* participated by conference telephone

04 – B – 00
Call to Order

04 – B – 01
Minutes

Mr. Kearney asked Board members if they had any changes to the minutes of the April 21, 2004, Board of Directors Meeting. Mr. Nowicki corrected a statement attributed to him in the eighth paragraph of item A-04-02(b), AICPA Regional Council Meeting. He stated that the sentence, “He expressed the view that there would be a substantial increase in peer review comments due to new public company auditing standards”, should be corrected to read, “He expressed the view that there would be a substantial increase in peer review comments due to revisions in AICPA peer review standards.”

Mr. Piluso moved to approve the minutes as amended by Mr. Nowicki, and Mr. Sohr seconded the motion. The motion passed unanimously.

Mr. Kearney noted that the minutes of the May 13, 2004 Executive Committee meeting and the draft minutes of the June 16, 2004 Executive Committee meeting were provided in the Board agenda packet for informational purposes.

04 – B – 02
President’s Report

a. AICPA Council Meeting

President Kearney gave a report on the AICPA spring meeting of Council, which was held in Scottsdale, Arizona, and pointed out several meeting highlights including the passage of a resolution supporting peer review transparency which was very similar to that which the NYSSCPA supported. He reported that the AICPA would be embarking on a campaign to educate its members and the public about the value of peer review transparency, and noted that the AICPA would also be embarking on a literacy campaign to improve people’s understand of financial issues.

Mr. Kearney called upon Mr. Hoops to report on the status of recommendations made by an AICPA Council Task Force on the Roles and Responsibilities of Council, on which Mr. Hoops served. Mr. Hoops stated that the task force’s recommendations were not adopted as a whole; however, Council supported its members taking an oath of responsibilities and fairly presenting the endorsed views of Council.

Mr. Kearney noted that New York’s at-large member of Council, Herbert Schoenfeld, made a request that Council consider expanding its at-large membership, and Council responded that it would consider doing so.

b. Committee Appointments

Mr. Kearney announced appointments to the Audit, Finance and Policy Committees as follows:

Audit Committee:

Warren Ruppel, Chair
NYC Comptroller's Office, New York, NY

David C. Ashenfarb
Schall & Ashenfarb CPAs LLC, New York, NY

Bonnie J. Chambers,
Risk & Insurance Mgmnt. Society Inc. New York, NY

Mark P. Hettler
Fagliarone Group CPAs P.C., Syracuse, NY

Henry J. Krostich,
Krostich & Krostich LLP, Roslyn Heights, NY

Finance Committee:

Arthur Bloom, Chair
Marks Paneth & Shron LLP, New York, NY

Michael P. Bronstein
Loews Corporation, New York, NY

Steven Edelman,
West Glen Communications, Inc., New York, NY

Thomas R. Emmerling
Dopkins & Company LLP, Williamsville, NY

Alan D. Kahn
The AJK Financial Group, Syosset, NY

Leon M. Metzger
Paloma Partners Management Co., Greenwich, CT

Rita M. Piazza
Marden Harrison & Kreuter CPAs P.C., White Plains, NY

David C. Rosenzweig
Rosenzweig & Maffia LLP, New York, NY

Patricia G. Wright
Starr & Company LLC, New York, NY

Policy Committee for Peer Review and Ethics:

Stephen F. Langowski, Chair
KPMG LLP, New York, NY

Brian A. Caswell
Caswell & Associates CPAs P.C., Phoenix, NY

Vincent J. Love
Kramer Love & Cutler LLP, New York, NY

Michael L. McNee
Marks Paneth & Shron LLP, New York, NY

Robert E. Sohr
Retired, Deloitte & Touche, New York, NY

Maryann M. Winters
Sirchia & Cuomo LLP, Syracuse, NY

Margaret A. Wood
Grant Thornton LLP, New York, NY

Mr. Kearney called upon Mr. Langowski to announce the appointments to the Selections Subcommittee. Mr. Langowksi began by noting that one of his duties as President-elect was to chair a Selections Subcommittee. Mr. Langowski then announced that the following four individuals had been named to serve:

Barbara S. Dwyer
Barbara S. Dwyer, CPA, Lake Placid, NY

Nancy A. Kirby
Kirby Beals Maier CPAs PLLC, Elmira, NY

Don Kiame
Windsor Management Corporation, Kiamie Properties Management, New York, NY

Richard E. Piluso
Loews Corporation, New York, NY

c. CAMICO Update.

Mr. Grumet reminded the Board that the Society’s exclusive endorsement contract with CAMICO Mutual Insurance Company was scheduled to renew automatically on a year-to-year basis at the end of the current calendar year. The Professional Liability Insurance Committee was renegotiating the contract for another five-year term subject to Board approval in September.

Mr. Grumet stated that CAMICO reported 386 policies in force as of May 31, 2004, covering 1,276 CPAs and generating $2,094,387 in premiums. Mr. Eassa expressed that CAMICO appeared to be meeting the needs of many previously-uninsured Society members in public practice, and had continued to provide free CPE and risk management education to members at large during the term of the existing endorsement contract.

A question was raised regarding the existing and potential reach of CAMICO business to Society member firms in New York, taking into consideration the Society’s approximately 30,000 members. Mr. Nowicki explained that although the Society has 30,000 total members, approximately only one-third or 10,000 were in public practice excluding Big-Four firms. Mr. Eassa added that Big-Four firms were typically excluded from CAMICO marketing efforts because CAMICO does not have the capacity to insure Big-Four firms. Mr. Eassa noted, however, that CAMICO has the capacity to write policies for most of the remaining public practice firms, including several large firms through reinsurance arrangements.

d. Relocation Update

Mr. Kearney called upon Mr. Schmelkin to give an update on the Society’s office relocation to Three Park Avenue. Mr. Schmelkin reported that the build-out had already commenced and was anticipated to be completed sometime before mid-October, at which time the actual physical relocation would occur. He noted that weekly construction meetings were being held with staff to monitor progress.

A board member asked if there were any substantial increases in the estimated cost of the relocation to date. Mr. Schmelkin responded that because the move had not taken place over the summer as initially planned, FAE had to book hotels for several conferences that were originally scheduled to be held at the new location, thus impacting FAE’s conference budget.

04 – B – 03
Treasurer’s Report

a. Financial Statements for twelve months ending May 31, 2004

Mr. Bloom presented the Treasurer’s Report. He reported that combined NYSSCPA and FAE income for the period ending May 31, 2004 was $813,000. Net income was ahead of budget by $608,000. Cash and equivalents stood at $4.4 million as opposed to $3.9 million in the previous year.

Mr. Bloom noted that $100,000 of the surplus was attributed to rent the American Institute of Chemical Engineers (AIChE) was paying to the society under the lease agreement for the society’s new offices at Three Park Avenue. He noted AIChE was also expected to pay $250,000 per year over two years to the Society for expenses incurred for the location’s build-out.

Mr. Bloom then called upon Ms. Chambers to summarize the Society’s semi-annual benchmarking data, provided in the Board agenda materials. Ms. Chambers reviewed the insurance program, hits on the website, FAE events and attendance, and six graphs that indicated the Society’s financial health.

A question was raised regarding how current were the principles and directions from Society’s Strategic Plan, adopted by the Board in 2002. President Kearney reminded the Board that the Society’s budget and operations had been based upon the strategic plan since the plan’s adoption, which provided an opportunity to look at the plan and its principals over the last two years. He noted that the Board should give a fresh look at the strategic plan to see if anything should be changed or added to reflect more-current events.

b. Audit Committee Report

Mr. Bloom reported that the Society’s IRS Form 990 had been accepted by the IRS as filed.

Mr. Bloom also reported that the Society had taken a number of steps to comply with recommendations of the firm Loeb & Troper with respect to its review of the Society’s internal controls. Among the steps noted by Mr. Bloom were the establishment of a corporate-wide policies and procedures manual.

Mr. Bloom then noted that as a result of voluntary disclosures made by the Society during the filing of its 2002 IRS 5500 return concerning its employee 401k plan, the U.S. Department of Labor (DOL) conducted an audit over several months. The audit results letter that was issued informed the Society that it owed $473 in interest lost due to late contributions. The DOL also notified the Society that its fidelity bonding policy retained a $5,000 deductible, which should have been removed from the policy in order to comply with ERISA regulations. Mr. Bloom stated that both issues were promptly resolved and no further action was required by the Society.

A Board member inquired about steps taken to prevent unscheduled payroll distributions. Mr. Grumet responded that new procedures were implemented requiring that 2 staff persons, including one department head, would be required to sign off on the payrolls each period before they are transmitted for processing.

c. Dues Update

Mr. Pape reported that dues were running ahead of last year, but because of technical issues approximately 1,500 dues invoices had not been sent to members. He stated, however, that the issues were resolved and that staff would send future invoices in batches to the printer so as to provide more control over any technical issues.

04 – B – 04
President-elect’s Report

a. Legislative Update

President-elect Langowski called upon guest Kevin McCoy, Chair of the Society’s 2004-2005 Legislative Committee, to give an update on accountancy legislation.

Mr. McCoy reminded the Board that Bill 302-D, which was endorsed by the Society board, had been passed by the New York State Senate and that the Society had encouraged adding substantial equivalency language to the bill. He noted that an identical New York State Assembly bill, sponsored by assemblyman and chair of the Higher Education Committee Ronald Canestrari, was not progressing quickly towards approval. Mr. McCoy informed the Board that there existed a third bill, number 11695, which lacked language covering a number of important issues covered by 302-D such as peer review, mandatory increased CPE and penalties.

Political Action Committee President, Michael Borsuk, encouraged that the Society chapters schedule meetings with their respective legislators to promote the advancement of the Society’s legislation objectives.

04 – B – 05
Vice Presidents’ Reports

a. Chapters Update

Vice Presidents Doran and Eassa gave reports on the Society chapters, noting that they had each attended the chapters’ organizational meetings.

b. Recent Society Comments

Vice President Berlant noted that the following Society comments had been issued:

• May 19, 2004 Letter to the Honorable George E. Pataki, Governor, State of New York, from NYSSCPA President Jeffrey R. Hoops, CPA, regarding Proposal to Curtail Administrative Hearing Rights for New York State Taxpayers, as proposed in Part L of Budget Bill S. 6060-A/A. 9560-A;
• May 28, 2004 redistribution to the Internal Revenue Service, National Taxpayer Advocate, of comments made by the NYSSCPA Tax Oversight Committee, currently chaired by Stephen P. Valenti, regarding Tax Simplification; originally distributed to members of Congress and other interested parties on May 27 2003; Principal Drafters: Alan E. Weinder, M. David Bahr, Sheldon Barasch, Arthur Bloom, Joseph L. Charles, Alan Dlugash, I. Jay Safier, and Harold K. Wiebusch;
• Comments submitted to the New York State Department of Taxation and Finance by the NYSSCPA Multistate and Local Taxation Committee, chaired by Mark Levin, regarding New York State Unemployment Insurance Regulations; dated May 28, 2004; Principal Drafters: Adam Lambert and Steve Valenti; and
• Comments submitted to the Financial Accounting Standards Board, by the NYSSCPA Financial Accounting Standards Committee, chaired by Robert A. Dyson, regarding Exposure Draft: Proposed Statement of Financial Accounting Standards, Share-Based Payment, an amendment of FASB Statements No. 123 and 95; File Reference 1102-100.

Mr. Berlant commended the committees and drafters for their outstanding work. Mr. Berlant encouraged Board members to inform the Society of issues that could be commented upon proactively, as opposed to reactively.

04 – B – 06
Secretary’s Report

a. Committee Update

Secretary Nowicki reported that as Chair of the Committee Operations Committee (CoCo), he had appointed Richard Piluso, Susan Schoenfeld and Robert Sohr to respectively lead task forces to: 1) review CoCo’s committee action plan, 2) consider committee report cards; and 3) improve the coordination between statewide and chapter committees.

b. Nominating Process Report

Secretary Nowicki reported that the Society’s 2003 bylaws greatly changed the timing of the nominating process by, among other things, shifting the nominating committee petition deadline from late Fall to the second Friday in August. A revised checklist of steps in the updated process was provided in the Board packet for information and reference.

President Kearney drew the Board’s attention to the NYSSCPA Master List of Meeting Dates for 2004-2005 as follows:

Board of Directors Meetings (For Board Members Only)

2004

2005

Executive Committee Meetings (For Executive Committee Members Only)

2004

2005

(To coincide w/Annual Dinner)

• All meetings will adjourn at 3:00 p.m. unless otherwise noted.

Upon a motion made by Mr. Berlant, and seconded by Mr. Waxman, the Board unanimously approved the meeting dates.

President Kearney provided background regarding the October 4, 2000 Board approval of six new provisional Society chapters: Manhattan, Queens, Brooklyn, Rockland County, Fingerlakes (then-referred to as Central Southern Tier) and Adirondacks. He noted that the initial approval of new chapters required the Board to revisit in 2004 which, if any, of the new chapters would be given permanent status. President Kearney referred Board members to a review of the new chapters, which was provided in the Board packet.

In the ensuing discussion, the Board discussed the differences in performance between chapters based upon their membership and geographic size. Several members suggested that such differences made it difficult to compare the performances of dissimilarly sized chapters.

Ms. Dwyer moved that the Board approve making permanent the status of all six provisional Chapters: Manhattan, Queens, Brooklyn, Rockland County, Fingerlakes and Adirondacks. Mr. Duffy seconded the motion. The motion passed unanimously.

Mr. Kearney noted that the Executive Committee, at its June 16, 2004 meeting, recommended full Board approval of several new member benefits evaluated and recommended by the Member Benefits Committee, Chaired by Ms. Carol Lapidus. A description of each proposed benefit was provided in the Board agenda materials.

Mr. Bloom moved that the Board approve the Executive Committee’s recommendation to endorse the following new member benefits:

a. Insurance Programs:

1) Senior Term Life – Marsh Affinity Group Services (US Life, underwriter)

2) Life Line Screening – Marsh Affinity Group Services

3) Umbrella Policy Endorsement – GEICO Insurance Company

4) Dental Insurance – Marsh Affinity Group Services (US Life, underwriter)

b. CPA Review Courses

1) MicroMash (Pass Matrix Learning Systems)

c. Hardware/Software

1) Hewlett Packard Accounting Discount Program

Mr. Piluso seconded the motion. The motion passed unanimously.

Mr. Kearney thanked Ms. Lapidus and the Member Benefits Committee for their work.

Mr. Kearney asked that the Board approve the formation of an Executive Committee for the 2004-2005 fiscal year, and asked for a motion to that effect. Ms. Dwyer made the following motion, which was seconded by Mr. Sohr:

WHEREAS, the NYSSCPA Bylaws give the Board the authority to establish an Executive Committee, and

WHEREAS, if an Executive Committee is established by the Board, it is to consist of the Officers (including the Executive Director, who is to serve in a nonvoting capacity) and up to six other members of the Board; and

WHEREAS, the Board desires to establish an Executive Committee for the 2004-2005 fiscal year and wishes to appoint additional persons from among its membership to serve on such committee;

NOW, THEREFORE, BE IT RESOLVED, that the Board hereby establishes an Executive Committee for the 2004-2005 fiscal year comprised of the following individuals:

John J. Kearney, President
Stephen F. Langowski, President-Elect
Peter L. Berlant, Vice President,
Katharine K. Doran, Vice President
Andrew M. Eassa, Vice President
Raymond M. Nowicki, Secretary
Arthur Bloom, Treasurer
Deborah L. Bailey-Browne
Andrew Cohen
Neville Grusd
Raymond P. Jones
Nancy A. Kirby
Richard E. Piluso
Louis Grumet (nonvoting)

The motion passed unanimously.

Mr. Kearney noted that the Society needed to change its financial institution signatories to reflect the change in leadership for the 2004-2005 fiscal year and entertained a motion to that effect. Ms. Dwyer made, and Mr. Casey seconded, the following motion:

RESOLVED, that the Bank of America Shall serve as the depository for the Society and also, wherever appropriate in the discretion of the Executive Director, for the Society’s Chapter;

RESOLVED, FURTHER, that the following persons are hereby appointed to serve as authorized signatories on all banking and investment accounts of the NYSSCPA other than those of its chapters:

RESOLVED, FURTHER, that with respect to the banking accounts of each of the chapters, there shall be three authorized signatories, the respective chapter’s president and treasurer and the Society’s Executive Director.

RESOLVED, FURTHER, that the officers and staff of the Society are hereby authorized and directed to execute and deliver any documentation required to carry out the intent of this resolution.
The motion passed unanimously.

Mr. Pape presented the Membership Report which included 195 new members (including 81 new associate members), 6 reinstatements, 35 deaths, 29 candidate terminations and 38 resignations. These changes reflected a total membership of 30,485 as of July 13, 2004, as compared with 29,834 at approximately the same time the previous year.

Mr. Schlegel moved to approve the Membership Report, and Mr. Grusd seconded the motion. The motion passed unanimously.

Mr. Kearney explained that due to technical problems with the Society’s teleconferencing service on June 1, 2004, only 20 lines were able to participate in the first meeting of the 2004-2005 Board of Directors held by conference telephone. He stated that the consensus of the Board members on the phone was that, under the circumstances, they would proceed without the necessary quorum and ask that the full Board approve any actions in July.

Mr. Kearney noted that the Executive Committee, which could not be formed by the Board without a quorum on June 1, had since met on June 16, 2004 and had taken several actions as reflected in the minutes of that body. A copy of the draft June 16, 2004, Executive Committee minutes were provided in the Board packet.

Mr. Kearney then asked for a motion to ratify the actions of the Executive Committee as reflected in the draft minutes of its June 16, 2004 meeting. Mr. Piluso so moved and Mr. Eassa seconded the motion. The motion passed unanimously.

President Kearney referred Board members to a copy of the Nominating Committee Protocols, which were approved by Board on October 2, 2003 for use during the 2003-2004 fiscal year nominations process. A copy of the protocols were provided in the Board agenda packet.

A lengthy discussion ensued regarding several aspects of the nominating process, including the sufficiency of background information on nominees, the number of meetings necessary for the nominating committee to do its work, the confidentiality of the process, and the potential for leaks identifying the nominated candidates before verification of their willingness to serve or before formal announcement.

After the discussion, Mr. Ellis moved that the Board approve the existing Nominating Committee Protocols for use during the 2004-2005 fiscal year nominating process, but with the following additional consideration:

Once the Nominating Committee develops a list of potential candidates for the Society’s Board and officer positions, the Society’s counsel shall contact the potential candidates to obtain information regarding their relevant experience and what they might bring to the Society through their service.

Ms. Kirby seconded the motion. The motion passed with three Board members opposed.

a. In-Firm Sales

Mr. Schmelkin reported on the Foundation for Accounting Education’s In-Firm Continuing Professional Education (CPE) program, noting that the program allowed FAE to provide accounting CPE courses and training in firms’ offices, or in facilities of a firm’s choice. Mr. Schmelkin reported that FAE had doubled its in-firm sales during the period January to June 2004, noting that over 1,000 members had taken courses over 35 days in that time period. Mr. Schmelkin stated that a number of CPA firms and several companies which employ a large number of Society members were among the corporate clients of FAE’s in-firm program including Master Card, Citigroup.

Mr. Schmelkin closed his report by acknowledging the work of Mr. Monte Kaplan, Senior Manager of the in-firm program, for his assistance in program administration and course development.

b. Current CPE Activities

Mr. Schmelkin gave an update on current FAE CPE activities, including several web-based program initiatives. During the discussion, a Board member suggested that FAE also look at the issue of unrelated business income taxation as a possible CPE topic.

c. Amendment of FAE Bylaws

Mr. Hoops, president of the Foundation for Accounting Education (“FAE”), reported on the meeting of FAE trustees held Sunday, noting that the trustees had voted to amend FAE’s bylaws to accomplish several goals including:

1. Suggesting to the NYSSCPA Board that a new standing rule be implemented whereby the FAE Trustees would be appointed through the same process by which the NYSSCPA Board selects members to serve on the AICPA Council from New York;
2. Providing that the FAE Trustees to select FAE’s officers, rather than having certain NYSSCPA officers serve as FAE officers ex officio;
3. Introducing a president-elect position;
4. Conforming, where appropriate, FAE’s bylaws to NYSSCPA’s bylaws; and
5. General clean up of FAE’s bylaws, including numerous miscellaneous and stylistic changes.

d. Proposed merger with the NYSSCPA Benevolent Fund

Mr. Hoops reported that during their Sunday meeting, the FAE trustees continued its discussion of possibly merging the FAE Scholarship Fund with the Benevolent Fund, resulting in a single fund for both benevolent and scholarship purposes. He noted that the two organizations would continue to evaluate ways of proceeding that would be acceptable to the governing bodies of both entities.

e. COAP Program

No report given.

f. Scholarship Program

No report given.