* participated by conference telephone

03 – F – 00
Call to Order

03 – F – 01
Minutes

Mr. Hoops asked Board members if they had any changes to the minutes of the September 24, 2003 Board of Directors Meeting. Mr. Grusd noted that Mr. Langowski should have been fully identified as “a former Vice President”, where the minutes incompletely identified him as, “a former”. Mr. Piluso moved to approve the minutes as corrected by Mr. Grusd, and Mr. Bloom seconded the motion. The motion passed unanimously. Mr. Cohen did not participate in the vote.

Mr. Hoops then asked Board members if they had any changes to the minutes of the October 2, 2003 meeting. It was noted that Mr. Plostock was incorrectly shown as absent. There being no further corrections, Mr. Barback moved to approve the minutes as corrected, and Mr. Nowicki seconded the motion. The motion passed unanimously. Mr. Cohen did not participate in the vote.

03 – F – 02
President’s Report

a. Relocation Update

Mr. Hoops called on Mr. Grumet, who commended Steven C. Baum, Chair of the Real Estate Task Force, and Alan Schmelkin, Director of Operations, for their efforts in the Society office relocation process.

Mr. Schmelkin then gave an update on the negotiations for office space located at 3 Park Avenue, which was approved at the July Board of Directors meeting. He noted that the parties were exploring recasting the transaction from a sub-tenancy agreement to an outright lease assignment to the NYSSCPA. The revised deal further envisioned the NYSSCPA, as primary tenant, subleasing excess space back to the American Institute of Chemical Engineers while retaining the office space in which it was originally interested. Mr. Schmelkin noted that an additional advantage of the revised proposal was a right of renewal at 95% of market.

Mr. Grumet reminded the Board that due to initially-unsatisfactory financing negotiations with the Bank of New York, the Society approached Fleet Bank to see if it could better accommodate the Society’s financing needs with respect to the relocation. He noted that this resulted in a competitive process by the respective banks to retain or gain the Society’s banking business. Mr. Grumet reported that while the proposals were still being evaluated, the Society would consider transferring its banking accounts from the Bank of New York to Fleet if such a transfer would facilitate financing the relocation.

b. Chapter Visits

Mr. Hoops reported on the status of the Officers’ Visitations to the Society’s seventeen chapters, noting that thirteen had been completed thus far. Mr. Hoops stated that the visitations had been well-attended and well-received, and included topics such as the accountancy legislation passed by the New York State Senate in 2003 and plans for the next legislative session. Mr. Hoops stated that members were also encouraged to contribute to the Political Action Committee.

c. AICPA

Mr. Hoops reported that the letter from the NYSSCPA Board of Directors to AICPA Chairman William Ezzell, dated October 7, 2003, had been posted on the Society’s website and published in the November issue of The Trusted Professional. Mr. Hoops stated that the letter was generally well-received, and noted that the Executive Director of the California State Society of CPAs had publicly expressed solidarity with the New York State Society in an Op-Ed piece published in Accounting Today.

Mr. Hoops then spoke briefly regarding the AICPA Council meeting, which was held in New Orleans, Louisiana from October 19 – 22. He opined that the meeting agenda was more member- and professional association-oriented than previous years. Mr. Hoops then referred to several accomplishments of the meeting, including by-laws changes to strengthen the AICPA’s ethics enforcement process, and the continuation of the Personal Financial Specialist (PFS), Certified Information Technology Professional (CITP) and Accredited Business Valuator (ABV) credentials.

A discussion then ensued regarding the relationship between the AICPA and the media. The Board also discussed the NYSSCPA’s relationships with other state societies, including those which are dependent on the AICPA for staffing and operational support. It was suggested that the more dependent a state is on the AICPA, the less leeway such a state has to support any position other than that of the AICPA’s.

Mr. Hoops then reminded the Board that at the September 24, 2003 meeting, he had formed a task force to recommend ways of improving communication between the NYSSCPA Board of Directors and AICPA Council Members from New York. Volunteering for the task force were Mr. Evangelista, Ms. Golden, Ms. Napoleon-Hudson and Ms. Dwyer.

Ms. Napoleon-Hudson summarized the task force recommendations as follows:

• Recommended appointing three Board members, who are neither NYSSCPA Officers nor Executive Committee members, to serve as liaisons with nine AICPA Council Members from New York.
• Recommended two annual meetings of the above-mentioned twelve individuals in September and late-April, prior to full AICPA Council meetings.
• Recommended that the three liaisons attend the March regional AICPA Council meeting.
• Recommended that liaison service be limited to three-year staggered terms.
• Recommended that the three liaisons be selected by the Selections Subcommittee of the Board.
• Recommended that outgoing Board members serving as liaisons be invited as guests to future Board meetings for the duration of their liaison term.
• Recommended that a NYSSCPA membership survey be conducted regarding any issues with the AICPA as the profession’s national organization.
• Recommended further developing relationships with other state society boards of directors.

Ms. Napoleon-Hudson noted that although the last recommendation might be considered as outside the task force’s charge, relationships with other state society boards might nonetheless enhance communications at the AICPA Council level.

Ms. Kirby moved that the Board accept the recommendations of the task force, and Mr. Sypolt seconded the motion.

In the ensuing discussion, Ms. Golden cautioned the Board not to create a layer of bureaucracy by adopting the recommendation, and expressed support for a more informal process. The Board then discussed whether the process should be less formalized than as recommended by the task force.

Mr. Evangelista pointed out that although AICPA Council positions from NY are formally recommended by the NYSSCPA, those selected are not Society “delegates” per se; accordingly, the Society could not mandate that the council members from NY cooperate in any specific way with the NYSSCPA Board, but rather could only encourage their participation in the spirit of shared objectives. A member suggested that the Society define clearly to its Council nominees a friendly obligation to keep apprised of NYSSCPA positions as communicated to them by the Board liaisons. Several members agreed with this approach.

Following discussion, a vote was taken and the motion to approve the task force’s recommendation was approved 13 to 12. Mr. Cohen did not participate in the vote.

03 – F– 03
Treasurer’s Report

a. Financial Statements for the Five Months Ending October 31, 2003

Mr. Bloom presented the Treasurer’s Report, noting that combined NYSSCPA and FAE income for the period ending October 31, 2003 was $556,000. Net income is ahead of budget by $356,000. Cash and equivalents stood at $3.75 million as opposed to $3 million in the previous year.

b. Internal Controls Review

Mr. Bloom reported that requests for proposal had been mailed to 25 firms to solicit proposals for the Society’s internal control audit engagement.

c. Benchmarking Data – Six Largest State Societies

Ms. Chambers shared with the Board the results of benchmarking data which she had compiled for the six largest state societies: New York, California, Texas, Illinois, Pennsylvania and Florida. The information included both balance sheet and revenue statement data points, as well as the number of members, committees, CPE program attendees, website hits and employees.

03 – F – 04
President-elect’s Report

a. Annual Election Dinner

Mr. Kearney announced that the Annual Election Dinner would be held on May 13, 2004 at the Marriot Marquis, with guest speaker Harvey Goldschmidt, a member of the Securities Exchange Commission.

b. Chapter Workshop

Mr. Kearney announced that the annual Chapter Presidents-elect workshop would be held at the Society’s offices on January 26, 2004.

c. Peer Review and Ethics Task Force Update

Mr. Kearney gave a brief update on the report of the Peer Review and Ethics Task Force, which had been e-mailed to members for comment. He reported that approximately twenty comments had been received thus far, and he would report the comments in more detail at the next meeting of the Board.

03 – F – 05
Vice Presidents’ Reports

a. Chapters Update

Vice Presidents Napoleon-Hudson and Nowicki gave reports on the Society’s seventeen Chapters.

b. Legislative Update

Mr. Grumet reported that the Society and the Big Four accounting firms had appeared to reach some consensus on possible accounting proposals for the next legislative session.

c. Professional Issues Update – Recent Society Comments

Vice President Rubin commended several committees and authors for their work on issuing Society comments as follows:

• Comments submitted by the NYSSCPA International Accounting and Auditing Committee, chaired by Robert N. Waxman, to the International Auditing and Assurance Standards Board on Proposed IAASB Exposure Draft “Review of Interim Financial Information Performed by the Auditor of an Entity”, October 1, 2003.
• Comments submitted by the NYSSCPA Financial Accounting Standards Committee, chaired by Robert Dyson, to the Financial Accounting Standards Board on Proposed Statement of Financial Accounting Standards, Employers’ Disclosure about Pensions and other Postretirement Benefits, and amendments of FASB Statements No. 87, 88, and 106 and a replacement of FASB Statement No. 132, October 22, 2003; principal drafters Fred Goldstein, Mark Mycio and Robert Dyson.
  

03 – F – 06
Executive Director’s Report

a. Insurance Update

Mr. Grumet reported that the CAMICO Mutual Liability Insurance Company, which the Society exclusively endorsed as a provider of CPA liability insurance, had reached approximately $1.6 million in annual premiums in New York, covering 329 firms and over 1,050 CPAs, which was slightly more than was reported at the September Board meeting. Mr. Grumet added that CAMICO had recently added a more aggressive broker, MLW Services, to its list of New York agents.

b. COAP Update

Mr. Grumet reported that the Society was close to an agreement with the State University of New York at Brockport to host a Continuing Opportunities in the Accounting Profession (COAP) program next year, and negotiations were under way for a program in the Northeast Chapter.

Mr. Grumet also reminded Board members that Long Island University had indicated an interest in hosting a residential program at its own cost.

In response to a question regarding COAP alumni, Mr. Pape noted that, going forward, the program would attempt to better track its alumni.

Mr. Hoops added that he had appointed Frank Fusaro to chair a newly formed COAP fundraising committee.

c. FOIL Action

Mr. Grumet reminded Board members that the State Education Department (SED) had rejected the Society’s Freedom of Information Law request for the names and addresses of newly certified accountants, reportedly due to privacy concerns, and that staff was investigating the possibility of a law suit for the information.

Mr. Grumet reported, however, that he had spoken to his colleagues at other New York professional associations, and found that the same SED policy was being consistently enforced. As a result, Mr. Grumet recommended that a law suit for the information not be pursued at this time.

d. CPA Journal and Trusted Professional

Mr. Grumet introduced Damian Voerg, the Society’s Art Director, to give a presentation on the new design of The CPA Journal scheduled to begin with the January issue. In giving his presentation, Mr. Voerg pointed out that the design objective was to provide a more contemporary feel of the magazine while making it easier to read.

Mr. Grumet then announced that starting in February and running through and including the April issue, The Trusted Professional would be published twice per month, in order to address such issues as more-timely Chapter event announcements and more up-to-date reporting of state legislative sessions. Mr. Grumet added that during slow summer months, the newspaper would return to its monthly schedule. In response to a question, Mr. Grumet noted that the change in publication schedule would not affect staffing. Ms. Barry added that the additional issues would cost the Society approximately $8,000 more per month in production and mailing costs.

In response to a question regarding advertising, Ms. Barry noted that she was communicating with the Society’s ad agency regarding any contractual issues with advertisers that might arise from a more frequent publication schedule.

On another front, Mr. Grumet added that the website had achieved a rate of four million hits per month in high volume months.

a. NYSSCPA Board Designees to Serve on NYSSCPA Nominating Committee

Mr. Hoops noted that the Nominating Committee under the recently approved Society Bylaws consists of nine members who are nominated by petition (“Petitioners”) and two directors who are designated to serve by the Board. He also stated that the Board is empowered to fill any vacancies among the Petitioners with qualifying members (qualifying members must have been members of the Society for five years, served on either statewide committees or chapter executive boards for a collective total of at least two years, and not be a currently sitting Board member or a member of either of the last two Nominating Committees.)

Mr. Hoops noted that in years past the President had selected the Board designees, which selection was then adopted by the full Board. The Bylaws Revision Task Force had suggested a more open approach utilizing a Board subcommittee to nominate directors as Board designees, then permitting the Board itself to add to the nominees and finally conducting an election by the Board. Mr. Hoops noted that although formal approval of this approach had not yet occurred, he thought it a good idea and he had appointed a Selections Subcommittee chaired by President-elect Kearney. He then turned the floor over to Mr. Kearney to present the Selections Subcommittee’s report.

Mr. Kearney noted that the following eight individuals had submitted petitions by the cutoff date:

• Anthony Cassella
• Joseph L. Charles
• Phyllis R. Graybow
• Arthur S. Hoffman
• Norman W. Lipshie
• James F. Passikoff
• Joel C. Quall
• Maryann M. Winters

Since only eight petitions had been received proposing members to serve on the Nominating Committee, the Board had one vacancy to fill along with the two Board members that needed to be designated.

A discussion ensued as to whether Mr. Hoffman, who is associated with GGK, LLP, the Society’s incoming auditing firm, should appropriately sit on the Nominating Committee charged with selecting individuals who would be officers and directors of the Society at the time the audits would be performed. Messrs. Hoops and Grumet said they would raise the issue with GGK.

Regarding the elections to follow, Mr. Kearny stated the recommendation of the Selections Subcommittee that in the event one or more of the persons selected by ballot to serve on the Nominating Committee is later unable to serve, the person or persons receiving the next most votes should automatically be deemed to be the Board’s choice to fill the resulting vacancy.

At this point, Mr. Kearney, on behalf of the Selections Subcommittee, placed into nomination the following individuals to serve as Board-designated members of the Nominating Committee:

• Rosemarie A. Barnickel
• Mark Ellis
• Raymond P. Jones
• Robert E. Sohr

Mr. Hoops then asked the Board if there were any additional names any directors wished to place in nomination. There being none, Mr. Hoops declared the nominations closed. An election was held and Messrs. Ellis and Sohr received the most votes to serve as the Board-designated members of the Nominating Committee.

In accordance with the Selections Subcommittee’s recommendations, there was a consensus that if either Mr. Ellis or Mr. Sohr, or both, later vacated their position(s) on the Nominating Committee, the person(s) who received the next most votes in the ballot just conducted should fill the vacancy. Mr. Woehlke was directed to retain the record of the election until the day after the Nominating Committee completed its work.

Mr. Hoops then opened the floor for nominations to fill the vacancy among the Petitioners to the Nominating Committee. The following names were placed into nomination:

• Ronald Benjamin
• Franklin H. Federmann
• Myrna L. Fischman
• Ronald J. Huefner
• Ian M. Nelson
• Nancy Newman-Limata

Mr. Hoops again asked the Board if there were any additional nominees. There being none, Mr. Hoops declared the nominations closed. An election was held and Mr. Nelson received the most votes to fill the ninth position on the Nominating Committee.

Again, in accordance with the Selections Subcommittee’s recommendations, there was a consensus that if Mr. Nelson later vacated his position on the Nominating Committee or if another of the Petitioners vacated his or her position, the person(s) who received the next most votes in the ballot just conducted should fill the vacancy. Mr. Woehlke again was directed to retain the record of the election until the day after the Nominating Committee completed its work.

b. NYSSCPA Recommendations for AICPA Council

Mr. Hoops stated that in many years past AICPA Council members were selected by the President. During Ms. Golden’s presidency this approach was improved significantly by opening the process to Executive Committee discussion and approval.

The Bylaws Revision Task Force had recommended that a standing rule be adopted to greatly expand the approach to involve the entire Board. Mr. Hoops said he had decided to adopt this approach pending action by the Board on the recommendation. In addition, he had e-mailed the entire membership soliciting interest in the Council positions. The Selections Subcommittee had received over 80 expressions of interest and had the chore of winnowing that number down.

Mr. Hoops then turned the floor over to Mr. Kearney to review the open positions on Council and describe the deliberations of the Selections Subcommittee. Mr. Kearney noted that the NYSSCPA is permitted to recommend or designate a total of ten people to serve on the Council, the AICPA’s governing body. Nine of these individuals, referred to as directly-elected Council members, are “recommended” to the AICPA Nominating Committee and serve three-year terms on a rotating basis. In January, 2004, the AICPA would request the names of four individuals to fill vacancies of directly-elected Council members whose terms will be ending in 2004. In addition, the Society is empowered to “designate” one Council member each year who serves a one-year term.

Mr. Kearney summarized by saying that there would be five vacancies on AICPA Council that the Board needed to act upon. He reported that the Selections Subcommittee recommended that one of those positions be reserved for the person who will be nominated as the Society’s President-elect. Mr. Sypolt moved and Mr. Riley seconded that one position as a directly elected member of Council be reserved each year for the Society’s President-elect, who would serve on an ex officio basis, meaning that if he or she is either not ultimately elected or later ceases to serve as Society President-elect or President, he or she will then resign his or her position as Council member. Following discussion, the motion carried unanimously.

Mr. Hoops then noted that Mr. Kearney was not presently a member of Council and further that his name had not been put forward by the Selections Subcommittee. Mr. Hoops said he believed service on Council was important to be an effective Society President. Ms. Golden echoed that view and moved that Mr. Kearney be recommended by the Board to serve as a directly elected member of Council. Mr. Barback seconded the motion. Following discussion, the motion carried unanimously. Mr. Kearney did not participate in either the discussion or the vote on this motion.

Mr. Kearney then resumed the floor and noted that there were two positions remaining to be filled as directly elected Council members and one as the Society-designated Council member. He noted the Selection Subcommittee’s recommendation that an election be held and that the individuals receiving the highest vote would then become the Society’s recommendations for directly-elected Council members and the person receiving in this case the third most votes would become the Society-designated Council member. It was the subcommittee’s further recommendation that if one of the persons receiving the greatest votes later was nominated for president-elect or withdrew from consideration for Council, the top vote-getters would be redetermined, eliminating the name of the president-elect candidate or withdrawing member.

In behalf of the Selections Subcommittee, he placed the following eight names into nomination:

• Frank Aquilino
• Peter L. Berlant
• Philip B. Chenok
• Arthur F. Dignam
• Carol C. Lapidus
• Vincent J. Love
• Ilene Leopold Persoff
• Thomas E. Riley

Mr. Hoops asked the Board if there were any additional nominees and Mr. Elliot L. Hendler’s name was added to the list. Mr. Hoops again asked for additional nominees. There being none, Mr. Hoops declared the nominations closed. An election was held and the two individuals receiving the greatest votes were Messrs. Berlant and Love, who will be put forward as NYSSCPA recommendations to the AICPA Nominating Committee for consideration as directly-elected Council members from New York. Mr. Riley received the third most votes and will become the Society-designated Council member for 2004-2005.

It was again the consensus that if one of the persons receiving the greatest votes later was nominated for president-elect, or withdrew from consideration for Council, the top vote-getters should be redetermined, eliminating the name of the president-elect candidate or withdrawing member. Mr. Woehlke again was directed to retain the record of the election until the day after the 2004 Annual Election Meeting. This date was set for the destruction of the ballots because if a vacancy occurs following that date, the consensus was that a new election should be held.

Mr. Hoops congratulated the individuals selected by the Board and the Board as a whole for its participation in the process to select members of Council.

Mr. Hoops noted that the Executive Committee, at its October 15, 2003 meeting, recommended that the Board approve a Communications Policy.
Mr. Nowicki moved to approve the policy as recommended by the Executive Committee, and Mr. Evangelista seconded the motion.
In the ensuing discussion, however, several members raised concern over certain inconsistencies with communications guidelines and timeliness issues.

Ms. Golden then moved to postpone the motion until the next Board meeting, and Mr. Bloom seconded the motion. The motion to postpone passed unanimously. Mr. Cohen did not participate in the vote.

Mr. Pape presented the Membership Report which included 385 new members (including 263 new associate members), 3 reinstatements, 15 deaths, 1,741 terminations and 53 resignations. These changes reflected a total membership of 28,925 as of November 18, 2003 as compared with 30,097 at the same time the previous year, which did not reflect the prior year’s 1725 terminations for non-payment of dues.

Ms. Golden moved to approve the Membership Report, and Mr. Piluso seconded the motion. The motion passed unanimously. Mr. Cohen did not participate in the vote.

a. Operations

Mr. Schmelkin reported that FAE conferences were proceeding well, garnering 350 more participators than expected. In addition to higher than budgeted attendance figures, POP usage is less than anticipated; therefore, FAE operations are more profitable.

b. Scholarship Fund

Ms. Golden reviewed several then-circulating proposals to merge the NYSSCPA Benevolent Fund and the FAE Scholarship Fund. These proposals were in the discussion stage.