Minutes of:

New York State Society of Certified Public Accountants (NYSSCPA) Board of Directors Meeting

Date & Time:

Monday, April 6, 2009, 9:04 a.m. to 2:00 p.m.

Location:

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

Presiding Officer:

Sharon Sabba Fierstein, President

Board Members Present:

David J. Moynihan, President-Elect
Barbara S. Dwyer, Vice President
Joseph M. Falbo, Jr., Vice President
Elliot L. Hendler, Vice President
Margaret A. Wood, Vice President
Richard E. Piluso, Secretary/Treasurer
Scott M. Adair*
Edward L. Arcara
John Barone
Susan M. Barossi
Cynthia D. Barry
S. David Belsky
Anthony Cassella
Robert L. Goecks
David R. Herman
John B. Huttlinger, Jr.
Martha A. Jaeckle*
Suzanne M. Jensen

Lauren L. Kincaid
Gail M. Kinsella
Nancy A. Kirby
J. Michael Kirkland
Kevin Leifer
Elliot A. Lesser
David A. Lifson
Mark L. Meinberg
Avery E. Neumark*
Robert A. Pryba, Jr.*
Joel C. Quall
Ita M. Rahilly
Judith I. Seidman
Thomas M. VanHatten
Liren Wei
Charles J. Weintraub
Louis Grumet, Executive Director

Board Member Absent:

Thomas Boyd
Scott Hotalen

Anthony J. Maltese

Staff Present:

Suvro C.K. Banerjee
Joanne S. Barry
Charlie Chen
Derrick Chou-Marquez
Craig Mandelbaum
Ernest J. Markezin
Dennis O’Leary

Patrick Payano
William J. Pape
Alan Schmelkin
Paul L. Sinegal
James A. Woehlke
Dominic Yung

B09 – A – 0
Call to Order

President Sharon Sabba Fierstein noted that a quorum was present and called the meeting to order at 9:04 a.m.

B09 – A – 1
Minutes

a. Approval of Minutes of December 18, 2008, Meeting

Ms. Fierstein asked if Board members had any changes or comments to the minutes of the December 18, 2008, Board of Directors’ meeting. Mr. Lesser moved to approve the minutes and Mr. Hendler seconded the motion. No questions or comments were raised. The motion passed unanimously with no abstention.

b. Draft Minutes of February 13, 2009, Executive Committee Meeting for Information Only

Ms. Fierstein noted that the draft February 13, 2009, Executive Committee meeting minutes were attached for the Board of Directors’ information. No questions or comments were raised

a. 2009 Annual Election Meeting and Dinner Journal Ads for the Benefit of COAP

Ms. Fierstein discussed the 2009 annual election meeting and the dinner journal ads for the benefit of COAP. Mr. Moynihan and Mr. Passikoff had acted as co-chairs of the fund-raising campaign. So far, two of the four major accounting firms had each committed a contribution of $10,000. It was noted that total commitments had been down this year, compared to those of previous years.

b. Awards Committee Report

Mr. Lifson provided the awards committee report and mentioned the five individuals who received society awards:

• Mr. Thomas J. Murray – Arthur J. Dixon Public Service Award.
• Mr. Elliot Hendler – NYSSCPA Distinguished Service Award.
• Mr. Brian L. Roulin – Outstanding CPA in Government.
• Mr. William R. Donaldson – Hall of Fame.
• Mr. Sidney Kess – Hall of Fame.

c. Town Hall Meetings Update

Ms. Fierstein reported that all chapter town hall meetings had been completed. In particular, Ms. Fierstein mentioned that the Westchester Chapter Managing Partners and the Nassau Chapter Managing Partners and town hall meetings in January 2009 were well attended.

a. Quality Enhancement Policy Committee

Mr. Moynihan noted that the Quality Enhancement Policy Committee did not meet in March 2009. The committee would next meet on April 22, 2009, to further discuss the thought paper on why quality matters to the profession.

b. 2009 Leadership Conference

Mr. Moynihan noted that the upcoming Leadership Conference would be held at Turning Stone in Verona, New York, between July 12 and July 14, 2009. The theme for this year’s conference would be “How we all work better together amongst the Board, chapters, committees, and young CPAs.” Meetings for the PAC, FAE, and media training would start later in the day on Sunday (July 12), followed by a cocktail reception. Vouchers would be provided for dinner at the Turning Stone facilities for the convenience of the attendees. Monday’s (July 13) sessions would last no more than five hours, followed by a cocktail reception and dinner. A Board meeting would be scheduled on Tuesday (July 14), and the conference would adjourn subsequently.

a. Chapters Update

Chapter Vice President Falbo reported that there was no chapter president call held in March 2009. Mr. Falbo noted that the Executive Committee had recommended in February 2009 that the new chapter financial policy be included in the fiscal year 2009-2010 chapter manual. The issue of the speaker honoraria would need to be discussed at the Governance Subcommittee and the Executive Committee before further actions would be taken. Mr. Falbo also mentioned that chapter treasurer training sessions would be planned. Ms. Dwyer commented that an outline would be prepared for the incoming chapter presidents.

A board member raised the issue of requiring two signatures on checks by chapter officers for chapter activities. Mr. Falbo responded by indicating that if the activity had been approved as part of the chapter budget, then there would be no need for two signatures. Otherwise, chapter financial policy would need to be followed. This would be reflected in the fiscal year 2009-2010 chapter manual.

Mr. Moynihan announced that Mr. Meinberg and Mr. Wei would assume the role of Vice Presidents in charge of chapters during fiscal year 2009-2010.

b. Recent Society Comments

Ms. Wood stated that 37 comment letters had been issued this fiscal year to date. Since the December 2008 Board of Directors’ meeting, the following comments had been submitted:

• 3/5/09 – Comments to the Securities and Exchange Commission on their proposed Roadmap for the potential use of financial statements prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board by U.S. issuers for purposes of their filings with the Commission. This Roadmap sets forth several milestones that, if achieved, could lead to the required use of IFRS by U.S. issuers in 2014. Prepared by the NYSSCPA’s IFRS Roadmap Task Force. Principal drafters were Mr. David Bender, Mr. Robert A. Dyson, Mr. Hisham A. Kader, and Ms. Anna Zubets.
• 3/3/09 – Comments to the Financial Crimes Enforcement Network Agency (FinCEN) of the Treasury Department on FinCEN’s proposal to reorganize Bank Secrecy Act regulations. Prepared by the Anti-Money Laundering and Counter Terrorist Financing Committee, chaired by Mr. Timothy Hedley. Principal drafters were Mr. Robert L. Goecks, Mr. Peter A. Goldman, Mr. Alan W. Greenfield, Mr. Tom Levanti, and Ms. Linda Silvestri.
• 2/18/09 – Comments to the Public Company Accounting Oversight Board on Release No. 2008-006 - Proposed Auditing Standards Related to the Auditor’s Assessment of and Response to Risk, with comment on efforts to improve the risk assessment procedures undertaken during an audit. Prepared by the Auditing Standards Committee, chaired by Mr. Robert N. Waxman. Principal drafters were Ms. Karin Blaney, Mr. Robert W. Berliner, Ms. Rosanne G. Bowen, Mr. Fred R. Goldstein, Ms. Jan C. Herringer, Mr. Menachem M. Halpert, Mr. Neal B. Hitzig, Mr. Anil Kumar, Mr. Moshe S. Levitin, Mr. Mark Mycio, Mr. Lawrence E. Nalitt, Mr. William J. Prue, and Mr. Richard T. Van Osten.
• 2/12/09 – Comments on an exposure draft of a proposed statement on auditing standards that would supersede Statement on Auditing Standards No. 70, Service Organizations, which contains guidance for auditors auditing the financial statements of entities that use a service organization and for auditors reporting on controls at a service organization. Prepared by the Auditing Standards Committee, chaired by Mr. Robert N. Waxman. Principal drafters were Mr. Robert W. Berliner, Mr. William J. Prue, and Mr. Paul D. Warner.
• 2/12/09 – Comments on an exposure draft of a proposed statement on standards for attestation engagements that would supersede the requirements and guidance for auditors reporting on controls at service organizations (service auditors) in AU section 324, Service Organizations (AICPA, Professional Standards, vol. 1). Prepared by the Auditing Standards Committee, chaired by Mr. Robert N. Waxman. Principal drafters were Mr. Robert W. Berliner, Mr. William J. Prue, and Mr. Paul D. Warner.
• 2/11/09 – Comments to the Public Company Accounting Oversight Board on Release No. 2008-006, specifically addressing Appendix 4, The Auditor's Responses to the Risks of Material Misstatement, page A4–13–37. Prepared by the Technology Assurance Committee, chaired by Mr. Bruce I. Sussman. Principal drafters were Mr. Michael A. Pinna, Mr. Yigal Rechtman, and Mr. Bruce I. Sussman.
• 2/10/09 - Comments to the IRS on Proposed Amendments of Regulations §1.108-7, Reduction of Attributes. The purpose is to explain how an S corporation can reduce its NOL tax attribute under IRC § 108(b) for tax years in which the S corporation has COD income which is excluded from gross income. Prepared by the Closely Held and S Corporations Committee, chaired by Mr. Stewart Berger. Principal drafter was Mr. David S. Gibson.
• 1/21/09 - Comments on FASB's proposed FSP 144-d that would amend the definition of a discontinued operation and the disclosure requirements of Statement 144. Prepared by the Financial Accounting Standards Committee, chaired by Mr. Edward P. Ichart. Principal drafter was Mr. Abraham E. Haspel.
• 1/9/09 - Comments to the AICPA on Proposed Preface to Codification of Statements on Auditing Standards, Principles Governing an Audit Conducted in Accordance With Generally Accepted Auditing Standards, and Proposed Statement on Auditing Standards, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance With Generally Accepted Auditing Standards. Prepared by the Auditing Standards Committee, chaired by Mr. Robert N. Waxman. Principal drafters were Mr. Gillad C. Avnit, Mr. Robert W. Berliner, Ms. Jan C. Herringer, Mr. Neal B. Hitzig, Mr. Michael R. McMurtry, and Mr. Robert N. Waxman.

Ms. Wood noted five oversight committees and twelve statewide committees that had been involved during the fiscal year in producing the comment letters:

• Anti-Money Laundering and Counter Terrorist Financing Committee,
• Auditing Standards Committee,
• Closely Held and S Corporations Committee,
• Financial Accounting Standards Committee,
• Government Accounting and Auditing Committee,
• International Accounting and Auditing Committee,
• New York, Multistate and Local Taxation Committee,
• Not-for-Profit Organizations Committee,
• SEC Practice Committee,
• Stock Brokerage Committee,
• Technology Assurance Committee, and
• Trust and Estate Administration Committee.

Ms. Wood mentioned that other committees and chapters should be encouraged to participate in the comment letter process.

c. Committees Update

Mr. Hendler reported that preparations had been in progress for the incoming committee chairs and vice-chairs. The committees and oversight committees had been meeting consistently during the first quarter of 2009. On February 26, 2009, the Tax Division Oversight Committee had sponsored a breakfast briefing discussing the Madoff scandal and tax-related issues, and it was a successful event. The new online committee brochure had been released and could be found on the Society website.

Mr. Moynihan announced that Mr. Lesser would assume the role of Vice President in charge of committees during fiscal year 2009-2010.

a. Financial Statements for Nine Months Ended February 28, 2009

Mr. Piluso reported that the financial statements for nine months ended February 28, 2009, had been in line with the budget and were reflective of the Society’s financial position.

b. Election Process Report

Mr. Piluso discussed the efforts of the 2008-2009 Nominating Committee. Mr. Piluso praised Nominating Committee Chair, Mr. Neville Grusd, for his outstanding leadership. Since no independent nominations had been received, the election would be expected to proceed unchallenged. The proxy mailing would be sent out on or about April 14, 2009. Past Presidents Thomas Riley and Stephen Langowski had agreed to assume responsibility for counting the proxy ballots.

a. Legislative and Regulatory Update

Mr. Grumet reported that Mr. O’Leary and he had been working closely with the New York State Legislature on current issues. In particular, they had been actively addressing the issue where CPAs would not be required to register annually with the New York State Department of Taxation and Finance as tax return preparers nor pay an annual registration fee of $100 as a commercial tax return preparer. Mr. Grumet mentioned that he would be soliciting legislative sponsors for the Board’s proposal to recommend the graduate degree requirement for a CPA license in New York.

Mr. Grumet noted that Mr. O’Leary and he had been in daily contact with the New York State Education Department (SED) on the drafting of the regulations with respect to the 2009 accountancy reform law. The process had been moving swiftly and the draft regulations would include items related to quality review. The State Board for Public Accountancy had held a public meeting on March 20, 2009, where the draft regulations were discussed and approved conceptually and had subsequently been sent to the Counsel’s Office of the SED for review. The New York State Board of Regents would next meet in early May to consider the draft regulations, which would be on course to take effect as emergency regulations on July 26, 2009. Comments would then be expected from the public and the final set of regulations would be presented to the New York State Board of Regents in November 2009 for approval.

Mr. Grumet announced that, effective June 1, 2009, Mr. O’Leary would be working three days a week and would solely focus on legislative and regulatory efforts for the Society. Mr. Payano, effective June 1, 2009, would be promoted to department head of the Ethics Department, assuming full responsibilities related to the department handled by Mr. O’Leary.

b. Member Benefits Update

Mr. Grumet referred Board members to their agenda materials regarding the current year’s member benefits update.

c. Accounting Reform Law Outreach Program

Mr. Grumet reported that about 700 individuals had attended the various 2009 accountancy reform law sessions led by Mr. O’Leary, Ms. Joanne Barry, and him since February 2009. The questions that had been raised so far during these sessions mostly related to the effective date of the new CPE requirements, the treatment of the 2009 CPE calendar year, and whether it would include the last four months of 2008. Mr. Grumet mentioned that, through the drafting of the regulations by the SED, new concentration(s) related to industry would be devised. Mr. Grumet noted that, based on speaking with attendees at the sessions, it was apparent that many tax CPAs had not been previously registered, in addition to industry CPAs.

The SED would grant exemptions to CPAs if they could prove that they would not be using the skills and competency of CPAs in their profession. Mr. Grumet stated that the issue of mobility, as it related to the 2009 accountancy reform law, had not been a heavily discussed issue. The questions raised during these sessions had been forwarded to the SED for the FAQs on their website.

All chapters had been informed of the opportunity to hold similar sessions on the 2009 accountancy reform law. So far, the Suffolk Chapter and the Rochester Chapter had committed to a date for such a session.

d. Industry Outreach Program

Messrs. Grumet and O’Leary and Ms. Joanne Barry would soon be holding the 2009 accountancy reform law discussions at Deutsche Bank, Citigroup, and the New York City Government offices, and for members of Financial Executives International (FEI) and the Tax Executives Institute (TEI). Mr. Yung had been working to reach out to industry firms to raise the awareness of the Society and the 2009 accountancy reform law and to increase membership. On May 11, 2009, the Society and the New York City Chapter of FEI would co-sponsor an evening networking session at the Society’s offices. Members of TEI had been invited.
Mr. Grumet announced that Mr. Yung would be promoted to department head of the newly created Industry Department, effective June 1, 2009.

e. Benevolent Fund Update

Mr. Grumet reported that the Society had gained provisional approval from the New York Charities Bureau for the merger of FAE and the Benevolent Fund. The proposal would next be reviewed by the SED before returning to the New York Charities Bureau and, ultimately, to the New York State Supreme Court for final approval.

f. COAP Report

Mr. Grumet stated that a new COAP program had been established at York College. The C.W. Post campus of Long Island University could be the host of the next new COAP program.

g. Chief Officer for Strategic Plan

Mr. Grumet announced that Ms. Joanne Barry, as part of her role as Deputy Executive Director, would be the Chief Officer for the Strategic Plan. In this role, Ms. Barry would align the strategic plan, financial oversight, and governance issues and would be the chief liaison to the Board, the Executive Committee, the Governance Subcommittee, and the Audit Committee.

Ms. Cohen noted that FAE program registrations had experienced a decline during the fiscal year 2008-2009, but program cancellations had been lower than those of past years. As a result, substantial cost containments were implemented. The FAE staff, under the direction of Mr. Schmelkin, would be developing a curriculum with a focus for CPAs outside of public practice. At the upcoming FAE Board meeting in May 2009, the new curriculum would be reviewed along with policy issues due to the 2009 accountancy reform law. In addition, new members of the FAE Board of Trustees would be elected at that meeting. The FAE Scholarship Committee would be meeting in ten days to discuss scholarship applications. The 150-hour requirement would take effect this coming academic year. The 2009 COAP programs would begin at the end of June. Ms. Cohen advised that volunteers would be welcomed to serve on the 2009 -2010 curriculum committee.

Mr. Lifson reported on the activities at the AICPA Council meeting on March 18, 2009. The topics discussed at the meeting included:

• The proposed international CPA examination;
• The CPA profession’s reaction to the current financial crisis;
• The auditing of broker/dealer firms, hedge funds and investment partnerships, and investment advisors; and
• The requirement of CPA certification for senior officers of a firm (e.g., Chief Financial Officer).

The AICPA’s spring meeting of Council would take place at the JW Marriott in Washington, D.C., between April 26 and 28, 2009.

Mr. Schmelkin gave a presentation regarding the selection process of the new association management system (AMS), the recommendation of Aptify and the relevant costs, and the proposed timetable for the implementation. Mr. Schmelkin, on behalf of NYSSCPA management and with the recommendation by the Executive Committee, proposed that the Board support the staff proposal to acquire the Aptify AMS system, approve the contract with Aptify that had been reviewed by Legal Counsel, and authorize the Executive Director, or his designee, to sign such agreements and documents required to acquire and implement the new Aptify AMS system, consistent with the report and presentations.

Mr. Stone, Vice President of Sales of Aptify, followed by presenting the highlights of the functionalities and user-interface of the new AMS system.

During the ensuing discussions, Board members raised the following questions, all of which were responded to by either Messrs. Stone, Schmelkin, or Grumet:

• Identification of the costs and problems with the Society’s current system,
• Consideration of new hardware acquisitions,
• The ease of altering the user-interface (e.g., dashboard),
• The derivation of the annual maintenance fees,
• The documentation of system design/functionality changes, and
• Security issues.

Ms. Kinsella moved to approve the contract for the AMS, and Ms. Dwyer seconded the motion. After discussion, the motion passed unanimously with no abstention.

Mr. Piluso presented the background, detailing the development of the fiscal year 2009-2010 budget. The Finance Committee and the Executive Committee had approved the budget in February 2009, and the 2009 Strategic Plan was reflected in the new budget. Mr. Piluso explained that the fiscal year 2009-2010 budget package had combined the activities of the Society and FAE and would be a more effective management tool. Mr. Piluso noted that, due to the new presentation format of the budget based on objectives, comparison of the financials with prior years would be difficult during fiscal year 2009-2010.

During the ensuing discussion, Board members raised the following issues, all of which were responded to by either Messrs. Piluso, Banerjee, or Grumet:

• Clarification that the FAE budget was approved by the FAE Board of Trustees in December 2008,
• Clarification of membership dues projections,
• Explanation of the budgeted amounts for salaries/benefits and temporary help,
• Identification of the increase in budget for industry-related activities, and
• The budgeted costs for bank charges and their origins.

Mr. Falbo moved to approve the fiscal year 2009-2010 budget, and Ms. Kinsella seconded the motion. After discussion, the motion passed unanimously with no abstention.

Mr. Pape presented the membership report, noting that, as of April 6, 2009, there were 28,177 members compared to 28,443 at approximately the same time in the previous year. The members included the following (based on changes since June 1, 2008): 1,482 total applicants, 297 reinstatements and readmissions, 119 readmitted students and candidates, 99 deaths, 351 resignations, 1,547 dues-related terminations, and 5 ethics-related terminations.

Mr. Herman moved to accept the membership report, and Mr. Lifson seconded the motion. After discussion, the motion passed unanimously with no abstention.

Mr. Moynihan described the work done by the Selections Subcommittee in vetting and recommending eight candidates as nominees to fill the three vacancies on the FAE Board for fiscal year 2009-2010. Initially, there were sixteen submissions of interest. After one individual withdrew his expression of interest, eight candidates were vetted by the Selections Subcommittee and were being recommended for Board consideration.

Mr. Piluso moved to recommend the eight candidates to fill FAE Trustees vacancies, and Mr. Quall seconded the motion. During the ensuing discussion, several Board members expressed concerns with the proposed recommendations and requested further discussion of the issue during the executive session.
Mr. Moynihan moved to table Mr. Piluso’s motion until it could be further discussed at the executive session and Ms. Dwyer seconded the motion. The motion passed unanimously with no abstention.

Following the executive session, Mr. Piluso withdrew his motion without objection.

The Board then proceeded to conduct individual elections for each of the eight candidates vetted by the Selections Subcommittee. The results were as follows:

• Mr. Brian A. Caswell: Approved; Ms. Dwyer, Ms. Kinsella, Ms. Kirby, and Mr. VanHatten opposed.
• Mr. Robert H. Colson: Unanimously approved.
• Ms. Patricia A. Johnson: Unanimously approved.
• Ms. Lauren L. Kincaid: Unanimously approved; Ms. Kincaid abstained.
• Mr. Raymond M. Nowicki: Unanimously opposed; Ms. Fierstein and Messrs. Moynihan and Wei abstained.
• Mr. Victor S. Rich: Unanimously approved.
• Mr. Paul D. Warner: Unanimously approved; Mr. Lesser abstained.
• Ms. Priscilla Z. “Penny” Wightman: Unanimously approved.
  

Mr. Pape presented the Membership Committee’s recommendation on the new dues category for members temporarily out of the workforce. This recommended procedure would replace the existing system which had allowed staff to grant two dues reductions without committee involvement and for the committee to grant reductions thereafter. The new procedure would incorporate existing eligibility rules and add an additional category for members working fewer than 1,000 hours and who would be age 61 or younger.

Ms. Kincaid moved to approve the proposal for the new dues category, and Ms. Wood seconded the motion. After discussion, the motion passed unanimously with no abstention.

Adjournment Ms. Fierstein concluded the meeting by commenting on the events that took place during her term as president of the Society, which included the record number of comment letters, the 2009 accountancy reform law, and the extension of Mr. Grumet’s contract to 2012. Ms. Fierstein thanked the Board for their efforts during the year and specifically thanked the following outgoing Board members:

• Mr. Edward Arcara,
• Ms. Barbara Dwyer,
• Mr. Elliot Hendler,
• Mr. Scott Hotalen,
• Ms. Lauren Kincaid,
• Mr. Kevin Leifer,
• Mr. David Lifson,
• Mr. Richard Piluso,
• Mr. Robert Pryba, and
• Ms. Judith Seidman.

Mr. Lifson praised Ms. Fierstein for her leadership and perseverance during her term as president.

Mr. Moynihan moved to adjourn the meeting, and Mr. Weintraub seconded the motion. There being no objection, the meeting adjourned at 2:00 p.m.