02 – K – 00

Call to Order

02 – K – 01

Minutes of August 21, 2002 Executive Committee Meeting

02 – K – 02

President’s Report

a. AICPA Fall Council Meeting

Ms. Golden reviewed plans for the upcoming AICPA Fall Council meeting. She noted that there would be meetings of the presidents and also the chief staff officers of the largest state societies. Ms. Golden asked if there were anything the Executive Committee wanted discussed at these various meetings.

The discussion turned to AICPA governance. Ms. Golden mentioned that before the preceding Council meeting, the Massachusetts Society’s board had asked that Council revisit its role as the Institute’s governing body. The matter was deferred to the upcoming Council meeting at which member breakout sessions had been planned. The committee asked for and received a copy of the Massachusetts Society’s communication.

Committee members expressed displeasure that the Massachusetts Society’s communication had resulted only in a deferral of the study of the Institute’s governance problems. Individual committee members also felt that the governance review should encompass not just Council but also the AICPA board’s role and that of senior management. Mr. Grumet reminded the committee that the AICPA’s president had been careful to obtain governing body approval for each of the Institute’s major initiatives, including those that had met with widespread member disapproval.

Mr. Nowicki moved the following resolution, which was seconded by Mr. Nelson:

Whereas the New York State Society of Certified Public Accountants Executive Committee has reviewed the Massachusetts Society’s May 8, 2002, letter to American Institute of Certified Public Accountants’ Chairman James Castellano;

Whereas the New York State Society of Certified Public Accountants Executive Committee supports the tenets of the letter and believes there is

a need for timely action to restore the AICPA’s responsiveness to, and credibility among, its members and the public;

BE IT THEREFORE

Resolved, that the AICPA Council at its October 2002 meeting establish a task force to consider a new process for the selection of Council members, the Board of Directors, and the leadership of the AICPA to ensure greater responsiveness and accountability to the membership.

Resolved, further, that the membership of the task force shall be selected by the Boards of each State Society and that members of the task force shall not include members of Council, the Board of Directors, or the leadership of the AICPA.

Resolved, further, that such report shall be received by the AICPA Council at its Spring 2003 meeting.

Following extensive discussion the motion was unanimously approved. Ms. Lapidus was not present for the vote. Ms. Golden was asked to prepare a cover letter for the resolution to forward it to all state society presidents. Likewise, Mr. Grumet was directed to forward the resolution to the chief staff officer of each state society.

b. Legislative Matters

Mr. Grumet reported on the recent joint hearings by Assemblyman Brodsky and Senator Spano on recent highly publicized issues with financial reporting.

c. Recent Society Comments

Ms. Golden noted that there had been more comment letters submitted since the beginning of the fiscal year than during the entire preceding year. Mr. Colson, director of the technical services division, commented on the excellent quality of the work being done by the committees on comments, but noted there were still concerns expressed by the committees about the comment procedure.

Ms. Golden commended the following committees on their recent comments, which had been circulated to the Executive Committee:

• The Emerging Technology Committee, chaired by Bruce Nearon, for their August 12 “Comments on Exposure Draft AICPA/CICA Trust Services Principals and Criteria (Incorporating SysTrust and WebTrust) July 1, 2002, Version 1.0.”
• The Financial Accounting Standards Committee, chaired by Steven Rubin, for their September 9, 2002 “Comments on IASB Exposure Draft of Proposed Improvements to International Accounting Standards.”
• The Accounting and Review Services Committee, chaired by Debbie A. Cutler, for their September 20, 2002 “Comments on Exposure Draft: Proposed Statement on Standards for Accounting and Review Services: OMNIBUS – 2002 Amendment to SSARS No. 1 and SSARS No. 4.”

d. Dinner with Barry Melancon

Ms. Golden described the conversations with AICPA President Barry Melancon at the dinner he attended the night before the September meeting of the NYSSCPA Board.

e. Nominating Committee Update

Ms. Golden noted that a number of petitions to serve on the Nominating Committee had been received and that it looked possible from the number of petitions requested that for the first time in a decade a run-off election would be held to determine who would serve on the Nominating Committee.

f. Strategic Plan

Ms. Lapidus reported that the strategic plan had been posted on the website for member comment and the chapters had been asked three times to comment. Still no comments had been received to date. One committee member suggested that Ms. Golden should specifically assign each chapter president to review the strategic plan and provide chapter comments. Mr. Keiser said he would raise this at the next chapter presidents’ call on October 31 and asked Mr. Pape to circulate the strategic plan to the chapter presidents in advance of the call.

Mr. Grumet added that during the chapter visits, he and the officers had made a major point of soliciting member input on whether the Society should have higher professional standards than the state and whether this should be part of the strategic plan. These suggestions had met with general approval at the chapter meetings. Ms. Lapidus had asked if anyone had taken formal notes during the chapter visits. Mr. Grumet indicated that the answer was no, and volunteered to prepare a formal summary. One committee member suggested instead that each chapter president should be asked to submit notes from his or her chapter visit.

g. Real Estate Task Force

Messrs. Hoops and Grusd discussed recent deliberations by the Real Estate Task Force. Mr. Grumet reported that the space-needs study by Williams had begun.

h. Relations with the State Board

Ms. Golden reported that she had had several private meetings with the leadership of the State Board for Public Accountancy. She emphasized that the lines of communication with the SBPA were quite open. She also noted that the Society’s position paper on the State Education Department’s proposed rule regarding workpaper retention had been well received.

i. Leadership Conference Update

Mr. Hoops reminded the Executive Committee that the 2003 Leadership Conference will be held at the Gideon Putnam Hotel in Saratoga Springs from July 13-15, 2003. He noted that the conference will address how to build grassroots political support, how to regain the profession’s positive position in the public’s trust. Mr. Hoops noted that he was hoping to reintroduce continuing professional education programs to the conference. One committee member asked if the meeting could be opened to broader leadership, provided the additional members pay for the event.

02 – K – 03

Executive Director’s Report

a. Affinity Programs

Mr. Grumet explained that during the negotiations over the participation of state CPA societies in the AICPA’s Internet portal, he had held the staff back from seeking out new affinity programs. He still believed that affinity programs offering practice-development opportunities for members should be shunned by the Society. However, he now felt the Society could begin negotiating affinity relationships with companies that seek to offer products and services for consumption by the members themselves. He suggested that every such affinity relationship have a clause clarifying that the services are for NYSSCPA members and the affinity vendor is prohibited from seeking entrée to the member’s clients. Until further direction is given by the Board or Executive Committee, the Executive Committee is to have the power to finally approve all affinity relationship agreements. By consensus this approach was approved by the Executive Committee.

b. COAP Update

Mr. Grumet reported that a fifth COAP program is being explored with Le Moyne College. The Syracuse chapter would sponsor the program. Final approval of the new program would be sought in the budget process. By consensus, Mr. Grumet was encouraged to explore the establishment of a fifth COAP program with that program to be presented at an upstate college or university.

c. FAE Update

Messrs. Grumet and Schmelkin reported on discussions FAE had been having with chapter leaders, out of which had developed a plan to shift ten programs out of FAE and over to the chapter budgets. Also, plans were in the works to offer one or more three-day CPE programs throughout the state. On a different front, members in industry had approached staff to offer an ethics program geared to them and such a program was being offered. Mr. Grumet noted that the Society had added a person dedicated to developing the market for in-firm CPE offerings by FAE. Finally, they noted that FAE is exploring the possibility of moving some FAE events out of hotels and into facilities at colleges and universities.

d. Executive Director’s Meetings with Managing Partners

Mr. Grumet reported on a meeting he had had with managing partners of firms in the Buffalo area. The meeting was so well received that he was open to similar meetings elsewhere in the state. One goal is to involve managing partners in the Society’s government relations program.

02 – K– 04

Proposal to Approve Relations with the Legal Community Committee

Ms. Golden turned to the discussion of a proposed new committee approved by the Committee on Committee Operations that would focus on relations with the legal community. She asked Mr. Woehlke to provide background. He noted that the idea for the new committee had arisen in conversations between a number of members with both CPA and attorney credentials and Mr. Grumet. The draft committee action plan had been prepared by staff in conjunction with those members and referred to COCO, which had changed the name, slightly expanded and clarified the CAP, then referred it on to the Executive Committee for final approval.

The committee began discussion of the CAP. Mr. Aquilino suggested that the requirement that the committee be composed mostly of people with joint legal and accounting backgrounds be dropped. Ms. Golden noted an inconsistency in the CAP with regard to the bar associations with which the new committee would have interactions and felt that instead of listing the bar associations of the state and city of New York a more generic bar association description should be used. Mr. Love moved a resolution that the CAP be approved with the changes recommended by Mr. Aquilino and Ms. Golden. Mr. Langowski seconded the motion. Following further discussion, the motion was unanimously approved.

02 – K – 05

NYSSCPA 401(k) Plan Safe Harbor Election for 2003

Ms. Golden asked Mr. Woehlke to introduce the topic of the NYSSCPA 401(k) Plan safe harbor election for 2003. He reported that the contribution experience of the Society’s 401(k) plan for the 1998, 1999, and 2000 plan years (calendar years) resulted in a partial refund of contributions to a number of higher paid staff members following the plan year end. This significantly lessened the ability of these staff members to contribute to their retirement savings. Staff had requested and received Executive Committee approval for the filing of safe-harbor elections for 2001 and 2002.

He noted that the filing of such an election for 2003 would result in the immediate 100% vesting of that portion of the employer contributions equal to 3% of each employee’s salary. Such an election would result in a smaller forfeiture upon the departure of employees with less than 100% vesting. A smaller forfeiture would result in increased out-of-pocket costs to the Society, because forfeitures reduce the amount the employer is otherwise required to pay as contributions. He said Ms. Chambers estimated that the amount of these reduced forfeitures would be significantly less than $10,000, He closed by stating that notice of the 2003 safe harbor election, if approved, must be made to plan participants by November 30, 2002.

Mr. Eassa then moved, and Mr. Langowski seconded, a resolution to approve the making of a safe harbor election applicable to the NYSSCPA 401(k) Plan’s 2003 plan year, using the parameters outlined in Mr. Woehlke’s report. Following discussion, the motion was unanimously approved.

02 – K – 06

Proposal to Restructure the Committee Application Process

Ms. Golden asked Messrs. Nelson and Markezin to report on the proposal from the Committee on Committee Operations to restructure the committee-application process. They reported that on September 10 COCO acted to accept and refer on to the Executive Committee a proposal calling for replacing the mandatory annual reapplication process with one where members are automatically reappointed until the Society receives either (1) a committee member notification that he or she no longer wishes to serve or (2) a committee chair “do not reappoint” designation regarding such member.

Mr. Love moved, and Mr. Nowicki seconded, a resolution approving the COCO-approved restructuring of the committee-application process. The motion passed unanimously.

Discussion turned to expanding the scope of the Peer Review and Ethics Committees or perhaps changing their composition. One member asked that the November Board meeting include a detailed briefing on these committees, their work, and potential changes to their operations. Ms. Golden agreed to the request.

02 – K – 07

Use of Membership Database

Mr. Love, chair of the Mediation and Arbitration Committee reported that his committee had completed work on revisions to the Society’s arbitration rules and was submitting them to the Executive Committee for final approval. Mr. Eassa moved that the revised arbitration rules be approved and Mr. Nelson seconded. During the ensuing discussion, it was noted that the Mediation and Arbitration Committee had reserved to itself the final authority to revise the rules. Mr. Eassa was asked if he would be willing to amend his motion to approve the rules subject to changing section two to make rule amendments subject to the final approval of the Executive Committee or the Board. Both Mr. Eassa and Mr. Love agreed. With this amendment, the motion was unanimously approved.

02 – K – 08

Membership Report

Mr. Pape presented the membership report, which included 118 new members (including 42 new associate members), 7 reinstatements, 9 deaths, and 15 resignations. These changes reflected a total membership of 29,929 as of October 10, 2002. Mr. Aquilino moved and Mr. Nelson seconded a motion to approve the Membership Report. Following discussion, the motion passed unanimously.

There followed a discussion of the benefits that should or should not continue for members who are delinquent in paying their dues. Mr. Nelson moved and Mr. Aquilino seconded a resolution that members who are three months delinquent in paying their dues should not be permitted to avail themselves of the discount offered by FAE to NYSSCPA members. Following discussion, the resolution passed unanimously.

02 – K – 09

Financial Statements as of September 30, 2002

Mr. Aquilino presented a report on the financial statements of FAE and the Society. Mr. Eassa asked that in the future the investment income be grossed up and that unrealized losses be separated out.

02 – K – 10

Executive Session

The committee did not enter into executive session

02 – K – 11

Adjournment