Minutes

The meeting was called to order at 9:40 A.M.

Approval of Meeting Minutes

The Committee members reviewed and approved the minutes of the July 19, 2006 meeting.

Required Auditor Communications

Mr. Ian Benjamin distributed a draft of the Consolidated Financial Statements for the fiscal year ended May 31, 2006 and began his presentation. He informed the Committee that this was the third audit of the Society by GGK. He highlighted that GGK issued an unqualified opinion for the years ended May 31, 2006 and 2005. He also noted that GGK received full cooperation from the Controller. There were no significant changes in accounting policies.

Chair Suzanne Jensen asked if an outside firm reviewed the Executive Director’s expenditures. Mr. Louis Grumet answered affirmatively.

Mr. Benjamin stated that the only adjustment was a reclassifying journal entry. Mr. Adam Cheung added that the entry was to reclassify a Chapter’s account receivable to cash. Mr. Benjamin recommended that if the Chapter Treasurers do not perform their role properly, the Society should centralize the cash management and accounting. Ms. Levine suggested that the Society staff offer to provide accounting and bookkeeping assistance to those Chapters who need it. Ms. Susan Barossi commented that it did not seem to be a major problem at the Chapter level, but it would be nice to offer help. Mr. Grumet stated that the Audit Committee could make this recommendation to the Board and the committee agreed to do so.

Mr. Grumet noted that the Society’s contract review system had extended to the Chapters’ level since last year. Ms. Michele Levine asked if there were any objections from Chapters in legal review. Mr. Grumet replied that only a few Chapters objected initially.

Audited Financial Statements - Draft

Mr. Cheung presented the Draft Audited Financial Statements to the Committee members. During his presentation Committee members raised the following issues:

Mr. Charles inquired about the flat rate of growth in membership. Mr. Grumet answered that the Society recruits about the same number of new members as those lost. He also noted that there has been an increased recruitment effort for younger members.

Mr. Charles asked about the decline in in-firm sales. Mr. Grumet responded that the marketing efforts targeted to industry CPAs were not as popular as planned. In fiscal year 2007 marketing will be focused back to CPA firms.

Chair Jensen inquired about the methodologies of allocating functional expenses used by the Society. Mr. Benjamin answered that the methodologies used are reasonable and appropriate.

Mr. Charles asked if GGK passed on any journal entries. Mr. Benjamin responded that any journal entry made was presented by Mr. Cheung and that GGK did not pass on any entries.

In conclusion, the Committee discussed the 401(k) Plan audit and the management letter for fiscal year 2006. Mr. Benjamin also noted that the 401(k) plan audit was issued and they had filed for an extension on the return.

Mr. Benjamin stated that during the fiscal year, the Society wrote off a receivable from a related party that was approved by the Executive Director. He recommends that a write-off of this nature should require Board approval and that the Society should develop a policy surrounding related party transactions Management agrees and will adopt a new policy for writing off related party receivables.

Mr. Benjamin informed the Audit Committee that last year GGK recommended that management assess its policy for the use of its restricted funds (Scholarship Program and Benevolent Fund). Mr. Grumet explained that the Society is trying to merge the Benevolent Fund into the Foundation with $100,000 fund balance restricted for benevolent fund purposes and the rest for scholarships. This requires approval by the Charities Bureau and a New York Supreme Court.

Other Business

Mr. Joseph Charles asked if GGK had recommended the creation of an audit committee charter. Composition of the audit committee was also discussed. As background, Mr. Benjamin replied that California State Law allows nonprofit organizations to have non-board members sitting on their audit committees. Mr. Grumet suggested that the Audit Committee CAP be incorporated into a charter. Mr. Benjamin further suggested that the Committee could recommend to the Board of Directors that an outside legal opinion on this matter be obtained. Chair Jensen also suggested having a Board member other than the Treasurer sit on the Audit Committee. Discussion ensued and it was decided to recommend to the Board that at least one member of the (1) Society Board and (2) FAE Board be appointed to the audit committee.

An Executive Session was called by the Committee from which the management and staff were excluded.

Next Meeting

The Audit Committee members did not determine the next meeting.

With no further business to be discussed, the meeting was adjourned at 11:10 AM.

Respectfully submitted,

Myoshi Moore

Approved by Chair Jensen January 2, 2007