EC06 – D – 0
Call to Order

President Riley noted that a quorum was present and called the meeting to order at 9:03 a.m.

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Minutes

a.    Approval of Minutes of June 15, 2006, Executive Committee meeting

Mr. Riley asked if there were any changes to the draft minutes of the June 15, 2006, Executive Committee meeting.  There being none, Ms. Fierstein moved to approve the minutes and Mr. Stubbs seconded the motion. The motion passed unanimously.

b.    Minutes of July 11, 2006, Board of Directors Meeting for Information Only

Mr. Riley referred Executive Committee members to the draft minutes of the July 11, 2006, Board of Directors meeting, which was provided in the agenda materials for information.

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President’s Report

a.    AICPA Update

President Riley reported on a meeting Mr. Grumet and he had with the AICPA’s Barry Melancon, President and Chief Executive Officer, Susan Coffey, Senior Vice President – Member Quality and State Regulation and James O’Malley, Senior Vice President – Public Affairs, regarding Medicaid cost reports and peer review.  He also reported that the AICPA’s office relocation from Jersey City, New Jersey, to Durham, North Carolina, was behind schedule but otherwise proceeding as planned.

Mr. Grumet then briefly summarized a previously proposed AICPA ad campaign intended to teach the general public about the importance of saving money.  The Executive Committee discussed several objections to the manner in which the ad’s message was presented.  One committee member noted that the objectionable proofs sent to the Society had been superseded and that 49 states had since endorsed the campaign.  It was noted that there was no cost associated with state society endorsement of the ad campaign and that the NYSSCPA would reconsider an endorsement if provided an opportunity by the AICPA to review the revised proofs.

b.    Update on Bylaws Task Force

Mr. Riley gave an update on the Bylaws Revision Task Force, to which he had appointed John Lauchert as chair.  Other members appointed to the task force were Joseph Charles, Andrew Cohen, Martha Jaeckle and Laurence Keiser.  Mr. Riley noted that the task force was scheduled to have its first meeting on September 6, 2006.

Mr. Woehlke summarized several items that required addressing through a bylaws revision process, including revisions proposed by the Ethics Committee to bring the Society’s ethic’s sanctions closer to the AICPA’s sanctions regarding admonishment.  He said that the process would be publicized in the Trusted Professional to inform and encourage input from Society members.

c.    2006 Leadership Conference Debrief

Mr. Riley said that he had reviewed responses to a survey of participants in the 2006 Leadership Conference, recently held in Saratoga Springs, New York.  He noted that the conference was generally well received but that a number of participants suggested the conference be advertised more to the general membership as well as organization leaders in order to increase attendance. In addition, he noted that several expressed a view that the conference focused too much on a single topic.

A discussion ensued regarding ways to increase leadership conference attendance by both Society leaders and the general membership through additional CPE and marketing, among other ideas.  The timing of the conference was also considered.

d.    Annual Conference Task Force

Mr. Riley reported that he had appointed Philip Westcott to chair a task force to explore reinstating an annual conference for the membership in addition to the Leadership Conference.  The Executive Committee discussed the distinction between to the two, noting that the annual conference had historically been geared towards the general membership for CPE, social activities, and networking, while the Leadership Conference had traditionally been focused on leadership development and governance.   Ms. Fierstein, a member of the task force, encouraged Executive Committee members to provide input or suggestions.

e.    FAE Update

Mr. Riley reminded the Executive Committee that the next full Board meeting, scheduled for September 21, 2006, would be a joint meeting with the Trustees of the Foundation for Accounting Education to review the organizations’ consolidated audit and to discuss other matters regarding the organizations’ relationship with each other.

f.     PAC Update

Mr. Riley gave a brief update on the political action committee and its fundraising activities.

g.    Letter to State Board of Accountancy Regarding the
       Uniform CPA Examination

Mr. Riley announced that a committee of the New York State Board for Public Accountancy responded favorably to his letter, in which the Society requested the release of numerical grades to CPA exam takers.  He said the request would be considered by the full State Board on August 30, 2006, subject to final changes in the applicable exam regulations by the New York Board of Regents.

h.   Committee Appointments Process

Mr. Riley provided a summary of the practices surrounding appointments to statewide committees.  He noted that under the NYSSCPA bylaws, the President had final authority regarding all committee appointments; however, given the large number of statewide committees, the President’s authority had been delegated to committee chairs for all committees in the practice divisions and for several in the operations division.  He said that committee vice chair appointments were made by the President-elect because those vice-chairs would become chairs when the President-elect became President.  Other than vice-chairs, appointments to committees were typically vetted by staff and approved (or disapproved) by committee chairs before new members were added to committee rosters. 

Mr. Riley noted an instance where he had learned of an appointment to a committee that, as President, he would not have approved had he known about it beforehand.  Given the nature of the committee involved, he asked the Executive Committee whether formal guidelines should be considered for appointments to operations division committees and perhaps practice division committees as well.

A discussion ensued regarding the committee appointments process in general.  Mr. Woehlke advised that a Board standing rule could address such situations while maintaining the President’s ultimate appointment authority under the bylaws.

The committee by consensus recommended that a Board Standing Rule be developed to provide guidance to the President on committee appointments.

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President-elect’s Report

a.    Quality Enhancement Policy Committee

President-elect Lifson gave an update on the Quality Enhancement Policy Committee (QEPC).  He said that the QEPC would be submitting a draft thought paper on ethics for consideration at the November Executive Committee meeting, followed by the consideration of the full Board in December. He noted that among other things the paper would include recommended bylaws revisions, suggestions for handling the publication of member ethics violations, and procedures regarding the notification to a complainant of a case’s disposition.  A committee member encouraged that consideration also be given to educating members and the public about the role and authority of the Ethics Committee, including addressing a misconception that its role was to take away one’s professional license.

Mr. Lifson noted that the QEPC had formed a subcommittee to develop an educational model of what the profession should require of students in accounting education before entering the profession.  He said that the subcommittee would be reviewing New York accounting school curricula in light of proficiencies needed to enter the accounting profession including consideration of the AICPA’s “core competencies”.

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Vice Presidents’ Reports

a.    Chapters: Update and Review of Chapters Manual

Vice Presidents Piluso and Fierstein reported on the most recent chapter presidents’ conference call.  Ms. Fierstein observed that although attendance was low, call participants represented a good cross section of large and small chapters.  Mr. Piluso added that efforts were being made to reach out to members of the recently discontinued Finger Lakes Chapter.

Mr. Grumet noted that he and Mr. Pape had met with members of the Queens Chapter about ways to make that chapter more active.

b.    Recent Society Comments

Vice President Sohr noted that three sets of comments had been submitted since his last report as follows:

• Comments submitted to U.S. Senator Hillary Clinton by the NYSSCPA Estate Planning Committee and the Tax Policy Subcommittee of the NYSSCPA Tax Division Oversight Committee, chaired respectively by Mark I. Rozell and Susan Schoenfeld, relating to “The Need for Certainty in Estate Planning and Comments on Proposed Legislation;, dated July 14, 2006; Principal Drafters: Mark I. Rozell, Janice M. Johnson and Stephen A. Sacks;
• Comments submitted to the Public Company Accounting Oversight Board by the NYSSCPA SEC Practice and Auditing Standards and Procedures Committees, respectively chaired by Mitchell J. Mertz and Robert Berliner, regarding PCAOB Release No. 2006-004 - Proposed Rules on Periodic Reporting by Registered Public Accounting Firms (Docket No. 019), and PCAOB Release No. 2006-005 – Proposed Rules on Succeeding to the Registration Status of a Predecessor Firm (Docket No. 020), dated July 21, 2006; Principal Drafters: Robert W. Berliner, Jonathan Elmi, Mitchell J. Mertz and Mark I. Mycio; and
• Comments submitted to the Governmental Accounting Standards Board by the NYSSCPA Government Accounting and Auditing Committee, chaired by Warren Ruppel, regarding Preliminary Views – Accounting and Financial Reporting for Derivatives (Project No. 26-4P), dated August 3, 2006; Principal Drafter, Warren Ruppel.

President Riley commended the comment authors and their respective committees for their work.

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Treasurer’s Report

a.    Financial Statement for One Month Ending June 30, 2006

Treasurer Grusd reported on the Financial Statements for the one-month period ending June 30, 2006, noting an increase in net income of approximately $142,000.  This figure was $28,000 lower than was reported at the same time last year and was $85,000 exceeding budget.  Mr. Grusd noted however that several large revenue-generating Chapter events had been held recently and, therefore, had not yet been recorded.  Mr. Grusd noted decreased overhead and labor costs of $53,000, attributed in large part to unfilled staff positions in recruitment and industry, and employee-forfeited 401(k) match contributions from the Society.  Mr. Grumet responded that there had been normal turnover in the staff positions and that the positions were being filled as soon as possible.

Mr. Grusd continued by noting that the Society’s banking arrangement had been changed to provide for an interest-bearing sweep account which had garnered approximately $13,000 more in interest income than reported last year.  Mr. Grusd suggested that bank fees for the account be monitored and scrutinized carefully so that the income was not offset by large bank fees.  Dues were reported as on par with the prior year, and cash and cash equivalents were $5,851,729, as compared to $4,663,792 last year.  Total Liabilities and Net Assets were $10,661,003, as compared to $9,818,682 last year.  Mr. Grusd concluded by noting that he and staff were examining ways to improve the financial statements to better address seasonal variances.  He then handed out a list of issues relating to a multi-year financial plan and asked Executive Committee members for their feedback.

The Executive Committee discussed the Society’s financial support of member education and outreach as a Society membership program entrusted to the Foundation for Accounting Education.  Several viewed the arrangement as an investment in the Society’s membership, while some cautioned that the Society should continue to be diligent about how much it allocates to FAE.  Mr. Grumet noted that professional associations typically supported the education of their membership as a member service through their educational foundations.  A member reminded the committee that the Society Board had formally made this commitment to its members a number of years ago, thus resulting in the intercompany support of FAE.  It was noted that further discussion of the issue would be held at the joint FAE and NYSSCPA boards meeting in September.

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Secretary’s Report

a.    Committees Update

Secretary Ellis reported on the Society’s committees.  He expressed approval of the current version of the Society Committees Manual, noting that he had no changes to recommend.  He said that he would review the manual again in the following year after he has spent more time working with the Society’s committees.

Mr. Ellis presented a request by the Income of Estates and Trusts Committee to change its name to the “Trusts and Estates Administration Committee.” Mr. Ellis then moved to approve the request, and Mr. Sohr seconded the motion.  The motion passed unanimously.  Ms. Kincaid did not participate in the vote.

Mr. Ellis then gave a brief overview of the committees session held during the 2006 Leadership Conference.  He said that the session was well-received and noted that approximately 50% of committee chairs attended the overall conference.

A brief discussion ensued regarding an idea to recognize past committee chairs through a plaque or other memento in recognition of their service.  Staff agreed to look into the cost associated with the suggestion.

Another discussion ensued regarding a request from the Development of the Profession Committee for guidance from the Executive Committee on its purpose and how it fitted into the leadership structure.  Mr. Riley agreed to speak directly with the chair of the committee regarding its role.

b.     Nominating Process Update

Secretary Ellis reported that eighteen petitions had been received for service on the Nominating Committee, and that a membership vote would be taken to limit the number to nine pursuant to the Society bylaws. He said a ballot was being prepared for distribution to the membership with a due date of October 20, 2006.

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Executive Director’s Report

a.    Letter of Executive Secretary Dustin to FASB
       Regarding Small Company Accounting Principals

Mr. Grumet reported on a letter to the Financial Accounting Standards Board from State Board for Public Accountancy Executive Secretary, Daniel Dustin, regarding small company accounting principals.  He also reported on a meeting he and Mr. Riley had with Mr. Dustin regarding CPE credit for an ethics program ran by the Society.

b.    Peer Review Update

Mr. Grumet gave an update on recent peer review training, noting that feedback had been positive.  He said that progress was being made to reduce the Peer Review Committee’s backlog.

c.    Dues Update

Mr. Grumet announced that 86% of membership dues had been received to date.

d.   Member Benefits Program Update

Mr. Grumet referred members to the agenda materials for a summary of in-force statistics and performance data relating to the Society’s member benefits programs.

e.    COAP Update

No oral report was given.  A written update was provided in the agenda materials with a summary of each of the nine COAP programs held, respectively, at: the College of St. Rose, Hofstra University, LeMoyne College, Long Island University, Pace University, SUNY Brockport, SUNY Buffalo, SUNY New Paltz and Westchester Community College.

f.     Trade Show Update

Mr. Grumet summarized recent press relating to the Foundation for Accounting Education’s trade show which was held in July at the midtown Hilton Hotel.  He noted that the show attracted approximately 1,300 attendees, 100 exhibitor booths, and generated $381,000 in revenue and a profit of approximately $95,000.

g.   State Society Cooperative Computer System Update

No update was given.

EC06 – D – 8
Operations Division Committee Report

a.          Member Benefits Report

Don Kiamie, Chair of the Member Benefits Committee, gave a presentation on the activities of his committee, including a summary of several new and proposed member benefit programs.  After his presentation, Mr. Kiamie participated in a discussion of the proposed Find-A-Member program and of a request by Pearl Insurance, the Society’s insurance program broker/administrator, for the release of certain membership birth information (summarized below).

b.         Professional Liability Insurance Committee Report

Frank Aquilino, Chair of the Professional Liability Insurance Committee, gave a presentation on the work of his committee in overseeing the contractual relationship between the Society and CAMICO Mutual Insurance Company, noting that CAMICO was the Society’s exclusively endorsed provider of CPA liability insurance.  He summarized several aspects of the relationship including marketing and loss prevention education.  The committee also discussed claims statistics.  A member asked about the role of Andrew Eassa and Gerry Golub on the CAMICO Board.  Mr. Grumet noted that although they did not sit on the CAMICO Board itself, they sat on several committees of the CAMICO Board as Society representatives.  He said he would get back to the committee with the specific committees.

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Audit Committee

a.         Review of Tentative Audit Report

The Executive Committee met with Suzanne Jensen, Chair of the Audit Committee and Ian Benjamin, Goldstein Golub Kessler LLP (GGK) regarding the preliminary results of the organizations’ consolidated annual audit and management letter.

Ms. Jensen began by giving an overview of the process by which the audit committee worked with GGK and with management during the audit of the NYSSCPA, Foundation for Accounting Education, Inc. and the NYSSCPA Benevolent Fund, Inc.  She reported that the audit proceeded in standard fashion and that, despite two minor and immaterial changes, there were no major differences between the preliminarily audited statements and those presented by staff to GGK.  She then noted several key aspects of the audit, including the first full audit of the Society’s 401(k) plan in several years.  She added that the process included an executive session between the audit committee and GGK, and that both had received the full cooperation of staff during the process.

Mr. Benjamin then gave several highlights of the audit.  He reported that the audit risk areas of 1) revenue recognition and deferral, 2) accounting for restricted contributions, 3) salaries and related expenses, and 4) travel and entertainment expenses, required no significant adjustments.  In addition, he said that there were no significant changes in previously adopted accounting policies or their application within the organization, and that there were no disagreements with management relating to any material matters.  He noted that the quality of the organization’s accounting department function had improved significantly since GGK’s first year as auditor.

Mr. Cheung then provided a summary of the supplementary consolidating schedule of activities, which was presented with the auditor’s report for additional analysis.  He noted that cash and cash equivalents stood at $4,549,833 as of May 31, 2006, as compared to $2,565,561 as of May 31, 2005.  He attributed the increase to the earlier mailing in 2006 of dues notices as compared to the 2005 mailing which had been delayed pending Board approval of dues increases.  He then pointed to the increase in investments was partially due to the delay in wiring $200,000 into the cash reserve fund in June 2005 for fiscal year 2005 because of the officer approval process.  He reported prepaid expenses of $352,035, as compared to $195,931 last year, attributing the increase to FAE trade show booth sales.  He also pointed to an $84,378 capital lease obligation which did not exist as of the year end 2005 due to the acquisition of leased computer equipment in December 2005.  A change in net assets was reported at $624,353, as compared to $569,691 at the end of last year.  An intercompany contribution from the Society to FAE of $847,415 was noted.

The committee suggested by consensus that previously published consolidating statement of activities of the prior year be provided in the statements going forward.

The Executive Committee then discussed the draft management letter, which included a recommendation by the auditors that the organizations’ respective boards adopt policies addressing the write-off of receivable balances from related parties.  The Executive Committee by consensus recommended the adoption of such a policy by both the FAE and NYSSCPA Boards.

Ms. Jensen raised an issue regarding chapter expense documentation that did not rise to the level of the management letter.  She noted that chapter expense documentation presented several challenges, but that staff had handled the challenges well.  She noted that the audit committee recommended chapters be given the option for staff to perform their reconciliations.

After discussion of the audit, an executive session was held with Ms. Jensen and Mr. Benjamin. No resolutions resulted.

b.         Composition of the Audit Committee

The Executive Committee discussed the composition of the audit committee and the fact that it was not a committee of the organization’s Board of Directors.  Mr. Benjamin suggested that the audit committee be composed of board members because of their inherent fiduciary responsibility to the organization.  Several responded, however, that the audit committee had purposely been formed as a committee external to the board in order to preserve independence.  A discussion ensued regarding the governance standards for organization audit committees in general.  Mr. Benjamin stated it was unusual for an audit committee to be separate from a board.  Ms. Jensen stated that the audit committee was recommending external legal counsel be obtained to advise the audit committee and the board regarding the best practices on this issue.

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Revisions to 2006-2007 Budget

Mr. Grusd presented a summary of proposed revisions to the 2006-2007, capital budget, noting that the original budget was based in part on the Society’s reacquisition of additional office space from its 19^th floor subtenant.  He said, however, that because the subtenant indicated it was not interested in relinquishing the space, the budget revisions were necessary to address the resulting effect on capital and program expenses. Mr. Grusd said the amendment would represent a $151,000 total change in the capital budget as follows:

1.  $200,000 reduction in leasehold improvements for proposed build-out of 19^th floor;

2.  $54,000 increase in leasehold improvements for bathroom construction on 19^th floor;

3.  $10,000 reduction in video conferencing costs; and

4.  $5,000 increase in furniture costs.

Total = $151,000

Mr. Grusd then summarized amendments to the operating budget relating to labor and overheads.  He said that the net result would be a decrease of $1,650 broken down as follows:

1.  $20,000 increase in salaries;
2.  ($15,000) reduction in 401(k) plan contributions;
3.  ($137,468) increase in rent income from subtenant;
4.  $15,000 increase in repairs and maintenance;
5.  $18,000 increase in depreciation-furniture and equipment;
6.  ($18,000) change in amortization of leasehold improvements;
7.  $21,000 change in depreciation-data processing;
8.  $30,000 increase in credit card service fees; and
9.  $53,000 increase in bank service charges.

Total increase in labor costs and overheads         ($13,468)
Less Portion allocated to FAE and PAC              $11,818
Bottom Line impact                                                  ($1,650)

Ms. Fierstein moved to approve the revisions to the 2006-2007 capital and program budgets as presented, and Mr. Sohr seconded the motion.  The motion passed unanimously.  Ms. Kincaid did not participate in the vote.

Mr. Grusd noted that staff had prepared a projection of FAE’s financial position for the 2006-2007 year, based on its current revenue and expenses to date.  As background, he reminded the committee that the 2006-2007, budget for the Society included a grant to FAE of $491,579, a decrease from the prior year’s amended budget which called for a grant of $847,415.  He said that based on very preliminary figures, staff was projecting FAE would require approximately $147,421 more than the originally budgeted amount.  He said that staff would continue to monitor FAE projections throughout the year and keep both the FAE and NYSSCPA boards apprised.

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Member Benefits

a.         Proposal for Find-A-Member Program

Mr. Pape presented a summary of a recommendation by the Member Benefits Committee to establish a “Find-a-Member” program, which would allow members of the public to use the NYSSCPA website to search for the services of a CPA.  He noted that New York State law indemnified professional associations such as the Society from liability for such referrals so long as the service were free to the public and without the organization’s endorsement of the CPAs referred.

A discussion ensued about CPAs holding themselves out as having expertise in certain areas, and whether such claims should be verified before members were allowed to participate in the service.  Several expressed discomfort with the characterization of the service as a “referral” service and suggested that the program instead be offered as a free advertising service.   No vote was taken on the program; however, the Executive Committee by consensus suggested that the Member Benefits Committee reconsider its recommendation.

b.         Request for Reconsideration of Limitation on
            Information Made Available to Pearl

Mr. Pape presented a request by Pearl Insurance, the broker/administrator of a number of the Society’s member insurance programs, for reconsideration of a limit placed on member information provided to it for marketing purposes.  He said that the Executive Committee had previously approved providing Pearl with members’ years of birth for insurance marketing purposes; however, it limited birth information to the year of birth only, due to concerns about identity theft.  Mr. Pape explained that, according to Pearl, the most effective and efficient way to market the Medicare Supplement plan to members was to contact them within 60 to 90 days of their turning 65, which was when persons generally began shopping for that type of insurance.  Mr. Pape said that the Member Benefits Committee had considered Pearl’s position and recommended that the Executive Committee lift the limitation by providing Pearl with the month of birth in addition to the year.

A discussion ensued.  Mr. Lifson reminded the committee that the Society’s relationship with Pearl was governed by a contract which provided for strict confidentiality and strict limits on its use of any member information provided to it by the Society.  He expressed support for the recommendation.

Mr. Lauchert moved to approve Pearl’s request that the Society provide members’ month of birth in addition to the already-provided year of birth, for the sole purpose of marketing the Society-endorsed Medicare Supplement plan.  Ms. Cutler seconded the motion.  The motion passed.  Messrs. Ellis, Falbo, Piluso, Sohr and Stubbs were opposed.

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Investment Policy: Review and Re-approval

Mr. Cheung presented the Society’s Investment Policy, which was included in the agenda materials.  He noted that the policy had not been changed since it was last approved.  A discussion of the policy ensued, during which a number of changes were suggested.  The Executive Committee deferred its approval of the Investment Policy by consensus pending the investment committee’s consideration of the suggested changes.

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Membership Report

Mr. Pape presented the Membership Report as of August 25, 2006 which included 157 new members (including 76 new associate members), 12 reinstatements, and 73 resignations and 18 deaths. These changes reflected a total membership of 29,478 as compared with 30,306 at approximately the same time the previous year.

Mr. Falbo moved to approve the Membership Report and Ms. Fierstein seconded the motion.  The motion passed unanimously.  Ms. Kincaid did not participate in the vote.

Mr. Pape distributed member data forms to the committee for its information, noting in particular the data fields on the form for members to indicate their areas of expertise.  A committee member asked what percentage of members checked off a box on their data form agreeing to be included in Society affinity program mailings.   Mr. Pape agreed to obtain that figure and report back to the committee at a later time.  Mr. Pape also summarized the process used to collect dues from delinquent members, and announced that the New York State Education Department had agreed to release a list of New York licensed CPAs to the organization subject to the finalization of a contract prohibiting certain types of solicitation by the organization.

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Executive Session

The Executive Committee held an executive session as part of its discussion of the audit.  No resolutions resulted.

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Adjournment

There being no further business, the meeting adjourned by consensus at 2:46 p.m.