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Call to Order

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Minutes of July 16, 2002 Meeting

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Treasurer’s Report – Financial Statements for three months ending 8/31/02

Mr. Aquilino gave the Treasurer’s Report and made the following points:

Combined Balance Sheet

Investments were higher than the previous year because cash had been invested more quickly, and there were more funds available due to FAE's improved performance and the dues increase. Deferred membership revenue was lower than 2001 because the Society changed its revenue recognition method. Other liabilities increased because $500,000 has been accrued for 130 FAE events for which hotel invoices had not been received.

Combined Cash Flow

Accounts receivable was down by $922,300 because the Society had received 88% of invoiced dues. FAE's intercompany fund balance had decreased by $813,000, reflecting cash repayments made to the Society. These payments were possible because of FAE’s good results during the first quarter of the year.

Cash Flow History

The cash balance was running $500,000 higher than the previous year, and was at the fiscal-year 2000 level. This reflects both FAE’s positive performance and the dues increase.

Program Summary

Revenue was $366,000 under budget, reflecting a shortfall in advertising revenue, investment income, and education fees, while education, membership, and networking and recruiting program expenses were $394,000 under budget. The revenue shortfall was offset by the expense decrease, resulting in a net revenue that was over budget by $144,000.

In the discussion which followed, Mr. Hoops asked if cash flow were better than at that time the previous year. Ms. Chambers responded that it was, but added that the Society typically is in an excellent cash position at the beginning of the fiscal year because of the influx of dues revenue; however, cash flow steadily decreases through the year until the following year’s dues revenue begins to be received.

One member asked if the decrease in advertising revenue were reflected in the cash flow projections. Ms. Chambers responded in the affirmative.

FAE President Newman-Limata noted that FAE had budgeted an increase in revenue that was not realized during its busiest period. Mr. Schmelkin responded that revenue was down $150,000 because POP registrants amounted to as much as 40% of seminars and 9% of the conferences. The budget, based on prior years’ revenue data, was that members using their POP passes would be 21% of the total attendance. Therefore, although registrations had increased, the increase would not result in a proportionate increase in revenue.

Mr. Grumet noted that the accounting information collected and analyzed by Society staff and distributed to the leadership had significantly improved in both quality and quantity. With respect to FAE, staff was routinely monitoring course registrations to ensure that the Board-approved cut-off threshold of eight registrants was enforced. This had resulted in regular registration appeals being issued through the chapter communications mechanisms to successfully reduce the course cancellation numbers.

Mr. Grumet also stated that attendance information on who attends chapter-initiated events and FAE-initiated events located in the chapters proves that two very different audiences are being served.

Mr. Aquilino again drew Board attention to the cash-flow statement and noted that August realized an increase in cash from FAE. He stated that while this does not completely address FAE’s difficulties, it nonetheless shows that FAE was headed in the right direction.

Mr. Grumet asked Board members if the statements were presented in a useful format. A number of Board members responded that it was a useful format, but several directed that the report include page numbers next time.

Mr. Aquilino asked the Board if they found the level of detail regarding the chapters and individual departments to be useful, or would a summary suffice. A brief discussion ensued. Mr. Aquilino stated that the program budget summary component is vital, but asked members to e-mail to him comments regarding the format and content of the report.
Ms. Doran asked if the summary could be e-mailed.

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Report of the Audit Committee

a. Draft Audited Financial Statements

Ms. Golden turned the floor over to Mr. Fetterman, chair of the Audit committee, who commended the Audit Committee members – Ronald Benjamin, Michael L. McNee, Raymond M. Nowicki, and John F. Heveron – noting that they collectively brought to the audit process a strong foundation of experience in the not-for-profit sector.

Mr. Fetterman briefly explained the process by which the committee worked with the Society’s auditors, Eisner LLP, and management. To encourage full and frank communication, one meeting included an “executive session”; however, Mr. Fetterman noted that nothing substantive emanated from the executive sessions that would not have otherwise arisen.

Mr. Fetterman then introduced Julie Floch and Lynda Feldman from Eisner LLP, who presented the auditor’s report. They summarized the audited financial statements. Ms. Feldman directed members’ attention to notes J, “Volunteer Services”, and L, “Deficit in Unrestricted Net Assets”, both of which were new. She said that although the notes are not required by GAAP, the auditors felt it was important to include them, Note L listed the steps the Society had taken to address the deficit. Note J stated that Society volunteers provide a substantial amount of educational and other support services to members and the public at large, including the assistance offered to individuals and their businesses affected by the 9/11 terrorist attacks.

b. Management Letter

Ms. Feldman briefly reviewed the following five considerations in the management letter: 1) the comparison of interim financial information to budgeted data; 2) accounting for missing or skipped checks; 3) Chapter bank reconciliations; 4) disaster recovery policy; and 5) conflict-of-interest policy.

Mr. Langowski asked if any impairments to investment activity were taken into consideration in the audit. Ms. Feldman noted that analysis of investment activity through the date of the audit did not indicate any substantial impairment. Ms. Chambers referred directors to an investment report, which was included with their materials, for more recent information on investment activity. Mr. Fetterman added that the lack of any substantial impairment to date reflects the Society’s conservative investment policy.

Mr. Eassa asked if note L was mandatory, opining that it would muddy up the report if unnecessarily included. Mr. Langowski agreed, suggesting that a “management discussion and analysis”, “MD&A”, be done instead. Mr. Fetterman responded that it is not uncommon for not-for-profits to include such notes, even when not mandated.

A discussion then ensued as to whether to include note L in the audit, or instead prepare a detailed MD&A which would be published in The Trusted Professional. Although in the end the Board did not require an MD&A to be drafted, the consensus was that the members would benefit from an introduction to the financial statements when published.

After a discussion, Mr. Nelson moved to accept the Audit Report as written, and Mr. Federmann seconded the motion. Mr. Eassa opposed the motion and there were no abstentions. Ms. Golden declared the motion passed.

c. Appointment of Auditors

The auditors were then dismissed. Mr. Fetterman reported the Audit Committee’s recommendation that Eisner LLP be reappointed as auditors for the 2002-2003 fiscal year. Mr. Wolitzer moved to reappoint Eisner LLP as the Society’s auditors for another year, and Mr. Langowski seconded the motion. There being no objection, the motion passed unanimously.

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President’s Report

a. Real Estate Task Force Update

Ms. Golden reported on progress made regarding locating new space for the Society. She referred members to Mr. Schmelkin’s memorandum to the Board, dated September 11, 2002, which included a list of questions the Society’s real estate broker Williams has asked in order to assist it in the office relocation project.

b. Chapter Visits

Ms. Golden stated that four chapter visits had taken place to that point, and noted that the visits provided a good opportunity to interact with members. She noted that CAMICO Mutual Liability Insurance Company, the Society’s exclusively-endorsed provider of professional liability insurance, was delivering a two-hour CPE course on Ethics in conjunction with the chapter visits. She added that members seemed to be very concerned about the state of the profession.

Mr. Nowicki noted that CPAs representing the “top 25” firms in his chapter had been brought together at the same table to discuss issues facing the profession. He suggested that such meetings be explored as a way to bring members together in all chapters.

c. Recent Society Comments

Ms. Golden noted that more comments had been made since the beginning of the fiscal year than in the entire preceding year. She directed Board members’ attention to the agenda materials for the comments. She noted that because of the need for Society commentary on a number of topics that cut across committee specialties, she had appointed a Task Force on Public Accountability. comprised of the following members:

Vincent J. Love, chair, past presidents Brian A. Caswell, George T. Foundotos, Nancy Newman-Limata, and Marilyn Pendergast, and Paul R. Brown, Douglas R. Carmichael, Rona L. Cherno, Allen L. Fetterman, Dan L. Goldwasser, Robert Shallish, and Robert Sohr.

d. AICPA Council Meeting

Ms. Golden opined that Barry Melancon’s speech to the Board the night before was alarming, but not surprising in terms of what was said about the state of the profession. She noted that there is a difference of viewpoints between the Society and the AICPA, but added that the two associations are working hard to maintain a good relationship.

Ms. Golden then drew the directors’ attention to the agenda for the AICPA Council meeting. She noted that some New York Council members had suggested to Mr. Melancon that the agenda was too structured, even with the inclusion of break-out sessions. She said that Mr. Melancon agreed to look at this.

e. Young CPAs Conference

Ms. Golden stated that she attended the Young CPA Conference held in Syracuse. It had been a very positive experience and a good networking opportunity. Mr. Eassa noted that 140 persons attended the conference and that planning was a very deliberative process. He said that all participants seemed enthusiastic.

Ms. Golden mentioned that Board member Peter Frank spoke at the conference regarding accounting and technology. Mr. Frank stated that he found the group to be very engaging.

Ms. Golden said that both the Rockland and Suffolk chapters desired to host the next conference. They had compromised by deciding that the Suffolk Chapter would host the next conference, while the Rockland chapter would host it the following year. In response to a question, Ms. Golden said that the conference was a statewide event, not chapter-specific.

Mr. Hoops asserted that the CPA profession is very desirable in large part because of job opportunities, as opposed to other fields such as general business. He added that because of the publicity received by the profession in the past year, many now realize the importance of the auditing process.

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Executive Director’s Report

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Legislative Update

Ms. Golden noted that states have begun reacting to the recently passed Sarbanes-Oxley Act which greatly changes the regulation of auditors of public companies. California had passed a cooling off period for auditors of publicly traded companies and reconstituted its accountancy board with a majority of public members. The North Carolina accountancy board was making their state-mandated peer review more arduous.

Meanwhile, the Society and members of the New York State Board for Public Accountancy (SBPA) had been meeting to maintain open lines of communication. In separate meetings, she and Kevin McCoy, Chair of the Legislative Task Force, had met with Mr. Schoff, the SBPA chair, Mr. Mastracchio, the SBPA vice chair, and Mr. Fox, a past SBPA chair, regarding the proposed legislation supported by each group, proposed rules on records retention, and concerns about temporary practice permits.

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Membership Report

Mr. Pape presented the membership report, which included 522 new members (including 210 new associate members), 7 reinstatements, 8 deaths, 22 resignations, and 3 ethics-related terminations. These changes reflected a total membership of 29,827 as of September 25, 2002.

Mr. Eassa moved, and Mr. Frank seconded, that the Board accept the membership report. The Board unanimously approved the motion.

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Designation of Nominating Committee Members from Board

As set forth in Article IX, Section 1, of the NYSSCPA Bylaws, two Board members need to be designated to serve on the 2003 Nominating Committee.

Ms. Golden recommended that the Board designate Ms. Doran and Mr. Grusd to serve on the 2002 Nominating Committee. Mr. Nelson so moved and Ms. Dwyer seconded the motion. The Board unanimously approved the motion.

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Proposed Society Policies Regarding Antitrust and Conflicts of Interest

Ms. Golden opened the discussion regarding two policies that had been proposed for consideration by the staff and which had been recommended for approval by Vice President Larry Keiser. She asked Mr. Woehlke to review the suggested policies for the Board.

The first policy related to conformity with antitrust laws. Mr. Woehlke noted that the networking opportunities afforded to members by some associations’ meetings unfortunately gave rise to illegal agreements to set prices, boycott businesses, or engage in other prohibited activities. He stated that leading association legal counsel throughout the country recommended that associations have meaningful policies forbidding behavior at association events that could give rise to antitrust violations. Such a policy had been included with the Board’s agenda materials. Mr. Wolitzer moved to approve the following policy:

It is the policy of the NYSSCPA to comply strictly with the letter and spirit of all federal, state, and applicable international trade regulations and antitrust laws. Any activities of the NYSSCPA or NYSSCPA-related actions of its staff, officers, Board Members, chapter officers, committee chairs, committee members or members that violate these regulations and laws are detrimental to the interests of the NYSSCPA and are contrary to NYSSCPA policy.

Implementation of this antitrust compliance policy shall include, but shall not be limited to, the following:

A. NYSSCPA membership, Board of Directors, Executive Committee and other committee meetings shall be conducted pursuant to agendas distributed in advance to attendees; discussions shall be limited to agenda items; there shall be no substantive discussions of NYSSCPA matters other than at official meetings; and minutes shall be distributed to attendees promptly.

B. All association activities or discussions shall be avoided that might be construed as tending to: (1) raise, lower, or stabilize prices; (2) regulate production; (3) allocate markets; (4) encourage boycotts; (5) foster unfair trade practices; (6) assist in monopolization; or (7) in any way violate federal, state, or applicable international trade regulations and antitrust laws.

C. No officer, director, chapter officer, committee chair, or other NYSSCPA member shall make any representation in public or in private, orally or in writing, that states, or appears to state, an official policy or position of the NYSSCPA without specific authorization to do so.

D. Legal counsel shall attend all Board of Directors and Executive Committee meetings. Attendance of legal counsel at other meetings shall be at the discretion of the President or Executive Director.

E. NYSSCPA members or employees who participate in conduct that the Board of Directors, by a two-thirds majority vote, determines to be contrary to this antitrust compliance policy shall be subject to disciplinary measures up to, and including, termination of membership on the Board, committee, chapter board, or the Society itself, or in the case of employees, employment.

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Strategic Plan

Ms. Golden turned the floor over to Ms. Lapidus, Vice President (Strategic Planning), who gave an overview of the process that went into the creation of the draft strategic plan.

After a lengthy discussion, Mr. Hoops moved to publish the draft strategic plan on the Society website and in The Trusted Professional, only for the purpose of soliciting comments from the members at large. Ms. Lapidus seconded the motion. There being no objection, the motion passed unanimously.

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FAE Update

Ms. Newman-Limata, FAE President, gave the FAE update. She noted that although FAE has realized a reduction in cancelled courses, and an increase in attendance, there has nonetheless been a disparity in revenue due to the impact of POP registrations. She noted that the seminar budget was prepared using an estimate of 20% POP registrants, based on past history. However, actual POP attendees represented 40% of total seminar registration, resulting in lower than expected revenues.

Ms. Newman-Limata noted that a Technology Task Force had been set up by the FAE Trustees. Among the alternatives being considered by the task force were the increased us of cassette workbooks, internet chat rooms, and Internet interactive course providers for CPE content delivery.

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Executive Session

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Adjournment