B06 – C – 0
Call to Order

President Thomas E. Riley noted that a quorum was present and called the meeting to order at 8:35 am.

Mr. Riley recognized immediate past President Stephen F. Langowski, acknowledged his hard work and dedication to the NYSSCPA, and commended him for his successful and eventful year as Society President. Mr. Riley then presented him with a gift in recognition of his efforts.

B06 – C – 1
Minutes

a. Approval of Minutes of June 1, 2006, Board of Directors Conference Call

Mr. Riley asked Board members if any changes to the June 1, 2006, minutes were required. Mr. Piluso moved to approve the minutes as written, and Mr. Sohr seconded the motion. The motion passed unanimously.

B06 – C – 2
President’s Report

a. Peer Review Update

Mr. Riley discussed the results of the AICPA Peer Review Program Oversight Visit letter dated April 27, 2006, and Society’s response dated June 27, 2006. Mr. Moynihan, Chair, Peer Review Committee (PRC) noted that the PRC agreed with the staff suggestion that two outside consultants be retained to provide training regarding PRC procedures and staff administration. Mr. Moynihan opened the floor to questions or comments, but no inquiries were made.

b. Legislative Update

Mr. Riley discussed the status of the Society’s legislative initiatives. He noted that the Senate had unanimously passed the Society-endorsed bill for the fourth year in a row. In addition, the assembly had introduced a bill calling for mandatory quality review at the end of the session. Mr. Riley suggested that movement might occur in 2007 as a result of the program initiatives of a new governor.

c. Review of Committee and Chapter Manuals

Mr. Riley indicated that the Vice Presidents for Chapters will be reviewing the Chapter Manual and the Secretary will be reviewing the Committee Manual.

d. Bylaws Task Force

Mr. Riley noted that he had appointed most of the members of a task force to develop bylaw proposals. Board member John Lauchert had been appointed chair.

e. 2006 Leadership Conference

Mr. Riley reported that he had received positive feedback from the attendees at the 2006 Leadership Conference. He opened the floor for discussions and feedback from the board members. Past Society President Stuart Kessler requested that the Society return to sponsoring an annual conference along the lines of the conference held annually many years previously. His stated goal was to use an annual conference forum to identify, groom and mentor new leadership.

Ms. Cutler moved that a task force be formed to investigate the advisability of holding an annual conference modeled after the Annual Conference conducted by the Society up to 2000. Mr. Ellis seconded. Following discussion, the motion passed unanimously.

f. Report of Audit Committee Chair

In the absence of the audit committee chair, Mr. Cheung reported that the audit was proceeding according to schedule.

B06 – C – 3
President-elect’s Report

a. Quality Enhancement Policy Committee Update

Mr. Lifson reported that assembly bill A12027 was introduced in the Assembly, based on the Society’s White Paper on the reform of peer review. Mr. Lifson summarized the role of the QEPC, as proposed by the Caswell Task Force to review and propose changes to improve (1) peer review, (2) ethics and (3) education. He noted that the Executive Committee had expanded the QEPC’s role as originally contemplated by the Caswell Task Force by assigning the QEPC oversight responsibilities for the PRC and the Professional Ethics Committee. The QEPC had concluded its work on the peer review process with the final Board approval of the White Paper on the reform of peer review and proceeded to its review of the ethics program. He anticipated that a thought paper on the ethics program would be presented to the Board at its December 7, 2006 meeting.

B06 – C – 4
Vice Presidents’ Reports

a. Chapters Update

Ms. Fierstein discussed methods of improving and strengthening Chapters by obtaining support from local firms and networking. Mr. Piluso discussed the need to communicate with Society members in counties impacted by the merging of the Finger Lakes Chapter into adjoining chapters. Mr. Piluso volunteered to spearhead this initiative in order to better serve the chapters.

b. Recent Society Comments

Mr. Sohr reported that the following comments had been submitted and commended those responsible for their development:

• Comments submitted to the Information Security Audit and Control Association (ISACA) by the NYSSCPA Technology Assurance Committee, chaired by Joel Lanz, on Information Technology (IT) Control Objectives for Sarbanes Oxley – 2nd edition. Principal Drafters: Yigal Rechtman, Bruce Sussman and Joseph O’Donnell.

Looking forward, Mr. Sohr addressed two PCAOB proposals: (1) annual and special reporting of information and events by accounting firms that are registered by the PCAOB and (2) a proposal that would allow a firm to succeed outright to a predecessor’s registration in certain circumstances without any disruption in registration status. In other circumstances, the proposed rules would allow for temporary succession for a transitional period of up to 90 days while the firm seeks registration.

B06 – C – 5
Treasurer’s Report

a. Financial Statement for twelve months ending May 31, 2006

Mr. Grusd reported on the financial statements for the twelve months ended May 31, 2006. He reported that combined NYSSCPA and FAE income for the period ended May 31, 2006 was $464K a $85K decrease compared to $548K in the previous year. Fiscal year 2005-6 Net Income of $464K exceeded budget by $563K. Mr. Grusd highlighted certain items noting a $500K increase in net assets and a non-recurring unfavorable variance in the amount of $175K for under-budgeted real estate taxes at the new Headquarters building of which $78K was paid by the Society and $97K was paid by the American Institute of Chemical Engineers. Members expressed concern regarding the under-budgeted real estate taxes. Mr. Schmelkin explained that the variance was related to a tax acceleration clause which affected all tenants in the building due to tax abatements previously enjoyed by the landlord for having constructed 3 Park Ave. over a then existing Armory and incorporating a NYC High School as the first 14 floors of the structure.

B06 – C – 6
Secretary’s Report

a. Committees Update

Mr. Ellis commended the committee chairs for their excellent exchange at the committee break-out sessions. He reinforced the fact that he is the voice of the committees and that he will communicate any updates to the executive committee.

b. Nominating Process Report

Mr. Ellis reviewed for the board that the eleven-person Nominating Committee is comprised of nine members who petition to serve on the committee and two designated by the Board. He noted that the deadline to submit petitions to serve on the Nominating Committee was August 11 this year and that while Board members themselves could not petition to serve on the committee, they should encourage others to do so.

a. Regulatory Update

Mr. Grumet reported that two regents’ regulations were pending (1) Higher Education regulation related to the education requirement for licensure in public accountancy and (2) Unprofessional Conduct Rules. Mr. Grumet noted that additional regulatory action is possible from the Board of Regents, possibly applying SOX to government, not-for-profit and private industry.

b. Publications in The CPA Journal

Mr. Grumet discussed the process of getting articles published in the CPA journal.

c. COAP Update

Mr. Grumet noted that currently there were nine active COAP programs and that expansion of the program into Queens College and Baruch was under consideration.

d. Trade Show Update

Ms. Barry explained that the show, to be held July 17th and 18th, had reached its budgeted revenue goals. The success of the show would be driven by attendees on the show floor and she encouraged Board and FAE trustees to attend the event. This would be the first year of a new business model for the show, which had for the previous five years been handled by Flagg Management, Inc.. For this show, CPE had been developed internally and FAE registrants were expected to exceed budget projections. In addition, 1,200 people had pre-registered to attend.

e. Dues Update

Mr. Grumet reported that 71% of dues have been received.

f. Member Benefits Update

Mr. Grumet referred the Board to their hand out materials for an update on the number of members served by the Society’s member benefits programs.

g. 19th Floor Expansion Update

Mr. Grumet stated that 125 people could currently be accommodated in the 19th floor conference rooms and additional space was presently being sought to expand the facility. Even if no new space were added, though, he indicated that the facility would be upgraded. The sound system had been upgraded, significantly improving sound quality; and projection screens had been added. New bathrooms would be built and the rooms would be expanded. The current budget incorporated the necessary capital expenditures to support the expansion.

a. Report from FAE President

Ms. Kinsella presented Mr. Bloom the, out-going FAE president, with a gift and recognized new FAE board members. Ms. Kinsella noted a new policy requiring any event with 125 or fewer individuals in attendance must be held at the FAE Conference Center. Special exceptions to this rule would be considered by the Board of Trustees only in instances where a sponsor would make a financial commitment prior to the event.

She encouraged board members to participate in the COAP program and described the scholarship and ambassador programs. She noted that FAE would be reviewing and looking to improve the current curriculum by incorporating input from committee chairs. Members questioned why chapters were precluded from independently negotiating with CPE vendors. Mr. Schmelkin responded that only FAE could negotiate with vendors and that this was in the interest of all NYSSCPA members because vendors tended to “cherry pick” the topics and locations that earned them the most revenue. Relying on FAE to negotiate with vendors meant that more chapters’ would be better served with a higher number of popular courses.

b. Overview of FAE Operations

Mr. Schmelkin made a presentation on FAE operations. The topics covered in the presentation were as follows:

• FAE Business Operations
• Delivery of Education Services
• Today’s Focus
• FAE History
• CPE Climate - Early 1970s
• CPE Climate - from 70s to 80s
• CPE Climate - Late 1980s
• CPE Today
• Major FAE Cost Areas
• Seminars (Course Materials-Speakers)
• Seminars- Hotels
• Conferences
• Recent FAE Data
• Recent Developments
• Estimated Membership Service Market Share
• Individual FAE Users Seminars & Conferences
• Individual FAE Users All Events

Several Board members expressed concern over the amount that FAE’s net loss exceeded budget. Due to a time limitation and lack of all relevant information, the matter was postponed to the September meeting.

Mr. Kawa presented the results of the CPA Exam Task Force Report, which was based on the Task Force’s survey of 617 recent CPA Exam candidates earlier in the year. Survey topics included exam scoring, cost, registration, examination sites, and computer and software issues. Mr. Kawa said the Report’s main recommendation was that the New York State Board for Public Accountancy should begin reporting test scores numerically as soon as possible, rather than the then current practice of reporting to candidates only on a pass/fail basis. Candidates also did not receive numerical scores on individual sections. Over 90% of the candidates responding to the Task Force’s survey said New York State should give a numerical grade rather than report only on a pass/fail basis. Both the AICPA and the New York State Board for Public Accountancy recognized the shortfalls of reporting results on a pass/fail basis.

Mr. Kawa said the cost of the Exam was another major concern. Costs for the Exam had increased dramatically in New York to over $1000, which included the statutorily required license fee for first time candidates (most other states did not require pre-payment of the license fee before admission to the Exam). The Task Force’s survey revealed that Exam fees delayed half of the responding candidates either “very much “ or “somewhat” in applying for the Exam. Mr. Kawa said the Report recommended that candidates be charged the licensing fee only after they passed the Exam and that the AICPA, Prometric, and the State Board for Public Accountancy should better monitor the costs of the Exam and refrain from increasing costs unless absolutely necessary.

Mr. Kawa said the Report recommended that students graduating in May be allowed to register for the Exam earlier, in order to accelerate the registration process and avoid unnecessary delays. He noted that May graduates were not allowed to begin this process while still in school. As a result, after waiting until the end of May to begin the application process and then approximately three to four months for a notice-to-sit, some candidates were only eligible to sit for the Exam in October or November and perhaps not even until January.

Mr. Kawa went on to say that there had been many complaints of noise from non-professional test takers (PSAT, SAT, etc.). The Task Force, therefore, recommended that Prometric consider allocating specific times when only CPA Exam candidates were allowed to enter testing sites or to at least not schedule professional exams – in particular the CPA Exam – when high school students were taking tests.

Finally, Mr. Kawa said that computer hardware and software issues needed to be addressed. In the survey, 23% of candidates surveyed said they had computer hardware-related problems when they took the Exam, and over 50% of these candidates said the problem was either “very significant” or “somewhat significant”. The Task Force, therefore, recommended that – in the event of any major computer hardware or software problem – all agencies involved, including Prometric and the SED, develop contingency plans to enable a candidate whose Exam had been unfairly interrupted to complete any unfinished portion with as little undue hardship as possible. This included cost, registration for a new Exam, and adequate time to complete any unfinished parts.

Mr. Kawa asked Board members for approval of the white paper titled “Report of the NYSSCPA CPA Exam Task Force.” Mr. Nelson moved to approve the whitepaper and Mr. Stubbs seconded the motion. Discussion then ensued. Members inquired as to the difference in licensing fees as between New York and New Jersey. Members asked that staff research the pass rates and report the results back to the Board. Mr. Lifson then moved the previous question. Mr. Riley explained Mr. Lifson’s motion as follows: those wishing to end debate on the main motion should vote in favor of the motion; those wishing to continue discussion should vote in opposition. Mr. Lifson’s motion carried unanimously. Mr. Riley then restated the main motion for the Board as a motion to approve the Report of the NYSSCPA Exam Task Force and a vote was conducted. The motion passed unanimously

Mr. Riley asked Board members for approval of the Dissolution of the Finger Lakes Chapter Mr. Falbo made the following motion, which was seconded by Ms. Fierstein:

WHEREAS, on October 4, 2000, the NYSSCPA Board of Directors established six new chapters on a provisional basis, one of which was the Central Southern Tier Chapter, covering a territory comprising Steuben, Chemung, Tompkins and Cortland Counties; and

WHEREAS, on August 13, 2003, the Executive Committee approved a name change for the Central Southern Tier Chapter, which then became known as the Finger Lakes Chapter; and

WHEREAS, on July 13, 2004, the Board acted to change the provisional status of all six new chapters by making them permanent chapters; and

WHEREAS, the members of the Finger Lakes Chapter subsequently have been unable to generate the level of activity necessary to maintain a chapter organizational structure, despite several calls for interested members to serve as chapter leaders; and

WHEREAS, the current leaders of the Finger Lakes Chapter have requested that the chapter be dissolved; and

WHEREAS, the NYSSCPA Board of Directors is empowered by Article V, paragraph 4 of the NYSSCPA Bylaws to dissolve chapters.

NOW, THEREFORE, BE IT RESOLVED, that the NYSSCPA Board hereby dissolves the Finger Lakes Chapter in accordance with the terms of NYSSCPA Bylaws Article V, paragraph 4. RESOLVED, FURTHER, that the members located in Steuben and Chemung counties are reassigned to the Rochester chapter and the members located in Tompkins and Cortland counties are reassigned to the Syracuse chapter; provided however that individual members retain the right to designate their own chapter affiliation as provided in Article V, paragraph 2 of the NYSSCPA Bylaws.

Following discussion, the resolution passed unanimously.

Mr. Pape presented the membership report noting that as of July 11, 2006 there were 29,400 members compared to 30,217 at approximately the same time in the previous year. Of the 29,400 members included were the following as of June 15, 2006: 115 new members, 7 reinstatements, 5 deaths, 23 resignations. Mr. Lesser moved to approve the membership report and Mr. Piluso seconded the motion. During the discussion Board members inquired if

• terminated members were surveyed to determine the reasoning behind the non-payment of dues,
• the membership database could be accessed for contact information to assist chairs of committees and
• New Jersey residents could become NYSSCPA members. Members inquired as to methods for identifying potential new members through FAE.
• Also, Board members requested a chart breaking down the age demographic of the current membership.

Following discussion, the motion passed unanimously.

Mr. Riley asked if there were any further business. Mr. Nelson moved and Ms. Fierstein seconded a motion to adjourn, which passed unanimously. The meeting adjourned at 12:10 p.m.