04 – D – 00
Call to Order

04 – D – 01
Minutes

a. Approval of Minutes of Board of Directors September 22, 2004, Meeting

Mr. Kearney asked Board members if they had any changes to the minutes of the September 22, 2004, Board of Directors Meeting.
Ms. Dwyer suggested that the third sentence of paragraph three, item 04-C-04(a), which stated “. . . a non-CPA public representative would be invited to participate” be restated as “. . . two non-CPA representatives would be invited to participate.”

Vice President Berlant stated that under item 04-C-05(b), Recent Society Comments, the Financial Accounting Standards Committee and the Investment Management Committee did not actually meet over the Labor Day holiday, but did confer to complete their comments.

Lastly, Ms. Bailey-Browne asked that her last name be corrected from “Bailey-Brown” to “Bailey-Browne.”

There being no further changes, Mr. Sohr moved to approve the minutes as amended by Mr. Berlant and Mss. Dwyer and Bailey-Browne.

Treasurer Bloom seconded the motion. The motion passed unanimously. Mr. Cohen did not participate in the vote.

b. Minutes of November 16, 2004, Executive Committee Meeting for Information Only

The minutes of the November 16, 2004 Executive Committee meeting were provided in the Board agenda packet for the full Board’s information.

04 – D – 02
President’s Report

a. AICPA Council Update

President Kearney reminded Board members that the AICPA Governing Council's Fall meeting was held in Orlando, Florida from October 22 to 26, 2004. He then summarized several Council meeting agenda items as follows:

1. Revised Ethics Interpretation 101-3

President Kearney noted that 101-3 had been issued by the AICPA Professional Ethics Executive Committee to promote independence when AICPA members render non-attest services to attest clients. Mr. Nowicki added that there was a significant fear that small firms performing reviews and compilations were not aware of the documentation requirements of 101-3. He stated that a toolkit would hopefully address this concern by providing the small firm practitioner with a check-the-box list of issues they need to address. He announced that he and Mr. Cohen had authored an informational piece and toolkit regarding 101-3 which was scheduled for publication in the January issue of The Trusted Professional. In response to a Board member suggestion, Mr. Grumet stated that the informational piece would also be published on the Society’s website and in its e-Zine.

2. Peer Review Transparency Issues

President Kearney referred Board members to a transcript of incoming AICPA Chairman Bob Bunting’s inaugural address, which was included in the agenda materials. He noted that the address illustrates Mr. Bunting’s strong support for peer review transparency.

3. Financial Literacy Campaign

President Kearney reported that the AICPA was embarking upon a financial literacy campaign designed to educate the general public about such issues as credit management, meeting medical expenses, planning for college tuition, retirement and estate planning. For more information, he referred members to a “Fast Facts” summary of financial literacy published by the AICPA and included with the meeting agenda materials.

4. CPA Ambassador Program

President Kearney reported that the AICPA was cooperating with state CPA societies to offer members spokesperson training and access to extensive background tools on reintroducing the CPA profession to the American public. For more information, he referred members to a program summary included with the meeting agenda materials.

5. Large State Societies’ Social Security Initiative

President Kearney reported about an initiative of the largest state CPA societies’ presidents to tackle the issues of social security reform. He highlighted a recent meeting of the group including media outreach efforts and its plans to update an AICPA white paper on Social Security Reform.

A Board member suggested that health care also be addressed. Several members agreed that the health care system presented a huge problem worth tackling, but cautioned not to tackle too many huge issues at the same time.

b. Appointment of Committee on Practical Reform of the Tax System

President Kearney announced that he had appointed the following individuals to a committee assigned to develop one or more policy papers on comprehensive tax reform:

• David A. Lifson, Chair
• Joseph L. Charles
• Alan J. Dlugash
• Laurence Keiser
• Leon M. Metzger
• Stephen A. Sacks
• Maryann M. Winters

One board member suggested that the committee address the issue of workload compression. Another suggested that efforts be mounted to keep the New York State Tax deduction. President Kearney stated that the committee would be considering a multitude of important issues including those suggested.

c. Chapter Officers’ Visits

President Kearney noted that fifteen visitations had been completed, and two more were scheduled for January. He stated that all visitations had been well-received by attendees. Membership Relations Director William Pape added that at a recent meeting of the chapter presidents-elect, there was strong consensus to continue offering free Ethics CPE at next year’s round of visitations.

d. FAE Report

President Kearney reported that the FAE Trustees had accomplished several goals at their last meeting, including revamping the Excellence in Accounting Scholarship Program and passing a contract approval policy for the organization.

A Board member expressed concern over the space constraints at a recent FAE conference held at the Society’s new office location. Mr. Schmelkin stated that because of late registrations, there was not ample time to relocate the event to an outside facility but that the event was nonetheless very successful. Mr. Schmelkin noted that the Society’s conference space had the capacity for 150, which the conference in question drew; however, 120 proved to be a more comfortable number. He stated that based on historical data and a cut-off of 120, approximately 15 of FAE’s 40 conferences fit in the new conference space, five less than the 20 which were originally anticipated.

A board member noted that the November 16, 2004, Executive Committee meeting minutes reported that industry courses had not been performing as well as non-industry courses, and asked why this was the case. Mr. Schmelkin responded that FAE was committed to investing more in the educational needs of CPAs in industry who comprise more than a third of Society’s membership. In support of this commitment, Mr. Schmelkin noted that FAE was willing to offer educational support to members in industry with a robust industry curriculum at break even or even at a slight loss, until such time as FAE could further develop and grow the program through increased marketing efforts. Several board members commented that an industry curriculum was especially important for industry members in light of possible changes in state regulations requiring CPE for industry CPAs. Mr. Schmelkin stated that despite the lower performance of FAE’s industry courses, FAE’s overall course registrations were up and the organization was operating ahead of last year.

e. Board Vacancy [item not originally included in agenda]

President Kearney added to the agenda without objection a discussion of an unexpected board vacancy. He announced that Michael Baritot had missed three consecutive meetings and was, therefore, automatically expelled from the Board as per the Society’s bylaws. A discussion ensued regarding whether the Board should hold an election to fill the vacant seat. Several board members stated that because there was only one meeting left for the remainder of the fiscal year and since Mr. Baritot was in his final year of service, the seat should be left vacant. The Board by consensus agreed with this approach.

04 – D – 03
President-elect’s Report

a. Quality Enhancement Policy Committee Update

President-elect Langowski announced that the Policy Committee for Peer Review and Ethics had been renamed the Quality Enhancement Policy Committee (“QEPC”). He referred Board members to the minutes of the two most recent QEPC meetings, which were included in the agenda materials.

b. Selections Subcommittee Update

President-elect Langowski reported that the Selections Subcommittee was recommending four individuals for consideration by the full Board, one or two of whom the Board would elect to recommend for service on the AICPA Council. (Please see item 04-D-08 for the Board’s election of its AICPA Council recommendations.)

President-elect Langowski added that the Selections Subcommittee would also be looking at potential nominations for the FAE Board of Trustees, and that the subcommittee had asked the current FAE Trustees to provide selection criteria to help guide the subcommittee in this task.

c. Governance Subcommittee

President-elect Langowski noted that a governance subcommittee had been appointed by President Kearney with the following members:

• Stephen F. Langowski, Chair
• Peter L. Berlant
• Arthur Bloom
• Katharine K. Doran
• Neville Grusd
• Raymond P. Jones
• Raymond M. Nowicki

Mr. Langowski stated that the subcommittee’s purpose was to, among other things, help the organization assess and develop governance best practices, including creating an organizational “dash-board”, identifying educational board resources, developing officers’ and directors’ job descriptions, initially assessing any governance-related bylaw proposals, and providing other governance assessment tools and procedures.

In response to a question, Mr. Langowski encouraged input from board members and asked that members communicate any ideas to Society counsel James Woehlke.

d. President-elect’s Workshop

President-elect Langowski noted that the chapter presidents-elect workshop, which was held on the prior day, was well-attended and well-received by participants.

e. Plans for 2005 Leadership Conference

President-elect Langowski reminded Board members that the 2005 NYSSCPA Leadership Conference was scheduled for July 10 to 12, 2005 at the Sagamore Resort, in Bolton Landing, New York. He noted that last year’s conference was also held at the Sagamore and although the venue was generally well-received by participants, staff was looking for feedback from last year’s participants to help improve the upcoming event.

In response to a question, Mr. Schmelkin noted that the Young CPA Forum would not be held concurrently with the Leadership Conference in Bolton Landing, but would be held instead on August 15 and 16 in downtown Albany. He stated that the Northeast Chapter would be executing forum details with input from a statewide steering committee.

04 – D – 04
Vice Presidents’ Reports

a. Chapters Update

Vice Presidents Doran and Eassa gave reports on the Society chapters, noting that the most recent monthly conference call with chapter presidents included discussion of a number of topics such as independence rules, CPE, the Young CPA Forum and efforts to coordinate chapters more with statewide committees.

Mr. Sohr added that he was heading the Committee on Committee Operations (“COCO”) task force to improve the coordination of statewide committees and chapters and spoke briefly about efforts made in this regard.

04 – D – 05
Secretary’s Report

a. Committee Update

Secretary Nowicki reminded the Board that as Chair COCO, he had appointed Richard Piluso, Susan Schoenfeld and Robert Sohr to respectively lead task forces to: 1) review COCO’s committee action plan, 2) consider committee evaluations; and 3) improve the coordination between statewide and chapter committees.
Secretary Nowicki noted that the Executive Committee recently directed COCO to optimize the committees reporting structure and align it with the Society’s strategic plan. He noted that COCO would be taking action to implement.

b. Nominating Process Report

Secretary Nowicki reported that (1) the Nominating Committee election had been completed in late September, (2) President Kearney had appointed the chair, and (3) the 2004-2005 Nominating Committee was composed of the following individuals:

• Robert Fagliarone, Chair
• Spencer L. Barback
• Rosemarie A. Barnickel
• Warren M. Bergstein
• Arthur Bloom
• Peter H. Frank
• Arnold L. Haskell
• Stanley M. Heller
• Ronald J. Huefner
• Martin Leventhal
• Walter M. Primoff

He noted that the committee would be meeting per the bylaws on January 13, 2005.

A lengthy discussion ensued regarding the level of interest expressed to date in Society officer positions. Several noted that the interest level varies depending on what is going on in the profession from year to year. Also discussed were the roles of the officers, their respective time commitments and job descriptions.

04 – D – 06
Treasurer’s Report

a. Financial Statements for Six Months Ending November 30, 2004

Mr. Bloom reported that combined NYSSCPA and FAE income for the period ending November 30, 2004 was $1,306,994. Net income was ahead of budget by $1,143,872. Cash and investments stood at $3,270,845 as opposed to $4,329,757 in the previous year, the bulk of the decline being due to the expenditure of much of the moving reserve. Mr. Bloom noted that there was a new provision in the statements for doubtful accounts.

A board member asked why a particular chapter received its budgeted allotment so late. Vice President Eassa responded that there was a communication issue further impeded by a lack of documentation, but that the situation had been resolved.

Ms. Chambers then passed around a benchmarking survey which compared a number of state societies on such items as membership size, CPE revenues, website hits and operating budgets.

President Kearney commended Ms. Chambers on a fine job as the Society’s chief financial officer and wished her well in her new position at another organization. The Board unanimously applauded Ms. Chambers and offered her well wishes.

a. Comptroller Hevesi’s Financial Oversight of Schools Initiative

Mr. Grumet reported on New York State Comptroller Hevesi’s initiative on increased oversight of public schools’ finances, and a recent meeting between Hevesi representatives and the schools financial accountability coalition, which Mr. Grumet attended as representative of the Society. He noted that two important changes had been achieved as a result of the meeting: 1) the focus was shifted from requiring a five year auditor rotation to instead requiring a request for proposals (“RFP”) process every five years which would not necessarily preclude two consecutive 5-year terms; and 2) a draft provision was successfully defended that would require the personnel or entity providing the internal audit of a school district to meet professional standards for independence between the auditor and the district.

b. Editorial Board Meetings

Mr. Grumet stated that he and President Kearney had participated in editorial board meetings regarding accountancy legislation with two publications, which had gone well. He noted that several other newspaper publications were also interested in meeting with the Society.

c. Legislative Update

Mr. Grumet reported that the New York State Senate was expected to pass Society-endorsed legislation again this year. He noted that the Society retained a lobbyist who has represented us with the New York State Assembly.

d. Insurance Update

1. Professional Liability Program

Mr. Grumet reported that the CAMICO program had grown to 412 policies, covering 1,409 CPAs at over $2.4 million in annualized premiums.

2. Member Benefits Insurance Program

Mr. Grumet addressed issues relating to the New York Attorney General’s investigation of Marsh, Inc. and several other insurance companies. He stated that there appeared to be no effect on the Society’s member insurance programs brokered through Marsh Affinity Group Services, a sister company of Marsh, Inc., but that both staff and the Member Benefits Committee continued to monitor the situation. He added that to date the Society had received no calls from members regarding the investigation.

A brief discussion ensued regarding the membership insurance program and the Society’s contract with Marsh Affinity Group Services, which was scheduled to automatically renew at the end of calendar year 2005. Mr. Grumet reported that as a matter of due diligence, the member benefits committee was recommending that the Society embark upon an RFP process to determine whether it should remain with Marsh beyond 2005, or contract another broker/administrator. In the ensuing discussion, the Board agreed by consensus with the recommended approach of issuing an RFP.

3. Society Risk Management Program

Mr. Grumet noted that the New York State Attorney General’s investigation implicated the parent company of one of Society’s corporate insurance policy underwriters. Mr. Grumet stated that the investigation did not appear to affect the Society’s program and that staff was continuing to monitor the investigation as it develops.

e. Peer Review Program Oversight

Mr. Grumet reported that the AICPA had completed its oversight of the Society’s peer review program administration and that the results reflected significant improvement over the prior oversight. Unofficially, the oversight reviewer indicated that the Society was in the best shape of the societies seen yet this year, including several other large societies. He noted that the Society was exploring the possibility of running a parallel data system in the event New York State mandated peer review for CPAs.

f. Accounting Software Upgrade

Mr. Grumet noted that the Society had issued an RFP to engage a technical firm to upgrade the Society’s Great Plains Accounting Software. He stated that three proposals had been received to date, ranging from $15,000 to $20,000.

Mr. Langowski reported that the Selections Subcommittee had received ten names for consideration as potential NYSSCPA Board nominees to serve on AICPA Council from New York. Of the ten, the following four were recommended to the full board:

• Mark A. Alimena
• Frank Aquilino
• Steven Edelman
• Michele Mark Levine

Mr. Langowski noted that the Board was expected to select one or two AICPA Council members from among this list, depending on whether the as-yet-to-be-identified president-elect-designate was already serving on Council.

President Kearney then opened the floor to any additional recommendations. Mr. Grusd moved that former Vice President Carol Lapidus be added to the list, and Mr. Sohr seconded the motion. President Kearney then declared nominations closed.

Upon a duly-held election, Frank Aquilino received the most votes, followed by Carol Lapidus. Mr. Ellis did not participate in the election.
Mr. Woehlke noted that the Selections Subcommittee had, without Mr. Langowski participating, unanimously recommended to the board that it recommend to an appropriate future Society Board that Mr. Langowski’s term on Council be extended until such time as he completes his service as immediate past president of the Society. The board discussed this recommendation and approved it by consensus.

Ms. Dwyer moved to direct the Governance Subcommittee to develop a standing rule which would assure that the Society’s President-elect would be recommended to serve on AICPA Council for the three consecutive years coterminous with his or her term as President-elect, President and immediate past President. Mr. Piluso seconded the motion. The motion passed unanimously. Mr. Ellis did not participate in the vote.

Mr. Pape presented the recommendations of the Member Benefits Committee, subsequently approved by the Executive Committee, to endorse several new Society member benefits as follows:

• Automated Data Processing (ADP)
• Staples Business Advantage
• Traders’ Library
• Long-Term Care Insurance

A discussion ensued with respect to each of the recommended benefit programs and in particular whether the discount associated with the ADP program offered a competitive advantage to members. Mr. Pape stated that the Member Benefits committee had investigated and deliberated each program’s discount, and agreed to bring specific information back to the Board regarding the ADP discount at a later meeting.

Mr. Wolitzer moved that the Executive Committee approve the recommendation of the Member Benefits Committee and Executive Committee to endorse the new member benefits as listed above. Mr. Piluso seconded the motion. The motion passed unanimously. Mr. Ellis did not participate in the vote.

Mr. Pape presented the Membership Report which included 234 new members (including 177 new associate members), 4 reinstatements, 5 deaths, 18 resignations and 2,114 terminations for non payment of dues (per the bylaws). Mr. Pape noted that letters would be sent to members being terminated and that the board could expect that the final termination figure would be less due to reinstatements that usually follow this communications. These changes reflected a total membership of 29,212 as of December 9, 2004, as compared with 29,339 at approximately the same time the previous year.

Mr. Moynihan moved to approve the Membership Report, and Mr. Schlegel seconded the motion. The motion passed unanimously. Mr. Ellis did not participate in the vote.

Mr. Evangelista asked to have the board consider several concerns relating to the Uniform CPA Examination. The Board, without objection, amended their agenda to add this item.

Mr. Evangelista relayed to the Board two issues of concern regarding the CPA exam as it is administered in New York: 1) results are issued too late for failing candidates to sign up for the next examination; and 2) candidates do not receive a detailed grade, but merely “pass” or “fail”.

Ms. Doran made the following motion, which was seconded by Mr. Nowicki:

RESOLVED, that the Society investigate the facts related to the New York State Education Department policies regarding release of the CPA Examination results, after which the Executive Committee is directed to respond as it deems appropriate upon the advice of the full Board.

A lengthy discussion, during which Mr. Evangelista stated that there was also a third issue regarding the low availability of seats at exam centers which administer the CPA exam at the same time as a number of other exams. He moved that the above resolution be amended to add the phrase “the administering of the Uniform CPA Examination and” following the words “facts related to”. Ms. Dwyer seconded the motion to amend which passed without objection.

Mr. Kearney then put the question to a vote, stating the amended resolution as follows:

RESOLVED, that the Society investigate the facts related to the administering of the Uniform CPA Examination and the New York State Education Department policies regarding release of the CPA Examination results, after which the Executive Committee is directed to respond as it deems appropriate upon the advice of the full Board.

The motion passed unanimously. Mr. Ellis did not participate in the vote.

The Board then entered executive session for a personnel discussion. No actions were taken during executive session.

Following the Executive Session, Mr. Bloom moved and Mr. Berlant seconded that Alan Schmelkin be promoted to Managing Director for Operations, in recognition of his exemplary management of FAE and astute handling of the recent office relocation. Following discussion, the motion passed unanimously.

Mr. Eassa moved and Mr. Torres seconded that the Society dues of those individuals on staff qualifying for CPA membership be waived. The motion passed unanimously.

Mr. Kearney asked if there were any additional business. There being none, Mr. Cohen moved to adjourn the meeting. Mr. Torres seconded. The motion passed unanimously. The meeting adjourned at 2:52 p.m.