03 – A – 0

Call to Order

03 – A – 1

Minutes of November 19, 2002 Meeting

Ms. Golden asked Board members if they had any changes to the minutes of the November 19, 2002 meeting. The following changes were proposed:

• • On page 10, the references to “SEC auditors” should be changed to “auditors of SEC clients.”
• On page 13, the reference to “unfair advantage” should be changed to “unfair disadvantage.”
• On page 12, the reference to unsuccessful audits in the eighth bullet should be rephrased as “failed audits.”

Upon motion by Mr. Federmann, which was seconded by Mr. Sohr, the minutes were unanimously approved with the above corrections.

03 – A – 2

President’s Report

a. AICPA

Ms. Golden stated that she sent a letter in her capacity as NYSSCPA President and AICPA Council Member to AICPA Chair William F. Ezzell, Jr., commending the AICPA for its efforts in setting up the Task Force on the Role and Responsibilities of the AICPA Council, but making it clear that New York members expected a broader task force mandate to include a thorough governance review.

Mr. Hoops, who sat on the AICPA task force, stated that the letter was received and would be addressed. He stated that he would report back to the Board of Directors in July regarding any progress.

Mr. Frank raised an issue regarding the AICPA’s potential discontinuance of the PFS (Personal Financial Specialist), Accredited Business Valuator (ABV), and CITP (Certified Information Technology Professional) credentials. Mr. Frank, who held a CITP, had encouraged the Executive Committee to state a position with respect to maintaining the CITP credential, and the Executive Committee had instructed President Golden to write the AICPA and express concern with the discontinuance of the credential. In response to a question, Mr. Frank stated that approximately 500 persons maintained the CITP credential.

Mr. Frank expressed the view that the substance of both the PFS and ABV credentials was duplicated by other organizations while the CITP was unique, given the business knowledge required and connection of the CPA profession with technology.

Ms. Golden asked Board members to indicate whether they held any of the credentials in question, and two members raised their hands. She then polled the Board for their views on the matter and noted that a majority of the Board had no opinion as to whether the AICPA should establish and maintain specialty designations, generally, and should maintain the PFS, ABV and CITP credential specifically.

Mr. Hoops stated that the AICPA had not yet determined whether it would discontinue the credentials, but rather was examining how to make each credential more meaningful and, if not possible, how the organization might develop appropriate exit strategies.

b. Benevolent Fund

Ms. Golden stated that one applicant was recently awarded assistance by the Benevolent Fund.

c. Press Activity

This matter was deferred.

d. Legislative Update

Mr. Grumet announced that State Senator LaValle introduced Attorney General Spitzer’s accountancy bill into the legislature on the day of the meeting.

Ms. Golden then introduced Mr. David C. Ashenfarb, Chair of the Not-for-Profit Organizations Committee, which had prepared comments on New York Attorney General Spitzer’s bill to reform the Not-for-Profit Corporation Law to address concerns about financial fraud in nonprofit corporations.

Mr. Ashenfarb commended former committee chair Julie Floch for her work in preparing the comments on behalf of the Not-for-Profit Committee. He then outlined some of the points of concern to the committee, including a $250,000 threshold above which the President and Treasurer of the nonprofit corporation would need to certify the organization’s financial statements. The concern was that typically these positions were filled by volunteers and that the proposal would chill the interest of volunteers in serving as nonprofit corporation officers. The committee suggested that the threshold be raised to $5 million. The committee also suggested that the nonprofit corporation’s CEO and CFO be permitted to substitute in place of the President and Treasurer, respectively.

Mr. Grumet noted that the Legislative Task Force made two changes to the comment letter, suggesting that small not-for-profit organizations be subject to more direct oversight by the charities bureau and that the Society would support the additional funding for the bureau required for such oversight. Ms. Newman-Limata moved that the letter be approved as amended by the Legislative Task Force but with item 4 deleted. Mr. Berlant seconded the motion.

Without objection, the motion was placed on the table while additional copies were prepared for the Board. When the copies were distributed, the motion was taken from the table without objection and discussion proceeded.

Ms. Newman-Limata pointed out that the deletion of point 4 would be better for contributors and for practicing CPAs.

Following discussion, the resolution passed unanimously.

e. Peer Review and Ethics Task Force Update

Ms. Golden announced that the Task Force had been appointed, but had not yet met. The members were as follows: Brian Caswell (chair), Ron Benjamin, Rona Cherno, Allen Fetterman, Sharon Fierstein, Henry Krostich, Steve Langowski, Ian Nelson, and Robert Roath.

f. Real Estate Task Force Update

Mr. Grumet reported that the Real Estate Task Force was at the point where an architect needed to be retained to evaluate more carefully potential office space usage at the various locations under consideration. The task force, therefore, recommended that the Board authorize the Real Estate Task Force to engage an architect for an amount not to exceed $100,000, with the understanding that expenses would be held to a minimum, depending on the requirements of the space under consideration.

After a brief discussion, Mr. Grusd moved that the board accept the recommendation of the Real Estate Task Force to engage an architect. Mr. Hoops seconded the motion. There being no objection, the motion passed unanimously.

g. Leadership Conference Update

Mr. Hoops reported that substantial progress was being made on the leadership conference, and he thanked former president Michael L. Borsuk and Director of Operations Alan Schmelkin for their efforts in this regard. He added that the agenda was in place for the conference, which was scheduled to commence on Sunday, July 13 at the Gideon Putnam Hotel and Conference Center in Saratoga Springs, New York.

Scheduled speakers would include political consultant Michael Dunn and former SEC chief accountant Lynn Turner. There would be sessions on grass-roots lobbying, improving the CPA’s image and media relations. The boards of the Foundation for Accounting Education and the CPA PAC would also meet.

Mr. Hoops noted that chapters would be represented by three people, preferably their President, President-elect and chair of their Young CPA Committee. He added that the conference would be open to other members at their own expense. He encouraged all Board members to attend.

h. Nominating Committee Report

Ms. Golden announced that the Nominating Committee Report was published in the April Trusted Professional. The nominations were as follows:

President – Elect John J. Kearney
Vice President Vincent J. Love
Vice President Sandra A. Napoleon-Hudson
Vice President Raymond M. Nowicki
Vice President Steven Rubin
Secretary (second year) Thomas E. Riley
Treasurer (first year) Arthur Bloom
Director-at-large Richard E. Piluso
Director-at-large Michelle A. Cohen
Director-at-large Mark Ellis
Director-at-large Raymond P. Jones
Director-at-large Robert N. Waxman
Director (Buffalo Chapter) Ann Burstein Cohen
Director (Central S. Tier Chapter) Nancy A. Kirby
Director (Man./Bronx Chapter) William Aiken
Director (Southern Tier Chapter) Philip G. Westcott
Director (Syracuse Chapter) David J. Moynihan
Director (Westchester Chapter) Robert L. Ecker

i. Awards Committee Update

Ms. Newman-Limata, chair of the Awards Committee, announced the names of Hall of Fame inductees: current Board member, Phil Wolitzer, Arthur J. Dixon (1924-1981) and Maurice E. Peloubet (1892-1976).

Mr. Nelson moved that a new award be created highlighting service in the chapter area and the motion was seconded by Ms. Barnickel. A lengthy discussion ensued. Several members suggested that 17 awards be created, one for each chapter, while some suggested that the chapters create their own respective awards. With respect to the latter suggestion, a member opined that it would be a good gesture if a statewide-level Society official visited each chapter to present the awards. Mr. Hoops said that there already existed a number of awards recognizing Society leadership, and that additional awards may water down those that currently exist.

Mr. Keiser moved to postpone the motion indefinitely. Mr. Keiser’s motion passed without objection. Mr. Keiser and Ms. Van Bladel agreed to take the issue to the Chapters for further discussion.

03 – A – 3

Executive Director’s Report

a. Committees Update

Ernest Markezin, Associate Director, Committee Services gave a brief presentation on developments affecting the Society’s committees. Among the milestones he noted were that committee meeting attendance was up, chairs had increased responsibility and the staff had improved its meeting-planning capabilities.

b. Chapters Update

Ms. Van Bladel raised an issue she was asked to bring to the Board at the Chapter Presidents-Elect workshop. She noted that some chapters were budgeted at a break-even basis and others were permitted to run at a deficit. She said that some Chapter leaders were confused by this and requested that formal budgetary guidelines be put in place to improve uniformity. This sentiment was echoed by one or two other Board members.

A lengthy discussion ensued during which Ms. Golden and Mr. Grumet said that lack of uniformity in this area was a good thing. It permitted the Society to treat each chapter uniquely, which was appropriate since each presented a unique set of abilities to serve the Society’s members in its geographical area.

Mr. Grumet added that this approach was not following the trend in CPA Societies and indeed other professional associations, where chapters had been downplayed. The Society’s willingness to address the individual needs of the Society’s chapters marked its commitment to strengthening the chapter structure.

Mr. Hoops stated that whenever a chapter approached the Board or Executive Committee with a worthy idea that would be a variance from the budget, the leadership had approved the request. He added that an avenue was open to raise any chapter’s concerns with its budget allocation by bringing those concerns to the Board member from that chapter, who would raise them in the budget process. In response to a question, he noted that chapters’ issues of concern would be discussed at the Leadership Conference.

A Board member then summarized the de facto policy as one of budgetary equity, not equality, stating that chapters should stay within their respective budgets, but feel free to ask for additional funding when needed for special projects.

c. Meeting of Large States CPE Directors

This report was deferred.

d. FAE Registration Analysis

This report was deferred.

e. Demonstration of Membership System

Mr. Kevin Lewis, the Society’s Chief Technology Officer, demonstrated the Society’s association management software, called AM4.

f. Managing Partners’ Meeting Update

This matter was deferred.

03 – A – 5

Budget for Year Ending May, 2004

President Golden introduced Mr. David A. Lifson, Chair of the Finance Committee.

Mr. Lifson briefly described the process by which the Finance Committee oversaw the work of Society staff on the 2003-2004 budget. He noted that the Finance Committee had historically budgeted FAE and the Society separately, because of their separate legal status. As of fiscal year 2003, however, the committee used a consolidated budgeting approach.

Mr. Lifson then summarized the budget in 3 ways: 1) programmatically to demonstrate how the Society anticipated it would spend approximately $13.2 million on programs such as education (FAE), member proficiency, governance, communications, networking & recruiting, government relations and other programs; 2) by percentage allocation of dues revenue by membership category to each of these programs; and 3) line-by-line analysis.

Mr. Lifson noted that the education arm of the Society, FAE, was primarily supported by outside generated revenue, as opposed to dues. As such, it was more susceptible than the rest of the Society to changes in the marketplace. He pointed out that FAE comprised over a quarter of the entire budget, next followed by member proficiency.

In the discussion which ensued, one Board member indicated that the budget did not account for the value of volunteer services provided by members, and suggested that this be looked at in future budgets. Mr. Lifson acknowledged the lack of recognition for volunteer contributions in the budget, noting that it was difficult for any non-profit to adequately reflect and quantify volunteer services in a monetary budget. He also cautioned that attempts to do so might discourage volunteerism.

Another Board member asked where Peer Review program expenses were reflected in the budget. Mr. Lifson responded that Peer Review fell within Professional Competency and Governance. He also noted that the Peer Review program was entirely self-sufficient, supported entirely by fees charged to participating firms.

Ms. Chambers noted that the committee put together a strategic plan budget that anticipated a $200,000 net increase in funds for the coming year.

A discussion developed concerning advertising revenue and the expenses incurred to generate that revenue. Ms. Chambers reviewed the approach used to manage this area stating that management with Executive Committee approval had engaged an outside advertising representative. The commission expense is tied directly to the revenue generated. In response to a question, Ms. Barry indicated that 3,500 non-members subscribe to the journal for $25 per year. Two or three Board members suggested that this subscription charge be raised. Mr. Lifson responded, however, that advertisers do not make a distinction between members and non-member subscribers, but rather look at total circulation. He was loathe to risk a decline in readership from raising the subscription price with the resulting decline in advertising revenue.

In response to a question regarding website hits, which average 2.8 million per month, Mr. Grumet expressed the belief that this number was attributable in large part to student usage of the Society website for research and information.

Mr. Lifson stated his belief that the budget was very conservative in its anticipation of revenue for the coming year. Ms. Chambers used the treatment of investment income as example of the budget’s conservative approach.

Ms. Chambers walked the Board through the strategic plan goals budget with reference to the following areas: advocacy, professional competency, and recognition and visibility.

In response to a question, Ms. Barry noted that advertising geared towards college campuses accounted for an overall increase in media outreach efforts. She also pointed out events geared towards bringing journalists to the Society, such as the program on how to read financial statements.

A discussion ensued regarding what controls were in place to assure that the Society adhered to budget. Several items were noted, including conservative budgeting, increased communication between staff and lay leadership, monthly financial statements that were distributed to the Board, and staff’s direct responsibility.

Mr. Hoops emphasized that the Society had come a long way in the last two years to address its fiscal problems, and commended the Finance Committee and staff for their work.

Mr. Nelson moved that the 2003-2004 Budget be approved as presented. Ms. Kirby seconded the motion. There being no objection, the motion passed unanimously. Ms. Golden thanked Mr. Lifson and his committee for their excellent work.

03 – A – 6

Bylaws Task Force Report

Ms. Golden introduced Sharon S. Fierstein, Chair of the Bylaws Revision Task Force. Ms. Fierstein began by commending task force members Brian A. Caswell, Sandra A. Napoleon-Hudson, P. Gerard Sokolski and Louis C. Grassi for their work on the Society’s bylaws revisions.

After a brief summary of the task force’s deliberative process, Ms. Fierstein directed the Board’s attention to the March 6, 2003 transmittal memo (revised), which included a detailed discussion of the task force’s proposed bylaw revisions.

Ms. Fierstein discussed two new governance concepts introduced into the bylaws: Board Standing Rules and Nominating Committee Protocols. She also discussed recommended changes to the timing of the nominating process, Nominating Committee changes, and other miscellaneous changes.

Ms. Fierstein noted that the nominating process contained some inconsistencies because each year’s nominating committee tended to follow its own nominating criteria. To improve consistency, the task force recommended the use of Board-approved protocols which the Nominating Committee would be required to honor. If the members approve the concept, a future Board would have the opportunity to establish protocols, though the task force did include draft protocols to open such discussion.

Regarding Board standing rules, she said the task force was suggesting this approach to handle issues such as assignment of vice presidents and the process used to designate Board members serving on the Nominating Committee. The task force allocated these topics to the standing rule category rather than suggesting a specific bylaw change, because it felt these were the sorts of things that either (1) fell more within the purview of the Board than the membership, i.e. could need to be changed more frequently or with less formality than was occasioned by a bylaw change or (2) were somewhat experimental and should not yet be locked in stone by being incorporated into the bylaws. She added that the current bylaws already authorize the Board to pass standing rules and that the only change proposed here was that the standing rules would need to be published to the membership before becoming effective. As with the Nominating Committee Protocols, the bylaw proposals would merely authorize the standing rules; specific rules would only be approved by the Board once the bylaw proposals were passed. Again, the task force had drafted standing rules to open the Board’s discussion.

With regard to changes in the timing of the nominating process the two most significant proposed changes were (1) that the November members’ luncheon was being replaced with a fixed deadline for submitting petitions to serve on the Nominating Committee and (2) the process was being significantly extended to better accommodate holding elections when more than the prescribed number of members submit petitions to serve on the committee.

Other proposed changes to the Nominating Committee were the following:

• Increasing the Nominating Committee from nine to eleven, adding two members by petition.
• Limiting the number of terms a member could serve on the Nominating Committee to three. The task force suggested a transition rule, however, which would permit members to serve three terms following the effective date of the change.
• Permitting a member to sign only one petition.
• Expanding the Board members used to propose Board designees. At present, the President alone proposes the two Board designees to the Board. The task force suggested a standing rule that would create a selections subcommittee of the Board to make these proposals.
• Empowering the President to appoint the Nominating Committee chair. The current bylaws permit the Nominating Committee to appoint its own chair, which had resulted in the custom of having the most senior past president on the committee chair the committee.

• The ability to make Nominating Committee Protocols.
• The ability to make Board standing rules (The Executive Committee remains free to make standing rules governing the conduct of Executive Committee business in Article VII, paragraph 4).
• The ability to hire, fire, or discipline the Executive Director. Article VII, paragraph 2.

03 – A – 7

Membership Report

Mr. Pape presented the Membership Report, which included 227 new members (including 149 new associate members), 90 reinstatements, 38 deaths, and 3 resignations. These changes reflect a total membership of 29,495 as of April 23, 2003.

Ms. Dwyer moved to approve the Membership Report, and Mr. Berlant seconded the motion. There being no objection, the motion passed unanimously.

In response to a question, Mr. Pape stated that student members were assigned to chapters based upon their college

03 – A – 8

Report of the Finance Committee

a. Financial Statements for the Ten Months Ending March 31, 2003

Ms. Chambers summarized benchmarking data compiled for the five largest state societies: California, Illinois, New York, Pennsylvania and Texas. Among the areas of comparison were: assets, dues revenue, educational program attendance, website hits per month and number of members. Information of note included 2.8 million hits to the Society’s website, where the next highest figure was from the Pennsylvania Society, with 886,724 hits. In addition, the New York State Society had 1,350 distinct committee members, second only to Pennsylvania, which had 1,800.

Mr. Aquilino briefly reviewed the Financial Statements for the ten months ending March 31, 2003. He noted that there was an improvement in cash position over last year, when the Society had a negative cash flow and had borrowed its entire $500,000 line of credit. The Society would not have to use any of its line of credit this year.

Ms. Chambers noted that the financial statements for the 10-month period through March 31, 2003 showed combined total assets for the NYSSCPA and FAE of $3,474,399 million, total liabilities of $2,869,019 million and net assets of $605,380.

Mr. Aquilino announced that net revenue was higher this year than last year, reflecting changes in three areas: first, significant cuts in personnel; second, the dues increase; and third, increased seminar and conference attendance.

b. Investment Report

Mr. Aquilino noted that the Investment Subcommittee, consisting of Ms. Fierstein, representing FAE, and Messrs. Aiken and Evangelista, met with representatives from The Bank of New York, UBS, and Merrill Lynch regarding the administration of the Society’s and FAE’s investment accounts. He noted that the Society was currently using The Bank of New York for short-term cash investments, and the goal of the subcommittee was to find a bank with lower administration fees. He reported that although UBS and Merrill were able to offer fees lower by $4,000, they could not offer the Society the line of credit, which the Bank of New York currently extended in the amount of $500,000. The consensus of the investment committee was that a $4,000 savings on fees was not worth losing a $500,000 line of credit. The committee’s recommendation was that the Society stay with the Bank of New York.

03 – A – 9

Report on FAE

This matter was deferred.

03 – A – 10

Executive Session

The Board then entered executive session. During the executive session, the Board approved a three-year contract continuing the employment of Louis Grumet as Executive Director.

03 – A – 11

Adjournment