Minutes of:

Board of Directors Meeting

Date & Time:

Thursday April 3, 2008, 9:06 a.m. to 3:39 p.m.

Location:

3 Park Avenue, 19th floor, New York, New York

Presiding Officer:

David A. Lifson, President

Board Members Present:

Sharon Sabba Fierstein, President-Elect
Rosemarie A. Barnickel, Vice President
John J. Lauchert, Jr., Vice President
Edward J. Torres, Vice President
Mark Ellis, Secretary*
Richard E. Piluso, Treasurer
Scott M. Adair
Edward L. Arcara
Susan M. Barossi
Thomas Boyd
Debbie A. Cutler
Joseph M. Falbo, Jr.
Daniel M. Fordham
Robert L. Goecks*
David R. Herman
Martha A. Jaeckle
Suzanne M. Jensen
Lauren L. Kincaid
Gail M. Kinsella
Kevin Leifer
Elliot A. Lesser

Beatrix G. McKane*
Mark L. Meinberg
Ian M. Nelson
Jason M. Palmer
Robert A. Pryba, Jr.
Robert T. Quarte
Ita M. Rahilly
Thomas E. Riley
Judith I. Seidman
Anthony J. Tanzi*
Thomas M. VanHatten
Liren Wei
Ellen L. Williams
Margaret A. Wood
Richard Zerah
Louis Grumet, Executive Director

Board Member Absent:

Scott Hotalen

Staff Present:

Suvro C.K. Banerjee
Joanne S. Barry
Mary Jo Kranacher
Ernest J. Markezin

William J. Pape
Alan Schmelkin
Paul L. Sinegal
James A. Woehlke

B08 – A – 0
Call to Order

President David A. Lifson noted that a quorum was present and called the meeting to order at 9:06 a.m.

B08 – A – 1
Executive Session

An executive session was held. The Board unanimously resolved to accept the Executive Committee’s recommended actions with respect to certain ethics complaints.

a. Approval of Minutes of December 7, 2007, Board of Directors Meeting

Mr. Lifson asked Board members if they had any changes or comments to the December 7, 2007, Board of Directors meeting minutes. There being none, Mr. Riley moved to approve the minutes as presented, and Ms. Wood seconded the motion. The motion passed. Mr. Fordham abstained.

b. Highlights of February 12, 2008, Executive Committee Meeting (for Information only)

Mr. Lifson referred Board members to the highlights of the February 12, 2008, Executive Committee meeting, which were previously e-mailed for the Board’s information.

a. SET Tax Update

Mr. Lifson gave a brief update on the SET Tax. He noted that an Op-Ed piece on the proposal was being planned for hopeful publication in The Wall Street Journal.

b. 2008 Annual Election & Dinner Journal Ads for the Benefit of COAP

Mr. Lifson reminded Board members that the 2008 NYSSCPA Annual Election & Dinner was scheduled for May 15, 2008 at the New York Hilton. He noted that ads for the dinner’s commemorative journal would benefit the Foundation for Accounting Education’s Career Opportunities in the Accounting Profession (COAP) program. He encouraged all to attend and contribute to the commemorative journal.

c. Awards Committee Report

President Lifson announced that the Society’s Awards Committee made the following selections for 2007-2008:

NYSSCPA Distinguished Service Award
Howard D. Weiner

Outstanding CPA in Industry Award
Mark G. Leeds

Hall of Fame
Samuel B. Traum
Mr. Lifson congratulated the award recipients.

d Town Hall Meetings Update

President Lifson noted that the schedule for the 2008-2009 round of chapter town hall meetings was in the process of being finalized.

a. Quality Enhancement Policy Committee

See item B-08-19 for the Board’s approval of the QEPC’s Pre-Certification Education White Paper.

b. 2008 Leadership Conference Update

Ms. Fierstein distributed an agenda for the 2008 Leadership Conference to be held July 13 to 15, 2008 at the Turning Stone Resort in Verona, New York. Ms. Fierstein reported that she had visited the property and was very impressed with the accommodations. She noted that the resort was a half hour from the Syracuse Airport for those who preferred to fly. She also said that she had rearranged the conference schedule to enable people who are not on the NYSSCPA Board to reduce their time out of the office.

a. Chapters Update

Vice Presidents Barnickel and Lauchert reported on recent chapter activity.

b. Recent Society Comments

Vice President Torres presented the recent Society comments as follows:

• Comments to the SEC on Release Nos. 33-8889; 34-57258 – Internal Control Over Financial Reporting in Exchange Act Periodic Reports of Non-Accelerated Filers; 3/7/08, NYSSCPA SEC Practice Committee - Comments to the Securities and Exchange Commission on a proposal to amend temporary rules that would require companies that are non-accelerated filers to include in their annual reports an attestation report of their independent auditor on internal control over financial reporting for fiscal years ending on or after December 15, 2008; Principal drafter: Robert E. Sohr.
• Comments from the NYSSCPA Higher Education Committee to NASBA on their Exposure Draft of the UAA Model Education Rules 5-1 & 5-2; 1/30/08 – A response to the National Association of State Boards of Accountancy invitation to comment on their exposure draft of the UAA Model Education Rules 5-1 & 5-2. Principal Drafter, Priscilla Z. Wightman.
• Comments from the NYSSCPA Financial Accounting Standards Committee to FASB on Proposed FSP FAS 142-f – Determination of the Useful Life of Intangible Assets; 1/16/08 – Comments on proposed FASB Staff Position (FSP) FAS 142-f– Determination of the Useful Life of Intangible Assets (Issued 11/26/07) that would amend Statement No. 142, Goodwill and Other Intangible Assets, paragraph 11d, to allow an entity to consider its own assumptions about renewal or extension in determining the useful life of a recognized intangible asset. Principal drafter: Margaret A. Wood.
• Comments from the NYSSCPA Financial Accounting Standards Committee to FASB on Proposed FSP FAS 157-b – Effective Date of FASB Statement No. 157; 1/16/08 – Comments on proposed FASB Staff Position (FSP) FAS 157-b – Effective Date of FASB Statement No. 157 (issued 12/14/07) that would amend FASB Statement No. 157, Fair Value Measurements, to delay the effective date. Principal drafter: Margaret A. Wood.
• Comments from the NYSSCPA Financial Accounting Standards Committee on Proposed FSP FAS 157-a – Application of FASB Statement No. 157 to FASB Statement No. 13; 12/28/07– Comments on proposed FASB Staff Position (FSP) FAS 157-a – Application of FASB Statement No. 157 to FASB Statement No. 13 and its related interpretive accounting pronouncements that address leasing transactions (issued 11/28/07). Principal drafter: Edward P. Ichart.
• Comments from the NYSSCPA Higher Education Committee to AICPA on Improving the Uniform CPA Examination; 12/21/07 – A response to the AICPA’s invitation to comment on planned improvement to the Uniform CPA Examination. Principal drafters: Ronald J. Huefner, Wayne J. Morse and Priscilla Z. Wightman.
• Comments from the NYSSCPA SEC Practice Committee to the PCAOB on Preliminary Staff Views – An Audit of Internal Control that is Integrated with an Audit of Financial Statements; 12/17/07 – Comments to the Public Company Accounting Oversight Board on their Preliminary Staff Views (October 17, 2007) – An Audit of Internal Control that is Integrated with an Audit of Financial Statements: Guidance for Auditors of Smaller Public Companies. Principal drafter: Anthony S. Chan.

President Lifson commended the comment authors for outstanding work.

a. Financial Statements for Eight Months Ending January 31, 2008

Messrs. Piluso and Banerjee presented the Financial Statements for the eight months ending January 31, 2007. Net Revenue had a favorable variance to budget of $143,395 and a favorable variance to fiscal year 2007 of $113,316. In addition, to date none of the annual grant from the NYSSCPA to the Foundation for Accounting Education had been needed. It was noted that due to FAE’s business cycle, the contribution was typically not required until the end of the fiscal year.

a. Committees Update

Mr. Ellis gave an update on committee activity and provided a summary of committee data on such factors as attendance, number of meetings held, years of service of members, among other categories.

b. Committee Open House

Mr. Ellis reported that the Society’s first open house for committees held earlier in the year had been a success.

c. Election Process Report

Secretary Ellis reported that the Nominating Committee met on January 11, 2008 pursuant to Society bylaws and nominated the following individuals to serve in the leadership positions indicated next to their respective names:

a. Legislative and Regulatory Update

Mr. Grumet provided a legislative and regulatory update.

b. Member Benefits Update

Mr. Pape referred Board members to the agenda materials for statistical information regarding membership benefits programs. See also item B08-A-12, Pearl Insurance Update.

c. Peer Review Update

Mr. Markezin gave a brief update on peer review. He noted that the AICPA would soon be conducting another accelerated oversight review of the Society’s peer review program administration. The review would be the third such review in the last three years, with the last review receiving a favorable grade.

d. Financial Executive Institute (FEI) Joint Initiative

Mr. Grumet reported that he and staff had met with FEI leadership and learned there might be common ground for potential meetings and joint programs between the Society and FEI.

Foundation for Accounting Education President Peter Maier reported that FAE POP sales were strong and conferences were progressing well. He also reported on the results of a market research study undertaken by FAE to help it assess the CPE market in New York. He noted in particular that the study, conducted by an outside consultant, confirmed that FAE was meeting the needs of its customers and reaffirmed that FAE was on the right course in terms of its pricing and policies. The study also suggested that FAE further enhance its marketing of the POP program to reach those unfamiliar with the program, and it indicated relatively high interest in more experience level programs and online CPE participation.

Mr. Maier then reported on FAE’s curriculum committee, noting that it had identified nine topics and staff proposed an additional 41 new programs from major vendors which will be presented in the next CPE year commencing June 2008. Lastly, Mr. Maier said that due to program growth and the anticipated increase in course registrations, it was anticipated that FAE would not require any increase in the amount of the annual contribution allocated to it by the NYSSCPA in the 2008-2009 fiscal year. President Lifson thanked Mr. Maier for his presentation.

Board members were referred to the meeting materials for a copy of the agenda for the AICPA’s regional meeting of Council, held in March.

Mr. Pape presented a report regarding the membership retention and recruitment initiative. Among other recommendations contained in the report, Mr. Pape noted the creation of a “Professional Leader” designation for firms who cover 100% of the cost of their employees’ Society membership dues.

Ms. Barnickel moved to accept the report and its recommendations as presented. Mr. Lesser seconded the motion. The motion passed unanimously. Mr. Nelson did not participate in the vote.

Mr. Lifson introduced Gary Pearl, President and Chief Executive Officer of Pearl Insurance Company (“Pearl”) and George Bode, Senior Vice President and Director of Affinity Group Business, also of Pearl. Mr. Lifson noted that Pearl brokers and administers the NYSSCPA’s group membership insurance programs.

After a brief introduction by Mr. Pearl, Mr. Bode highlighted the performance of the Society’s group insurance programs in calendar year 2007. He reported that 189 new policies were anticipated to be issued by Pearl as of calendar year end 2007, based on issuing 75% of currently pending applications. This number compared with 187 policies issued in 2006, the first year Pearl assumed responsibility of the NYSSCPA group insurance program. Mr. Bode contrasted these results with the program’s performance in 2005, the year before Pearl assumed program responsibility, which garnered 55 policies. He noted that several new insurance product lines were added to the NYSSCPA portfolio in the past year including senior term life and long term care insurance. The presentation was well received.

A question and answer session followed. At its conclusion, Mr. Lifson thanked Messrs. Pearl and Bode for their presentation.

Mr. Pape presented a summary of proposed new membership benefit programs as follows:

a. Corporate Express – This program would entitle members to discounts on office supplies and an administrative fee to the Society based on net sales under the program.

b. Exam Matrix – This program would provide associate members a discount of over 20% on the Exam Matrix CPA review course.

c. Yaeger CPA Review – This program offers a 16% discount to associate members who purchase Yaeger’s CPA review course.

d. New CAMICO Product – Employment Practices Liability Insurance (EPLI) – CAMICO, already endorsed exclusively by the Society as a provider of CPA professional liability insurance, now offers a stand alone EPLI policy.

Although a stand alone policy, the EPLI coverage could only be purchased by CAMICO professional liability insurance policyholders, and premiums generated from the EPLI offering would be included in the overall affiliation fee provided the Society under the existing CAMICO endorsement contract.

Mr. Palmer moved to approve the new programs as presented, and Ms. Kinsella seconded the motion. The motion passed unanimously. Mr. Nelson did not participate in the vote.

Messrs. Piluso and Banerjee presented the proposed 2008-2009 budget. Highlights from the overall budget included:

• Budgeted net income of $122,000.
• CPE Program Support (formerly called Contribution to FAE) equivalent to the Fiscal Year 2008 figure of $674,000.
• Allocated Expenses budgeted to have an increased deficit of 4%. Key variances in this figure include 4% increased staff salary and benefits, Data Processing increases of 46% to accommodate greater server capacity and maintenance needed for Web-based meetings; and an upgrade of existing computers. General and administrative increases in this area reflected increased audit fees associated with a new Society auditor beginning FY 2008; increased bank and credit card service fees; and increased insurance.

Mr. Banerjee also summarized the budget as it relates to the five NYSSCPA strategic plan areas as follows:

• Professional Competency was budgeted to have an overall decreased deficit of 2.07%. Key components in this strategic area include increased CPA Journal advertising revenue, increased staff allocations for administering committee web based meetings, and CPE program support for the Foundation at the same level as fiscal year 2008 of $674,000.
• Public Trust was budgeted to have an overall decreased deficit of 15%. Key components in this area included increased net revenue for peer review administration, and reduced paper and labor expenses in the ethics area and peer review areas due to new paperless processes.
• Advocacy was budgeted to have an overall decreased deficit of 6%. The key components included an $108,000 increase in dues revenue based on the Board’s policy of increasing each membership class dues level by 2% annually, and on the goal of increasing each member class volume (number of members within each class) by 2% as well. This strategic plan area’s allocated expenses were reduced because the services associated with recruiting new members appears in Recruitment and Retention for FY 2009; and the services asoociated with exposing the profession to high school students appears in Public Awareness.
• Recognition & Visibility was budgeted to have an overall increased deficit of 10%. Key components included additional services in the area of Public Relations to expose the profession to the public at large. In addition, an 8% greater net deficit over fiscal year 2008 was budgeted for Website Management despite an increase in ad revenue due to greater allocated expenses from services provided by existing staff to manage increasing web content.
• Recruiting & Retention was budgeted to have an overall decreased deficit of 19%. Budgeted allocated expenses for this goal decreased from fiscal year 2008 due to the high school recruitment position being budgeted in the Public Awareness component of Advocacy in 2009. Budgeted direct expenses also were increased in this area due to greater activities planned to increase membership.

Mr. Torres moved to approve the fiscal year 2009 budget as presented, and Ms. Wood seconded the motion. The motion passed unanimously. Mr. Nelson did not participate in the vote.

President-elect Fierstein, chair of the Board Selections Subcommittee, noted that each year the Society Board nominated individuals from whom the FAE Board would be required to fill any FAE Board vacancies provided, however, that the Society Board nominated at least twice as many individuals as there were FAE Board vacancies. She mentioned that there would be three Trustee vacancies at the end of the current fiscal year; therefore, the Society Board needed to nominate at least six individuals.

Ms. Fierstein reported that an article was published in The Trusted Professional and an email was sent to all CPA members to solicit interest in serving on the FAE Board. The Selections Subcommittee met via teleconference to discuss the 18 persons who responded and subsequently narrowed the list to the following nine:

• Jack M. Carr
• Cheryl A. Cornwell
• Daniel M. Fordham
• James E. Godleski
• Jeffrey R. Haber
• Laurence Keiser
• Warren Ruppel
• Denise M. Stefano
• Paul D. Warner

Ms. Fierstein asked if there were any additional nominations. There being none, the nominations were closed without objection. President Lifson then designated Messrs. Adair and Meinberg as tellers for the election.

Upon a duly held election, the following six candidates received the most votes:

• Jack M. Carr
• Cheryl A. Cornwell
• Daniel M. Fordham\
• Jeffrey R. Haber
• Warren Ruppel
• Denise M. Stefano

President Lifson noted that the list would be presented for a final election during the FAE Board’s next meeting.

Mr. Pape presented the membership report noting that as of April 3, 2008, there were 28,443 members compared to 28,654 at approximately the same time in the previous year. The members included the following: 155 total applicants, 59 reinstatements, 42 deaths and 5 resignations. In addition, there were 258 student terminations. Student terminations were necessary because their member records indicated that they had graduated from college. These members were still paying Associate Student dues. Staff made repeated efforts to contact these members to update their employment status but received no replies.

Mr. Falbo moved to approve the membership report and Mr. Piluso seconded the motion. The motion passed unanimously. Mr. Nelson did not participate in the vote.

Mr. Pape noted that the Society’s contract with CAMICO called for the establishment of mutually agreeable revenue goals to be approved by the NYSSCPA each year. He presented the following set of goals for calendar year 2008:

• $3,811,691 in total premium
• 460 Policies
• 2,910 insured CPAs

Mr. Pape added that the newly approved CAMICO EPLI line (see item B08-A-13) also had the following goals:

• Renewal Premiums - $2,600 in premiums, 17 policies
• New Business - $40,000 in premiums, 33 policies

Mr. Piluso moved to approve CAMICO’s 2008 goals, and Ms. Rahilly seconded the motion. The motion passed unanimously. Mr. Nelson and Ms. McKane did not participate in the vote.

Mr. Schmelkin presented staff’s recommendations regarding enhancements and other changes to the Society’s office copiers and fax equipment. He noted that the changes could be accomplished by renewing expiring equipment leasing agreements with Century Business Solutions, Inc. and Xerox, respectively. Because both lease renewals would result in expenditures to the Society exceeding $100,000 over the terms of each lease, Board review and approval was required.

Mr. Schmelkin summarized the first proposal from Century Business Solutions (CBS). He noted that the Society had leased copiers and fax machines from CBS for over ten years, with the current lease covering four fax machines and four convenience copiers for routine staff faxing and copying. The renewal lease for all brand new machines was quoted at a rate of $2877.36 per month for 60 months, as compared to the current lease rate of $4010 per month for older models. In addition, the proposal would allow the Society to keep two loaned fax machines which were provided to temporarily replace two older problematic machines.

Mr. Schmelkin then summarized the proposal from Xerox to upgrade two high volume production copier machines. He noted that these machines were utilized by operations staff to produce the bulk of manuals for FAE conferences and seminars, as well as support the photocopy needs of NYSSCPA and affiliated entity governance bodies and committees. He said that although the current Xerox lease did not expire until 2009, several breakdowns with the current equipment during recent peak photocopy periods necessitated a speedier upgrade resolution. Xerox offered a 60 month lease proposal for newer, more efficient machines which would replace the existing lease and older equipment. Including overage fees, the new 60 month proposal was estimated to cost the Society an average of $9320 per month, as compared to the current $9410 per month.

In the ensuing discussion, it was noted that both leases had been reviewed by Society counsel and that their standard terms included the assumption of equipment loss risk, which was covered by Society insurance. Mr. Schmelkin added that maintenance and other services provided by both companies under the lease terms were excellent.

Ms. Fierstein moved to approve both leases and to authorize the Executive Director to execute all lease agreements necessary to accomplish the upgrades. Mr. Arcara seconded the motion. The motion passed unanimously.

Ms. Fierstein presented the QEPC’s white paper on pre-certification education by giving an overview of the paper’s concerns and of the process by which the committee finalized the draft. She noted that at its February meeting, the Executive Committee approved the white paper for consideration and action by the full Board. In the ensuing discussion, a Board member suggested that the practice area of tax be added to the practice areas listed on page as requiring essential foundations of technical knowledge. The suggestion was well received.

Mr. Piluso moved to approve the pre-certification education white paper as amended, and Mr. Arcara seconded the motion. The motion passed unanimously. Mr. Nelson did not participate in the vote.

SR-4. Roles of the Vice Presidents—The Vice Presidents shall serve in the following capacities, with the assignment to be made by the President:

• Two Vice Presidents for Chapters
• A Vice President for Committees
• A Vice President for Professional Issues

The chapter vice presidents shall be assigned responsibilities for chapters in a manner that assures diversity based on location, size, and longevity.

NP-6. The Nominating Committee should consider the role officers will play in developing its nominations for officer positions. However, regarding vice president assignments, the Nominating Committee is only to nominate vice presidents; the President is to make vice presidents assignments. When obtaining a candidate’s consent to serve as Vice President, the Nominating Committee shall alert the candidate to the fact that the President could assign the candidate to any of the responsibilities outlined for Vice Presidents in the Board’s Standing Rules.

There being no further business, President Lifson declared the meeting adjourned at 3:39 p.m.