Minutes

The meeting was called to order at 2:30 P.M.

Discussion on Debbie Cutler’s memo to the Audit Committee dated August 31, 2006

Chair Suzanne Jensen explained the purpose of the conference call was to discuss and address a memo dated August 31, 2006 issued to the Audit Committee from Ms. Debbie Cutler, a NYSSCPA Executive Committee member.

Code of Conduct:
Chair Jensen noted that the code did not exist but recommended that it should be established by the Board of Directors rather than by the Audit Committee, as had been suggested by Ms. Cutler.

Audit Committee Charter:
Chair Jensen noted that the Audit Committee’s Action Plan (“CAP”) was fairly brief. She asked that the Society staff look at other non-profit organizations for detailed audit committee responsibilities. Ms. Susan Barossi asked if the Audit Committee should have a meeting to discuss the charter. Mr. Joseph Charles suggested that it should be a function of the Board to adopt a charter and a function of the Audit Committee to implement it. Ms. Barossi further suggested the Audit Committee provide input and review before implementation. Mr. Ian Benjamin agreed that it could be a collaborative effort of the Audit Committee, Board and staff to formulate the charter.

Size and Term Limits:
Chair Jensen recommended that the committee’s charter address the number of members to serve and that term limits be staggered to maintain continuity. The Audit Committee recommended to the Executive Committee and the Board that a representative from both the Society Board and the FAE Board be appointed to the Audit Committee.

Meetings:
Chair Jensen stated that meetings of the Audit Committee were dependent upon the timing of the audit and the availability of Committee members. Ms. Barossi commented that previously the audit committee had met twice, however they could convene at any time, if necessary. Society General Counsel James Woehlke asked Mr. Benjamin if the Audit Committee typically engaged auditors for non-profit organizations. Mr. Benjamin replied that while various protocols exist in the nonprofit sector, the Society’s bylaws state that the Board appoints the Society’s auditors. All Committee members agreed that the Audit Committee should make the recommendation of the audit firm and the Board should make final the decision.

Ms. Michele Levine excused herself about 2:50 P.M.

Mr. Woehlke reminded the committee that the Board is meeting on September 21st to review and accept the audited financial statements. In advance of that meeting the Audit Committee should also make a recommendation regarding the audit firm selection for the coming year.

Executive Sessions:
Chair Jensen discussed with the committee the protocols for executive sessions. The committee concluded that an executive session should be held at one or all of the audit committee meetings. Chair Jensen reminded the committee members that an executive session was held on both the July 25, 2005 and the August 24, 2006 meetings and was so reflected in the minutes.

Financials/Conflict of Interest Statements:
Chair Jensen commented that the Audit Committee should not be responsible for reviewing the budget, as this is handled by the Finance Committee. The committee agreed and also felt that conflict of interest disclosure statements should be reviewed by the general counsel, rather than by the Board or the Audit committee.

Internal Controls:
Chair Jensen suggested that the Board determine the role of the Audit Committee in relation to internal controls, or delegate authority through the charter. The audit committee members felt it was appropriate for them to inquire as to the reliance on internal controls, as related to the level of testing to be done during an audit. It was also felt, as good protocol, that the Board should determine if an outside review of internal controls was needed at the present time and how often it should be repeated.

Revised Finance Policy:
Chair Jensen asked Mr. Adam Cheung to elaborate on the clause quoted in Ms. Cutler’s memo regarding a “revised finance policy”. Mr. Cheung explained that management’s emphasis on internal controls over assets and accounting reporting was reflected in the finance policy and procedures document revised in March 2006. This document enhanced controls over most significant risk areas. Mr. Cheung informed the committee that a copy had been sent to Mr. Adam Reiss, an audit partner of GGK overseeing the Society’s audit for fiscal year 2005, for a courtesy review and positive comments were received.

Fraud Issues:
Mr. Woehlke responded that currently there was no hotline for reporting fraud but there was a mechanism in place for any harassment or other staff concerns. Technically it would not be considered a formal whistleblower policy. Chair Jensen added that the Board should consider adopting a formal whistleblower policy. All Committee members agreed that the Audit Committee would inquire about any instances of fraud in conjunction with performing their roles and responsibilities.

Exit Interviews:
Human Resources should conduct exit interviews with all outgoing staff. Any issues should be reviewed by HR and discussed with the General Counsel.

Mr. Benjamin excused himself at 3:10 P.M.

Information Retention Policy (IFP):
Mr. Woehlke responded that the Board approved the policy in 2004. The policy is reviewed each year for continued applicability. The committee agreed that this is not an audit committee function.

Mr. McCoy suggested that prior to recommending GGK as the auditor for the next fiscal year, the engagement letters be reviewed. The committee agreed.

Mr. Louis Grumet joined the conference call at approximately 3:10 pm. In response to an inquiry by the audit committee, he commented that GGK was prompt and responsive during the audit and throughout the year.

With no further business to be discussed, the conference call was adjourned at 3:20 P.M.

Respectfully submitted,

Adam Cheung

Approved by Chair Jensen January 2, 2007