pointed out that the 2004 forum was to be in Rockland and he encouraged having an upstate location as well.

In the discussion which ensued, several committee members expressed concern that a second symposium would water down program attendance and possibly create an upstate/downstate division.

The committee also discussed that firm managing partners might fear allowing their CPA associates to participate in such gatherings, due to the possibility of recruitment by other firms, travel issues and time out of the office during busy work periods. Mr. Schmelkin noted that outreach had been done directly to managing partners concerning such issues, but without much response.

At the conclusion of the discussion, the suggestion for a second Young CPA event in 2004 was rejected by the committee.

i. Correspondence with SED regarding Ethics Course Guidelines

Mr. Grumet noted that FAE sent a letter, a copy of which was provided, offering to work with the New York State Education Department (SED) to revise the current ethics course guidelines which do not comport with the statute or the regulations governing CPE.

j. Correspondence with SED regarding Access to List of Newly Licensed CPAs

Mr. Grumet reported that in mid-June, staff had appealed the New York State Education Department’s (SED) denial of the Society’s recent Freedom-of-Information Law request for the names and addresses of newly-licensed CPAs. The SED had still not responded. Mr. Grumet said he intended to talk to colleagues in other New York associations regarding this issue.

a. Report on Chapters

Ms. Napoleon-Hudson and Mr. Nowicki reported on the organizational efforts of all 17 Society Chapters.

Ms. Kirby advised the committee of a request by the Central Southern Tier Chapter to rename itself the “Finger Lakes Chapter.” After a brief discussion, Mr. Nowicki moved to approve the name change, and Ms. Doran seconded the motion. The motion passed unanimously.

b. Legislative Update

Mr. O’Leary presented the legislative update in Mr. Love’s stead. Mr. O’Leary opined that the accountancy reform bill passed in the Senate under the sponsorship of Senator La Valle would not have further activity in 2003, and there was some prospect for its advancing the identical bill by Assemblyman Canestrari in the Assembly in 2004. He continued that State Attorney General Spitzer’s not-for-profit corporation bill, which was introduced only in the Senate and referred to a committee, appeared unlikely to advance further in the absence of a crisis in the not-for-profit community.

Mr. Kearney moved to approve the following policy concerning chapter activities reimbursement:

All NYSSCPA Chapter Executive Board members are urged to devote the time necessary to perform the responsibilities associated with their elected office.

It is, therefore, the policy of the Society to reimburse reasonable meal expenses associated with attendance at scheduled meetings of the Executive Board. Organizational meetings for chapter committees are included in this policy.

Since reimbursement is limited to meetings of the Executive Board and the organizational (first) meeting of chapter committees, it is highly recommended that group meals be arranged for convenience and cost efficiency. Per person costs should be limited to no more than $10 for breakfast or lunch and no more than $20 for dinner meetings (inclusive of tax and gratuity). The Society will not reimburse the costs of any alcoholic beverages. Timely and appropriate receipts must be provided to the chapter treasurer before reimbursement can be made.

Chapters who avail themselves of this policy are requested to be mindful of the need to conserve costs related to Executive Board activities and are, therefore, requested to hold the costs for which reimbursement is sought to a minimum.

Mr. Piluso seconded the motion. The motion passed unanimously.

Mr. Pape presented the Membership Report, which included 422 new members (including 200 new associate members) 40 reinstatements, 49 deaths and 77 resignations. These changes reflected a total membership of 29,913 as compared with 29,796 at that time the previous year.

Upon a motion made by Mr. Kearney, seconded by Mr. Bloom, the Executive Committee unanimously approved the Membership Report.

Mr. Hoops noted that the Furtherance Committee believed the Society should develop a white paper on who should issue standards for the profession. By consensus, the Executive Committee agreed and referred the matter to the A&A Oversight Committee to develop such a report.

Mr. Hoops then noted that the Furtherance Committee proposed that the Society make recommendations for the PCAOB’s Standing Advisory Committee. By consensus, the Executive Committee agreed and directed Mr. Hoops to set up a task force consisting of the Vice President for Professional Issues, and the chairs of the Accounting & Auditing Oversight Committee and Members in Industry Oversight Committee. The task force would be staffed by Robert Colson to make recommendations to the Executive Committee within the next two weeks.

President Hoops welcomed Julie Floch, Edward Martin and Lynda Feldman of the firm Eisner LLP, the Society’s auditor.

Ms. Feldman presented the preliminary 2002-2003 audit report including required communications from the auditors, highlights of the audit of the consolidated financial statements, and management letter points related to the audit. She emphasized that the report was preliminary, and subject to further review.

She then noted that the auditors were directing that to comply with GAAP, “management and administrative” expenses should be shown separately on the financial statements. By consensus, the Executive Committee agreed with this recommendation. Previously, “general and administrative” expenses had been separately reported until the Board, approximately three years ago, directed that they be fully allocated to departments as part of the program budget.

Ms. Floch expressed her firm’s preference not to provide preliminary audit reports, but noted that firm representatives would be meeting with the Society’s Audit Committee the next day in anticipation of a final audit report to the full Board in September.