Minutes

The meeting was called to order at 9:30 A.M.

Introduction

Chair Warren Ruppel asked the Committee members to introduce themselves and briefly discuss their backgrounds.

Committee Action Plan (CAP)

The Audit Committee Action Plan was reviewed and unanimously approved.

Audit Plan

Mr. Adam Reiss of Goldstein, Golub, and Kessler (GGK) distributed the Audit Plan for the fiscal year ended May 31, 2005. He noted that there would be continuity in the staffing of the audit team, with the same audit manager and senior auditor and also noted that Adam Cheung, Controller, had already prepared draft financial statements for fiscal year 2005.

During his presentation of the Audit Plan, the following questions were raised by the Committee members:

Mr. David Ashenfarb asked if GGK would perform any detailed testing.

Mr. Adam Reiss answered that internal control risk was assessed at the maximum level due to the small size of the accounting department. The auditors would not rely on the internal control but would perform substantive procedures that would include detailed testing. GGK would also read all Board minutes as well as those of other governing committees.

Ms. Junia M. Perez also added that GGK conducted interviews as required by SAS99 with all department heads last year. GGK will update these interviews during fieldwork.

Mr. Mark Hettler questioned the decrease in deferred dues. Mr. Adam Cheung explained that the decrease was due to sending out the annual dues billing more than a month later than the prior year (mid-May 2005) after the Board approved a 10% increase in member dues in April 2005.

Mr. Henry Krostich asked if the Society Chapters were late in providing bank reconciliations to the staff. Mr. Adam Cheung responded that not all reconciliations were received. However, the staff received Chapter bank statements and performed bank reconciliations for those Chapters that did not.

Chair Ruppel questioned if the staff wrote off any fixed assets during the fiscal year 2005. Mr. Adam Cheung noted that the leasehold improvements for the previous office space at 530 Fifth Avenue were totally written off and that other fully depreciated and amortized assets were also written off after review by Mr. Alan Schmelkin, the Managing Director of Operations.

Chair Ruppel inquired about the allocation between Program and General and Administration Expense. Mr. Adam Cheung explained that overhead costs were allocated based upon direct labor dollars. Mr. Adam Reiss added that the NYSSCPA staff may look at other methodologies such as occupancy use. Chair Ruppel stated that there were benefits in maintaining consistency in allocating expenses. Mr. Adam Cheung added that the Society allocated 18% of base rent expense to the Foundation for Accounting Education (FAE) before allocating the remaining occupancy costs.

Mr. David Ashenfarb asked if GGK would review the tax liability. Mr. Adam Reiss answered affirmatively.

Ms. Suzanne Jensen questioned why the NYSSCPA PAC (PAC) was audited by another audit firm. Mr. Adam Cheung answered that the decision was made by the PAC trustees.

Chair Ruppel recalled an auditor’s comment in last year’s management letter that a speaker did not submit expenses until years later and a liability had not been recorded. Mr. Adam Reiss commented that this issue could have been avoided by analyzing the profit and loss, by program, for FAE. Mr. Adam Cheung noted that when he was hired the Executive Director gave him two major goals, one of which was to provide management with a proper accounting of FAE’s profit and loss by program, which would have highlighted this problem.

Mr. Mark Hettler noted that there were balances in the intercompany receivables and payables in the consolidated balance sheet as of May 31, 2005. Mr. Adam Cheung explained that these would be eliminated in the consolidated financial statements. Additionally, payments were made to eliminate these balances after the financial statement date issued in early July.

Chair Ruppel noted that most management letter issues appear to have been addressed, except that Chapter activities needed additional work. Mr. Henry Krostich asked why all Chapters do not use the same bank as the Society and Ms. Suzanne Jensen asked how many Chapters are using Bank of America. Mr. Adam Cheung responded that 12 out of 17 Chapters used Bank of America, but some Chapters did not have a Bank of America branch nearby.

Chair Ruppel added that he would be communicating the Audit Committee activities to the Society’s Board of Directors and Executive Committee. He also asked all Audit Committee members to complete the Conflict of Interest Statement. Mr. Adam Cheung distributed the form.

The Audit Committee members did not determine the next meeting but agreed to meet about 2 weeks before the presentation to the Society’s Board of Directors.

With no further business to be discussed, the meeting was adjourned at 10:40 A.M.

Respectfully submitted,
Adam Cheung

Approved by Chair Suzanne Jensen August 23, 2006