Minutes of:

Board of Directors Meeting

Date & Time:

Tuesday, July 10, 2007, 8:35 am to 12:50 pm

Location:

Gideon Putnam Hotel, Saratoga Springs, N.Y.

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
Richard E. Piluso, Treasurer
Mark Ellis, Secretary
Scott M. Adair
Edward L. Arcara
Susan M. Barossi
Debbie A. Cutler
Joseph M. Falbo, Jr.
Dr. Myrna L. Fischman
Daniel M. Fordham
Robert L. Goecks
David R. Herman
Scott Hotalen
Martha A. Jaeckle
Suzanne M. Jensen

Lauren L. Kincaid
Gail M. Kinsella
Elliot A. Lesser
Beatrix G. McKane
Mark L. Meinberg
Ian M. Nelson
Jason M. Palmer
Robert A. Pryba, Jr.
Ita M. Rahilly
Thomas E. Riley
Judith I. Seidman
Thomas M. VanHatten
Liren Wei
Ellen L. Williams
Margaret A. Wood
Richard Zerah
Louis Grumet, Executive Director

Board Members Absent:

Thomas Boyd
Kevin Leifer

Robert T. Quarte
Anthony J. Tanzi

Staff Present:

Pat Agard
Suvro C.K. Banerjee
Joanne S. Barry
Nereida Gomez
Ben Kaplan
Mary Jo Kranacher
Craig Mandelbaum

Ernest J. Markezin
Dennis O’Leary
William J. Pape
Alan Schmelkin
Forrest Whitesides
James A. Woehlke

B07 – C – 0
Call to Order

President David A. Lifson noted that a quorum was present and called the meeting to order at 8:35 a.m.

B07 – C – 1
Minutes

a. Approval of Minutes of June 1, 2007, Board of Directors Conference Call

Mr. Lifson asked Board members if they had any changes or comments to the June 1, 2007, Board of Directors conference call minutes. There being none, Mr. Piluso moved to approve the minutes as presented, and Ms. McKane seconded the motion. The motion passed unanimously.

b. Highlights of June 14, 2007, Executive Committee Meeting (for Information only)

Mr. Lifson referred Board members to the draft minutes of the June 14, 2007, Executive Committee meeting, which were included in the agenda materials for informational purposes.

a. SET Tax Update

Mr. Lifson provided an update regarding the SET Tax initiative, a copy of which was included with the Board agenda. He asked that members provide feedback on the SET Tax proposal. Mr. Lifson handed out a sample copy of a SET Tax form and explained it.

b. AICPA Update

Mr. Lifson provided an update with respect to the AICPA. He stated that among the toughest issues the AICPA faces was increased transparency in the peer review process. Mr. Lifson noted that the AICPA had been working on developing niche credentials. The latest credential was a forensic accounting credential.

Mr. Lifson then discussed International Audit Issues in relation to Sarbanes Oxley Act of 2002, and the AICPA’s efforts in the harmonization process, and he referred to auditing issues affecting private companies and public companies, so-called Big-GAAP/Little-GAAP issue. The AICPA continued to be a voice in this process. The NYSSCPA could also participate through comment letters.

c. Membership Expansion Project

At Mr. Lifson’s request, Mr. Pape discussed the membership expansion project. Mr. Pape stated that members practicing in public accounting represent approximately 70% of the total membership. He was working with individual firms and with the human resources departments of public accounting firms to identify potential members. Mr. Pape thanked Ms. Kincaid for her efforts to increase membership; all qualifying members of her firm had become members in response to her recruitment efforts.

Mr. Pape briefly explained the different types of membership. He emphasized the link between membership and involvement. Mr. Pape suggested holding open houses at firms to increase membership. He was also looking to increase members in industry by enlisting the efforts of Board members to speak at industry venues.

d. CPA Journal Manuscript Submission

Mr. Lifson encouraged members to submit manuscripts for possible publication to The CPA Journal. He recognized those Board members who previously had written articles for the Journal. Mr. Lifson explained the submission process and peer review of articles before publication. He identified various subject areas covered in the Journal then asked Ms. Kranacher, CPA Journal Editor-In-Chief to discuss the Journal’ manuscript submission guidelines and procedures. Ms. Kranacher informed members that the majority of articles currently in inventory were related to accounting and auditing practice and there was a shortage of finance and taxation articles. Mr. Lifson encouraged members to review their files for possible material. Mr. Lifson noted that manuscripts submitted to the Journal should be both analytical and practical.

e. Review of 2007 Leadership Conference

Mr. Lifson asked members for feedback on the 2007 Leadership Conference. Mr. Piluso commented that articles or white papers should be produced with respect to the topics discussed at the various sessions. Mr. Lifson created the following task forces to draft summaries of the break-out discussions:

• Education Summary: Ms. Fischman and Mr. Piluso
• Accounting and Education Summary: Mss. Wood and McKane
• Tax Summary: Messrs. Riley and Fordham
  

a. Quality Enhancement Policy Committee Update

Ms. Fierstein reviewed the purpose and function of the QEPC for the Board. She noted that the QEPC had two key projects at present: the development of a white paper on pre-service education and consideration of implementation issues surrounding the peer review white paper

b. 2008 Leadership Conference – Turning Stone Resort

Ms. Fierstein announced that the 2008 Leadership conference would be held at the Turning Stone Resort from July 13 through 15, 2008.

a. Chapters Update

Vice Presidents Barnickel and Lauchert presented discussion points identified at the chapter organizational meetings they had attended. They stated that they would reach out to managing partners to engender greater participation in chapter activities. They encouraged active members to invite inactive members to chapter meetings. A Board member suggested that sole practitioners also should be targeted. Mr. Lifson thanked Ms. Barnickel and Mr. Lauchert for their efforts.

b. Recent Society Comments

Mr. Torres reported that the following comment letter had been issued:

• Comments submitted to the AICPA by the NYSSCPA Peer Review Committee, chaired by David J. Moynihan, regarding the AICPA’s April 16, 2007 Peer Review Board exposure draft of proposed revisions to the standards for performing and reporting on peer reviews, which in part were intended to create a single set of program standards, dated June 27, 2007; Mary A. Kimball, Thomas O. Linder, Raymond M. Nowicki, principal drafters.
• Comments submitted to AICPA by the NYSSCPA prepared by the Auditing Standards and Procedures Committee, chaired by Robert W. Berliner, regarding the Auditing Standards Board March 20, 2007

discussion paper on improving the clarity of the ASB standards, dated June 11, 2007; Robert W. Berliner, principal drafter.

a. Financial Statements for Twelve Months Ending May 31, 2007

Mr. Piluso reported that the pre-audited consolidated NYSSCPA and FAE Net Income for the period ended May 31, 2007 was $363,000, which, while a 34% decrease compared to the previous year, represented a $172,000 (90%) improvement over budget. Mr. Piluso noted an increase in Cash of $1 million and Investments of $220,000 over the preceding year.

He reminded the Board that the previous Treasurer, Neville Grusd, had begun the process to have the Society make an extraordinary contribution to FAE to eliminate FAE’s deficit unrestricted fund balance of approximately $580,000. He noted that this was still under review.

b. Financial Statement Format

Mr. Lifson proposed adding an executive summary to the financial statements. Mr. Piluso discussed possible changes to the statement of activities and emphasized that he would be reporting on the qualitative and quantitative aspects of the financials.

c. Role of Finance Committee

Mr. Piluso explained the function, duties, and role of the finance committee. He noted that the committee met three to four times per year and only participated in the budgeting process. Mr. Piluso expressed concern that the finance committee was not involved in the review of interim financial statements. He proposed that the finance committee be involved in reviewing the financial statements before they were presented to the Board. Mr. Piluso asked Board members for their feedback on this proposal. On balance, they did not appear to feel that review by a full committee of interim financial statements was necessary.

a. Committees Update

Mr. Ellis discussed his efforts to encourage committees to work collaboratively to, among other things, share speakers and topics. Mr. Ellis also suggested working with other organizations with similar interests. He said he would reach out to committee chairs who did not attend the leadership conference and obtain their individual feedback and reasons for non-participation. Mr. Ellis noted that attendance of committee chairs at the 2007 Leadership Conference was down. He believed the decline in participation was due to the conference being scheduled during a holiday week.

b. Nominating Process Report

Mr. Ellis announced that the form to submit nominations for the nominating committee was available online. He encouraged Board members in turn to encourage members interested in service on the nominating committee to download a petition and be sure to submit it by the August 10, 2007 deadline. Mr. Lifson noted his intention to ask nominating committee petitioners whether they were committed to a particular candidate for Board or officer service. If they were so committed, he intended to make that commitment known to the membership.

a. Legislative Update

Mr. Grumet provided a legislative update to Board members.

b. Experience Requirement Update

This matter was deferred by the State Board for Public Accountancy, in reaction to the stalemate on legislative proposals during this session, with addressing experience for licensure.

c. Single Audit Report by President’s Council on Integrity and Efficiency

Mr. Grumet reported on the Single Audit Report by referring members to the materials included with their agenda. He noted that this report could be used by legislators or state’s regulators to more tightly regulate the profession’s services provided to the public interest sector.

d. COAP update

FAE President-Elect Ann Burstein Cohen presented an update to the Board regarding the COAP program. She identified the two strategic goals of the NYSSCPA that the COAP program helped to meet. Ms. Cohen reported that ten COAP programs had been completed in 2007. Also, for the first time, FAE had awarded $10,000 in scholarships specifically targeted to COAP participants.

e. Dues Update

Mr. Pape presented the dues update, referring Board members to their agenda materials for specifics.

f. Member Benefits Update

Mr. Pape updated the Board on the Society’s membership benefits programs, referring Board members to the materials included in the agenda.

a. Report from FAE President

Mr. Maier, the FAE President, introduced the 2007-2008 FAE Board of Trustees and asked Ann Burstein Cohen, the FAE President-Elect to join him in making his presentation. He noted that the first face-to-face meeting of the Trustees for the current fiscal year was held the previous Sunday. Items discussed at the meeting included the development of a standing committee to advise the Trustees on curriculum. Mr. Maier asked that the committee perform a review of itself and develop a mission statement. Mr. Maier encouraged members to participate in the curriculum advisory committee. He was looking to add representatives from the peer review, PEC and Higher Education Committees to the curriculum advisory committee. Mr. Maier announced the future scheduled meetings for the fiscal year.

Mr. Maier announced the formation of a committee to develop a recommendation to the Trustees as to how the volunteer efforts of FAE speakers could be better recognized. He closed by noting that a first-ever open session had been held at the August 8 Trustees meeting at which several Society members had raised questions which the Trustees had taken under advisement.

b. Proposed Merger with Benevolent Fund

Mr. Maier discussed the proposed merger of the Benevolent Fund with FAE.

Mr. Maltese made a presentation on behalf of the PAC. He informed the Board of the purpose of the PAC. The PAC had nineteen trustees on its board which included the current Society president, past president, and president-elect and Mr. Grumet. He reported that Mr. O’Leary served as the PAC’s staff liaison. The PAC identified key legislators based upon the input from the trustees and established the disbursement policy that was applied when responding to solicitations from legislators. Mr. Maltese reviewed the contributions list attached to the agenda noting that the contributions had been waning. Mr. Maltese closed by expressing his hopes to develop a closer relationship with the Board in an effort to maintain the PAC’s relevance and effectiveness.

Mr. Lifson called on Mr. Lauchert, chair of the Bylaws Revision Task Force, to present its report. Mr. Lauchert recognized the four other task force members: Ms. Martha Jaeckle and Messrs. Joseph Charles, Andrew Cohen, and Laurence Keiser. He referred the Board to the task force report that was included with the agenda materials.

Mr. Lauchert said that generally the Bylaw change proposals had followed two different paths to that point. With one exception, all changes other than those in Article XII, Professional Conduct and Disciplinary Proceedings, had been deliberated by the task force and submitted to the Executive Committee for final vetting. Any proposals relating to Article XII or to the Code of Professional Conduct had been proposed by the Professional Ethics Committee, which was currently chaired by Mr. Robert Kawa, and submitted to the Quality Enhancement Policy Committee, chaired by President-Elect Fierstein, for comment and approval. The ethics changes were then submitted to the Executive Committee for final vetting. All the changes included in the task force’s report were deliberated by the Executive Committee at its June meeting and had been recommended for approval by the Board.The one exception noted above was a proposal that originated with the Executive Committee at its June meeting and was added by the task force to its report.

This change was to merge the secretary’s and treasurer’s positions into a single secretary/treasurer position and add a fourth vice-president’s position.
Mr. Lauchert then outlined the proposals other than those related to ethics and noted that Mr. Kawa was present to walk the Board through the ethics changes. Mr. Lauchert listed the proposed bylaw changes a follows:

Mr. Lauchert acknowledged that an additional change had come to the attention of the task force following the June Executive Committee meeting. He reiterated that the task force was recommending that, except for the quorum requirement for members’ meetings, wherever the bylaws contained a requirement for 100 members, the requirement should be replaced by 2% of the members eligible to vote. He said that the task force’s report inadvertently left out one such instance, the requirement to petition for an amendment of the bylaws. As a result, when he made his motion to approve the task force’s report, he would be adding this change.

Mr. Lauchert then invited Mr. Kawa to review the ethics changes being proposed to the Board.

At that point, Mr. Lauchert moved that the Bylaw and Code of Professional Conduct changes proposed in the Bylaws Revision Task Force report plus the additional change to replace the 100-member requirement to petition for a bylaw amendment with a requirement of 2% of the membership eligible to vote be approved by the Board and submitted to the membership for final approval. In addition, Mr. Lauchert moved that all changes become effective upon membership approval except (1) the requirement for 2% of the membership to petition for an independent candidate and (2) the proposal to merge the secretary and treasurer positions and add a fourth vice president, both of which should become effective the fiscal year after approval by the membership.

A Board discussion ensued largely focusing on the proposal to combine the secretary and treasurer positions and add a fourth vice president. There was discussion about whether a significant amount of volunteer effort was required of the secretary when performing traditional secretarial functions. The conclusion was that there was not a significant amount of such work. Mr. Ellis noted that the remainder of the Secretary’s work was involved in serving as a voice for committees in the wake of the elimination of the Committee on Committee Operations. Mr. Lifson reminded the Board that this portion of the secretary’s workload would be carried on by the proposed fourth vice president.

Ms. McKane moved to divide Mr. Lauchert’s resolution, separating out the proposal to merge the secretary and treasurer positions and add a fourth vice president. Ms. Fischman seconded the motion.

Mr. Lifson explained the effect of the motion to divide and asked if there were any objection to voting on Ms. McKane’s motion at that time. There being none, Mr. Lifson called for a vote on the motion to divide and it carried with 22 in favor and 11 opposed.

Mr. Lifson announced that the Board would first take up the question of all the bylaws proposals in Mr. Lauchert’s original motion except the proposal to merge the secretary and treasurer positions and add a fourth vice president.

Ms. Fischman moved the previous question and Ms. Wood seconded. The vote was unanimous to end discussion at that point on the first half of the divided motion.

Mr. Lifson restated the question as follows: to approve all the proposed bylaw amendments for submission to the membership, except the merger of the secretary and treasurer positions and the addition of a fourth vice president, with the effective date for the proposals to be upon approval by the membership, except for the proposal to require 2% of the members eligible to vote to sign petitions supporting an independent candidate, which would become effective the fiscal year following membership approval. He then called for a vote and the motion was approved unanimously.

At that point, Mr. Lifson informed the Board that the motion before them was to approve a bylaw amendment for submission to the membership to merge the secretary and treasurer positions and add a fourth vice president, with the proposal to become effective at the beginning of the fiscal year following approval by the membership. There being no further discussion, Mr. Lifson called for the vote. The motion passed with Mss. McKane, Fischman, and Barossi and Mr. Ellis opposed.

Mr. Lifson noted that per the Bylaws, once the Board had initiated a bylaws amendment, a proxy/ballot was to be sent to the membership and a special members meeting held within 90 days of Board approval.

Messrs. Lifson, Lauchert, and Kawa thanked the Board for its leadership regarding the Bylaws and Code of Professional Conduct amendments. Mr. Lifson, in turn, commended the Bylaws Revision Task Force, Professional Ethics Committee, and Quality Enhancement Policy Committee for their extensive efforts on the project.

There being no further business, President Lifson declared the meeting adjourned at 12:50 p.m.