B06 – A – 0
Call to Order

B06 – A – 1
Minutes

Approval of Minutes of December 8, 2005, meeting

Mr. Langowski asked Board members if they had any changes to the minutes of the December 8, 2005, Board of Directors meeting. There being none, Mr. Kiamie moved to approve the minutes as drafted, and Ms. Schoenfeld seconded the motion. The motion passed unanimously.

B06 – A – 2
President’s Report

a. Enterprise Risk Analysis

Mr. Langowski reported that a partner from his firm, Anthony T. Dalessio, met with the Executive Committee in February to provide an overview of enterprise risk management. He noted that staff was asked to develop an initial prototype of risks facing the organization to be brought back to the Executive Committee at a later time. In response to a question, Mr. Langowski noted that no specific time line had yet been set or a decision made with regard to a formal risk analysis, but that further meetings and an initial prototype would be the suggested preliminary steps. He encouraged the serious consideration of a risk analysis, saying that it would be well-worth undertaking. Mr. Grumet added that he also welcomed such an analysis because not all organizational risks were financial or adequately addressed by insurance coverage.

b. Update on Executive Director Contract Renewal

Mr. Langowski reported that the Executive Director’s contract renewal process was progressing, and that a vote on the contract was anticipated to be held at the next Executive Committee meeting on May 18, 2006.

c. Awards Committee Report

Mr. Langowski announced that the Awards Committee selected the following as 2005-2006 Society awards recipients:

Hall of Fame:
Robert L. Gray

Arthur J. Dixon Public Service Award:
Andrew M. Eassa

NYSSCPA Distinguished Service Award:
Kevin J. McCoy
Victor S. Rich

Dr. Emanuel Saxe Outstanding CPA in Education Award:
Alex B. Ampadu

Mr. Langowski congratulated the award recipients. He noted there were no nominations for the Outstanding CPA in Industry and Outstanding CPA in Government awards. The awards will be presented at a reception before the Annual Election Meeting and Dinner, scheduled on May 18, 2006.

d. Recognition of Board Members (not on agenda)

Mr. Langowski then recognized the following Board members whose terms were due to expire as of May 31, 2005:

William Aiken
Michelle A. Cohen
Ann Burstein Cohen
Raymond P. Jones
John J. Kearney
David J. Moynihan
Raymond M. Nowicki
Robert T. Quarte
Susan Schoenfeld
Stephen P. Valenti
Robert N. Waxman
Philip G. Westcott

He thanked the members for their service.

B06 – A – 3
President-elect’s Report

a. Quality Enhancement Policy Committee Update

President-elect Riley stated that the Quality Enhancement Policy committee had turned its attention to the Society’s ethics program.

President Langowski then acknowledged the distribution to the Board just before the meeting of letters written by roughly half the members of the Peer Review Committee endorsing a letter dated February 6, 2006, over the name of committee chairman Paul Salmin and addressed to the Executive Committee. The letter stated a number of concerns regarding peer review program administration. Mr. Langowski noted that the letter had been distributed to the Executive Committee at its February 7 with the assurance that he would look into the letter’s allegations and place the matter on the next Executive Committee meeting. He stated that it was not fair to the Board to discuss the matter without more advance notice, and assured the Board that the matter would be placed on the agenda of the Executive Committee’s May 18 meeting.

b. 2006 Leadership Conference

Mr. Riley reminded members that the 2006 Leadership Conference would be held at the Gideon Putnam, in Saratoga Springs, New York. He encouraged Board members to contact him or staff if they had any suggestions for the conference.

B06 – A – 4
Vice Presidents’ Reports

a. Chapters Update

Vice President Valenti reported on the most recent conference call of Chapter presidents, noting that chapters were doing well overall and were active.

Mr. Langowski thanked Mr. Valenti for his hard work as Society Vice President for Chapters during the 2005-2006 year. The full board also expressed its thanks.

b. Recent Society Comments

Vice President Schoenfeld reported that Society committees had issued comments as follows:

• Comments submitted to the Information Security Audit and Control Association by the NYSSCPA Technology Assurance Committee, chaired by Joel Lanz, on Standards Documents Under Exposure: Business Application Change Control; dated February 9, 2006, Principal Drafters: Yigal Rechtman and Joel Lanz.
• Comments submitted to the Internal Revenue Service by the NYSSCPA Professional Ethics Committee, chaired by Francis T. Nusspickel, CPA, Responding to Notice of Proposed Rulemaking 137243-02 – Guidance necessary to Facilitate Electronic Tax Administration – Updating of Section 7216 Regulations; dated March 6, 2006.

President Langowski commended the authors and their respective committees for outstanding work. He also thanked Ms. Schoenfeld for her hard work as Vice President for Professional Issues during the 2005-2006 year. The full board also expressed its thanks.

B06 – A – 5
Treasurer’s Report

Financial Statement for the Eight Months Ending January 31, 2006

Mr. Grusd presented the Treasurer’s Report, noting that the Society was ahead of budget in net income, while the numbers from February were showing a continuing trend. He attributed this positive variance to unfilled staff positions, increased revenues from chapter events and dues increases.

He noted that in February, the Society commenced its first contribution ($186,000) to FAE of a budgeted $623,000 contribution. He said that projections indicated FAE would require the entire contribution. He said that FAE’s allocations of cost would consume more than budgeted.

B06 – A – 6
Secretary’s Report

a. Committees Update

Mr. Nowicki reported that committees were continuing to operate well, noting in particular the increase in the amount of public commentary emanating from committees. He noted that the former Committee on Committee Operations or COCO had been discontinued which, he opined, had resulted in enhanced governance oversight of the committees by the Executive Committee.

b. Nominating Process Report

Mr. Nowicki reported that the Nominating Committee met on January 12, 2006, and nominated the following individuals for the positions set opposite their names:

Mr. Nowicki stated that he found the nominations process to be more open than it had been historically and suggested that, going forward, the Society should consider a democratic elective process whereby the membership could vote for individual candidates instead of a pre-determined slate.

Mr. Langowski thanked Mr. Nowicki for his hard work as Society Secretary during the 2004-05 and 2005-06 fiscal years. The full board also expressed its thanks. Mr. Nowicki thanked Mr. Langowski and the Board for the recognition. He encouraged the Board to consider looking at the role of the Secretary in organizational governance and to continue improving, formalizing and enhancing the role.

a. Legislative & Regulatory Update

Mr. Grumet reported on New York State Board of Regents regulations and concerns that had arisen last year over the due process implications of the regulations as they related to “reportable events”. A lengthy discussion ensued regarding the types of events that must be reported by licensed professionals. Mr. Grumet noted while there was agreement on many of the reportable events, any court or arbitration decision of more than $25,000 must be reported without respect for the exhaustion of available appeals. He noted that the Legislative Task Force would be approving a public letter and comments on this issue would be filed shortly.

Mr. Grumet noted that the State Board of Public Accountancy had met with the Legislation Task Force regarding the lack of an actual score on the CPA exam. He noted that the State Board was pressuring the AICPA for exam “diagnostics” which would help candidates assess their strengths and weaknesses on a failed exam, but the AICPA had not yet been forthcoming. With respect to the exam, Mr. Evangelista noted that a survey was being conducted to ascertain why candidates generally do not seem to be taking the exam as soon as they can.

Mr. Grumet then updated the Board on negotiations with the New York State Health Department concerning health facility cost reports required for Medicaid funding. He noted that the official forms for the cost reports needed to be GAAP compliant as well as compliant with other professional standards and state law. He also asked Board members to let staff know if they were aware of any situations in which they or their firms were required to sign off on official forms that were non-GAAP compliant.

b. Dues Update

Mr. Grumet announced that despite a later-than-usual mailing of dues invoices, 94% of membership dues had been received, which was on par with last year.

c. Member Benefits Update

Mr. Grumet referred the Board to a summary of member benefits program performance statistics, which was included in the Board agenda materials. No discussion was held regarding the programs.

d. COAP Update

Mr. Grumet announced that the COAP program would be unveiling a new program at SUNY Buffalo this summer and thanked Board member Ann Burstein Cohen for her efforts in making that program happen. In addition, programs were anticipated at a number of other venues throughout the state.

e. Trade Show Update

Ms. Barry reported that approximately $230,000 had been booked in exhibitor sales for the 2006 FAE Trade Show to date, with an additional $80,000 expected shortly. She noted that a total of $360,000 was budgeted overall, so sales were progressing very well at this point in the year. She reminded Board members that the show was scheduled for July 17 and 18, 2006 at the Hilton New York.

A discussion ensued regarding ways to attract more students to the trade show through targeted marketing, or by inviting recruiters to the show. Mr. Grumet stated that staff would look into the suggestions.

f. Disaster Recovery Plan

Mr. Grumet referred members to a copy of the updated disaster recovery plan, which was included in the agenda materials. He encouraged Board members to contact Operations Director Alan Schmelkin if they had any questions regarding the plan.

g. Report on CPA Journal, Trusted Professional and Website

Communications Director Joanne Barry and The CPA Journal Editor-in-Chief Mary Jo Kranacher each gave presentations to the Board on the production process relating to The Trusted Professional and CPA Journal, respectively, emphasizing particularly the quality control aspects of the processes. Ms. Barry also provided similar background regarding the Society’s website.

Adam Cheung provided a report on FAE in the absence of Mr. Bloom, FAE’s President. Mr. Cheung noted that after a review of FAE financials through February 28, 2006, a loss of $209,000 was recorded even after receipt of the initial $185,000 of a budgeted $624,000 contribution from the Society. He noted that approximately seven more FAE events were scheduled to wrap up the CPE season before May 31; however, an additional $190,000 shortfall was being projected for FAE over and above the full $624,000 Society contribution. He attributed the shortfall to facility costs including audio-visual fees associated with running larger programs in hotels, as well as the organization’s continued commitment to subsidizing an industry CPA educational curriculum often at a loss. Mr. Grumet added that the FAE Trustees would be meeting later in the month and were expected to request the additional contribution. In response to a question, Mr. Grumet noted that the anticipated request would be handled by the Executive Committee by way of an amendment to the current 2005-06 fiscal year budget. He noted that the Society was performing well ahead of budget, as reported earlier in the meeting, and that there was money to pay the additional contribution. Mr. Langowski added that the proposed capital budget would allow FAE to handle even more events in-house, including a number of conferences that currently are conducted at hotels, thus mitigating hotel costs.

President Langowski introduced Carol Lapidus, the Board’s representative to AICPA Counsel. Ms. Lapidus reported on the meeting of the AICPA Regional Council meeting, which was held in New York on March 27, 2006. She noted the following:

• Reports on the impending AICPA relocation from Jersey City, New Jersey, to Durham, North Carolina, were provided. It was noted that 15% of affected staff opted to relocate to North Carolina, of which 15% were management. No sublease on the Jersey City space had been finalized as of yet.
• It was reported that the CPA exam continued to show a marked decrease in the number of test takers after the advent of the computerized exam; however, it was anticipated that the number of test takers would increase in 2007 to pre-computerized test levels.
• The AICPA Peer Review task force on transparency gave a report including the results of a survey conducted of 1800 AICPA members regarding transparency. Roundtables were also held on the issue of transparency. Presentation of a Peer Review Transparency exposure draft was anticipated for AICPA Council vote in May 2007, followed by a full AICPA membership vote in August 2007.
• AICPA Chair, Leslie Murphy, held a town hall meeting on five subjects that will be part of a full AICPA membership vote in August 2007: 1) modification of associate membership requirements; 2) non-CPA faculty memberships; 3) modification of the honorary life membership requirement from 40 to 50 years; 4) modification of the 150-hour requirement for non-CPA owners; 5) postponement of the effective date for the 150-hour requirement from 2009 to 2012, in order allow state to subscribe to the requirement.

A lengthy discussion ensued with respect to the 150-hour requirement its history within the AICPA and in New York State, and the goals of the requirement. While some members suggested that the Society oppose the requirement, Mr. Grumet cautioned that such a position would seen as a call for lowering standards.

On behalf of the Board, President Langowski thanked Ms. Lapidus for her report.

Mr. Grusd presented the proposed 2006-2007 budget which had been unanimously recommended for full Board approval by the Executive Committee at its February 7, 2006, meeting. He noted that the proposed budget reflected net income to the NYSSCPA of $136,000 and incorporated the following features:

1. A 2% dues increase for all members excluding students, which would yield approximately $150,000. An additional $200,000 in increased dues revenue was also budgeted as a result of demographic shifts in the membership.
2. A grant to FAE of $492,000 to balance its budget, which did not account for a substantial projected increase in revenue for FAE programs based on enhanced target marketing of select course programs;
3. Two new Strategic Plan Goals: Public Trust and Recruiting and Retention, each of which called for an additional employee.
4. Acquisition of additional space on the 19th floor for more committee rooms and enhanced facilities for FAE conferences. In addition, the capital budget contained money for construction costs in the additional space;
5. Anticipated gross revenues of $10.2 million, which was 3.8% higher than last year’s budget;
6. Total expenses of $10 million divided among Strategic Plan Goals as follows:

7. A budgeted deficit of $453,000 for The CPA Journal as compared to a $188,000 deficit budgeted for 2006. This deficit increase was based on lower revenue projections of $91,000 and increased production costs of $234,000 mainly from allocated in staff compensation and facility expenses.
8. A budgeted deficit of $137,000 for Peer Review activities, as compared to a break even budget for the same in 2005-06, due to additional staff compensation and increased allocations in facility expenses.
9. An increase in cash flow of $216,000 over the year; and
10. An increase in net assets from $1.242 million to approximately $1.4 million by the end of the year.

A discussion ensued regarding the proposed dues increase. Several Board members questioned the need for an increase due to the overall favorable financial projections in the proposed budget. A member cautioned that the increase may be received negatively by members, coming right after a 10% dues increase instituted just last year. President Langowski responded that the Executive Committee recommended the increase due to the cushion that it would provide for any areas where costs might exceed expectations and also because the percentage increase was small in relation to less frequent but larger increases that may be needed in the future. Mr. Grusd added that the increase would possibly also allow staff to come back to the Board for a budget amendment later in the year to pursue public awareness programs left out of the current proposal. Mr. Nowicki added that a number of financial surprises to the organization could result from the passage of accountancy legislation.

A brief discussion ensued with respect to FAE’s projections reflected in the budget. Mr. Grumet acknowledged a level of uncertainty with respect to FAE in terms of outside facility costs, particularly in relation to audio-visual expenses and other standard add-ons. He noted that these costs were responsible in large part for FAE’s anticipated request for a budget amendment of $190,000 with respect to Society’s contribution to FAE for the current fiscal year, because such costs adversely affected anticipated revenues from several traditionally successful large FAE conferences, particularly the Not-for-Profit Conference. He noted, however, that the acquisition of additional space on the 19th floor would allow FAE to bring more of its larger conferences in-house and further reduce outside facility costs. He also noted that FAE had continued to honor its educational commitment to CPAs in industry, and also its commitment to subsidizing upstate conferences in August, but had realized a significant loss in course revenue as a result.

A Board member asked for an explanation of the overhead allocations methodology. Mr. Cheung responded that during the work week, staff individually allocated their work time to various departments within the organization via a timesheet program. He noted that he drew from these timesheet reports in order to develop the ratios applied to overheads in the budget.

Mr. Nowicki moved to approve the budget as presented, including a 2% dues increase for members excluding students, and Mr. Goldstein seconded the motion. The motion passed unanimously. Messrs. Fordham and Valenti abstained from the vote. Messrs. Palmer and Aiken did not participate in the vote.

President-elect Riley summarized the process by which FAE Trustee vacancies would be selected by the Trustees themselves from among a group of members identified by the Selections Subcommittee and further recommended by the Society Board. He noted that the process, mandated in FAE’s bylaws and NYSSCPA/FAE affiliation agreement, required that the number of nominees from the NYSSCPA be at least twice the number of vacancies pending on the FAE Board, if FAE is to be bound to fill its vacancies from the NYSSCPA list. He then reported that the Selections Subcommittee had considered 35 potential candidates, from which it was recommending the following seven persons for Board consideration:

• Ann Burstein Cohen
• Alan D. Kahn
• Robert W. Kawa
• Laurence Keiser
• D. Edward Martin
• Raymond M. Nowicki
• George Victor

President-elect Riley moved the names into nomination without objection.
President Langowski asked if there were any additional nominations. Mr. Stubbs then recommended Rey Padilla, and Mr. Grusd recommended Warren Bergstein. Mr. Evangelista then moved to close the nominations. There being no objection, President Langowski declared nominations closed. Mr. Piluso and Ms. Schoenfeld volunteered to serve as tellers.

Mr. Woehlke provided instructions on the voting process noting that members could vote for up to 6, but only once for a single candidate.

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

• Ann Burstein Cohen
• Alan D. Kahn
• Laurence Keiser
• D. Edward Martin
• Raymond M. Nowicki
• George Victor

Messrs. Fordham and Valenti abstained from the vote.

President Langowski noted that the list of nominees would be presented for a final election during the FAE board’s next meeting.

Ms. Cohen then moved to approve the Membership Report and Mr. Grusd seconded the motion. The motion passed unanimously.