Deborah L. Bailey-Browne
Nancy A. Kirby
Richard E. Piluso

05 – A – 0
Call to Order

05 – A – 1
Minutes

a. Approval of Minutes of November 16, 2004, Executive Committee meeting

Mr. Kearney asked if there were any changes to the minutes of the November 16, 2004, Executive Committee meeting. There being none, Mr. Cohen moved that they be approved as written. Mr. Berlant seconded. The motion passed unanimously.

b. Correction to Minutes of August 17, 2004, Executive Committee Meeting

Mr. Woehlke noted that the minutes of the August 17, 2004, Executive Committee meeting had mistakenly omitted reference to the termination of the section 457 plan. Mr. Langowski made the following motion to correct this error in the minutes:

RESOLVED, that item 04 – G – 11, “Executive Session”, in the minutes of the August 17, 2004, NYSSCPA Executive Committee meeting are hereby amended to read as follows:

04 – G – 11
Executive Session

The Executive Committee then entered into executive session. After the executive session ended, Mr. Piluso made the following resolution, which was seconded by Mr. Nowicki:

RESOLVED, that the Section 457 deferred compensation plan, approved at the December 17, 2003 meeting of the Executive Committee, see minutes item 03 – K – 11, “Eligibility for 457 Plan”, is hereby revoked, effective immediately. RESOLVED, further, that the officers are hereby authorized and directed to execute any documents necessary to carry out this resolution.

During the ensuing discussion, Mr. Woehlke noted that the staff was unable to identify a suitable investment vehicle for funds that would be invested in the plan, due to the fact that it was a non-trusteed plan. Following discussion the motion passed unanimously.

Mr. Jones seconded. Following discussion, the motion passed unanimously.

c. Minutes of December 9, 2004, Board of Director Meeting for Information Only

Mr. Kearney referred the Executive Committee to the agenda materials for them to review the current draft of the December 9, 2004, Board minutes.

05 – A – 2
President’s Report

a. AICPA Council Meeting

Mr. Kearney noted that the regional Council meeting for the Northeast region would be held in New York on March 23. The agenda for the meeting was expected to involve the transparency of the Institute’s peer review program and the project led by former AICPA chair Castellano regarding auditing standards for nonpublic companies.

There had been a conference to call to update the Council about final changes to Ethics Interpretation 101-3. There was a plea during the call for individuals to participate in the on-line poll on transparency. Mr. Kearney noted that following that call the Society’s membership had been encouraged to participate via articles in The Trusted Professional and on the website.

b. Computer Based Examinations

Mr. Kearney reported that pursuant to Board direction, the NYSSCPA sent a letter on December 31 to the New York State Board for Public Accountancy relaying the issues raised at the December Board meeting concerning the policies New York was pursuing regarding the computer-based CPA examination. The issues raised included the timing of results and the pass/fail approach used in NY.

In addition, the NYSSCPA Board’s concerns regarding the insufficiency of seating and test-site conditions at Prometric locations were communicated to the AICPA.

c. Chapter Officers’ Visitations

Mr. Kearney noted that the chapter officers’ visits were complete and that they were well attended. He noted a higher than expected participation at the meetings by members in industry.

d. Committee on Practical Reform for the Tax System Update

Mr. Kearney said that on January 7 the Committee on Practical Reform for the Tax System, chaired by David A. Lifson, hosted a summit on tax reform attended by tax policy experts from the accounting, economics, and legal professions. The Committee then commenced preparing its report, which had not yet been issued.

e. State Board of Accountancy Update

Mr. Kearney reported on the following actions taken by the New York State Board for Public Accountancy at its January 26, 2005, public meeting:

• Passed a motion to recommend a regulation change that would require CPA firms to submit copies of modified or adverse peer reviews to the State Board. The recommendation was to be forwarded to the New York State Education Department’s (SED’s) counsel for review. The motion passed with the knowledge by the State Board that the State Legislature had not passed a mandatory peer review law.
• Passed a motion regarding the computer-based CPA exam, which recommended to SED that it consider the proposed price increases of the exam to be charged to NY candidates to be unwarranted and that it call upon the AICPA to rescind its planned increase as representing a significant financial barrier to entry to the profession.
• Recommend to SED that it call upon the National Association of State Boards of Accountancy and its member boards to join together and consider the development of a contingent licensing exam. This exam could be used by the 54 licensing jurisdictions, if it were to be determined that the continued use of the CPA exam were not in the best interests of future applicants for licensure from New York State and the other licensing jurisdictions.
• Discussed the need to expand the experience requirement in the regulations, if the legislature were to expand the scope of practice, but no motion was made. Instead, the current Regulation 70.2 with amendment language would be reviewed at the April meeting. (The State Board had defeated a motion for expanded experience at its meeting in November, 2004).

a. Quality Enhancement Policy Committee

Mr. Langowski reported that the QEPC had met and discussed the ethics and peer review programs. They decided to focus first on peer review. Its next meeting had been set for February 16.

b. COAP Fundraising Update

Mr. Langowski noted that as of February 9, COAP had received pledges amounting to $65,000 towards advertising in the COAP commemorative journal.

c. Governance Subcommittee

Mr. Langowski reported that the governance subcommittee had prioritized its projects and was first addressing position descriptions for directors and officers and an assessment of the “dash board” provided to the Board to determine whether it met the Board’s needs.

d. 2005 Leadership Conference

Mr. Langowski reminded the Executive Committee that the 2005 Leadership Conference would be held July 10 – 12 at the Sagamore Resort, Bolton Landing, NY. The theme of the Leadership Conference would be Quality.

a. Reports on Chapters (Katharine Doran and Andrew Eassa)

Ms. Doran reported on efforts to coordinate chapter and committee activity by encouraging chapter representatives to participate on relevant state-wide committees via conference call. Mr. Eassa noted that the Manhattan chapter had raised some questions concerning the conveyance of the careers committee to the Manhattan chapter. The chapter had wanted to retain the state-wide committee chair who lived in Elmira. The Executive Committee by consensus determined that reimbursing travel for this purpose would not be prudent and instead encouraged the Finger Lakes chapter and indeed all chapters to establish their own Career Day events.

b. Recent Society Comments

Mr. Berlant reported that the Society had issued three sets of comments as follows:

• Comments submitted to the Information Systems Audit and Control Association by the NYSSCPA Technology Assurance Committee, chaired by Gary E. Carpenter, regarding the Proposed Information System Auditing Standard on Irregularities and Illegal Acts; dated December 31, 2004; Principal Drafters: Gary E. Carpenter, Marc Engel, Joel Lanz, Joseph B. O’Donnell, Ph.D., Yigal Rechtman, and Bruce I. Sussman;
• Comments submitted to the Financial Accounting Standards Board by the NYSSCPA Financial Accounting Standards Committee, chaired by Robert A. Dyson, regarding Proposed FASB Staff Position FIN 46(R) - b; dated February 3, 2005; Principal Drafter: Robert A. Dyson; and
• Comments submitted to the International Auditing and Assurance Standards Board by the NYSSCPA International Accounting and Auditing Committee, chaired by Robert N. Waxman, regarding ISA 230 (Revised), Audit Documentation, Amendment to ISA 330, The Auditor’s Procedures in Response to Assessed Risks, and Amendment to ISQC 1, Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information and Other Assurance and Related Services Engagements; dated February 3, 2005; Principal Drafter: Robert N. Waxman.

Mr. Berlant noted that these comments illustrate that the Society’s committees are very engaged in and responsive to the accounting environment. He added that there is now a plethora of organizations to which the Society is commenting.

a. Committees Update

See 05 – A – 10, below.

b. Report of the Nominating Committee

Mr. Nowicki reported that the Nominating Committee met on January 13 and nominated the following individuals for the positions set opposite their names:

a. Financial Statement for eight months ending January 31, 2005

Treasurer Bloom reported that due to the fact that the Society was in the middle of a software upgrade, there were no January 31 statements as yet for the Executive Committee to review. He expected them to be issued in the next few days.

Mr. Bloom did note that dues collection were running ahead of the previous year and that FAE was continuing to have significantly stronger results than were expected for that time of the year.

a. Comptroller Hevesi’s Financial Oversight of Schools Initiative

Mr. Grumet reported that although bill numbers were not yet available, Comptroller Hevesi’s proposed legislation on the financial oversight of schools reportedly had received significant sponsorship. He noted that the Society was working closely with the Comptroller to develop training in the event of the bill’s passage. As of February 10, the State Education Department had not indicated support for the initiative.

Mr. Grumet also provided a general legislative update including a gubernatorial budget proposal that CPA and certain other professional licenses not be subject to renewal if New York taxes were owing by the licensee. Mr. Eassa moved, and Mr. Bloom seconded, that Mr. Grumet be directed to explore establishing a joint effort with the legal and medical professions to oppose the proposal. The motion was unanimously approved.

b. Editorial Board Meetings

Mr. Grumet reported that editorial board meetings on the school district audit situation and the regulation of CPAs had been held with Newsday, The Albany Times-Union, the Buffalo News and with the Journal News in Westchester. As a result, editorials ran in Gannett newspapers in Westchester, Rockland and Putnam counties and in Newsday. Op-eds appeared in The Buffalo News, and the Democrat & Chronicle.

c. Member Benefits Update

Mr. Pape described a member benefit that the Member Benefits Committee was recommending for approval. Kaplan CPA Review proposed to offer a significant discount to Society members. No royalty revenue to the Society was included in this proposal. Mr. Langowski moved, and Ms. Doran seconded, a motion to recommend to the full Board that the member benefit being offered by Kaplan CPA Review be approved. The motion was unanimously approved with the matter to be placed on the Board agenda for its April meeting.

d. Continuity of Practice Program

Mr. Woehlke reported on a proposal from the Small Firm Practice Management Committee to advise members and the representatives of their estates on issues related to continuity of practice, including assistance in identifying potential purchasers for the practices of deceased and disabled members. The Executive Committee offered a number of suggestions to the proposal and directed Mr. Woehlke to present a revised program for further consideration at the May Executive Committee meeting.

e. Software Upgrade

Mr. Grumet noted that the accounting package being used by the Society, Great Plains, was being updated. He also reported that all confidential documents generated by the ethics and peer review programs and Society contracts were being stored electronically, using a program called DocuWare.

1. A 10% dues increase
2. An increase in the peer review administration fee
3. Two new staff persons: one dedicated to marketing CPE to industry and the other to assist in developing policy positions for the Society.
4. A grant to FAE of $623,725.

Mr. Pape presented the Membership Report, which included 366 new members (including 246 new associate members) 356 reinstatements, 269 deaths, one ethics termination and three resignations. These changes reflected a total membership of 29,698 as compared with 29,847 at that time the previous year. Mr. Pape noted that the unusual number of deaths in this report resulted from a culling of the membership lists.

Upon a motion made by Ms. Doran, seconded by Mr. Berlant, the Executive Committee unanimously approved the membership report.

Mr. Nowicki reported that the Committee on Committee Operations (COCO) had met on January 6 and made the following recommendations to the Executive Committee:

1. The Peer Review Committee and Professional Ethics Committee should remain in the Operations Division but report to the Quality Enhancement Policy Committee.

2. The Mediation and Arbitration Committee should be moved from the Operations Division and into the Consulting Services Division.

3. The Public Relations Committee should be sunset.

4. The Furtherance Committee should be disbanded with the provision that the Executive Committee bear in mind how it or the Board would go about monitoring emerging issues and continuing their ongoing evaluation of the strategic plan.

5. The Managing Partners Committee should be merged into the Large Firm Practice Management Committee.

6. The Promoting CPA Careers Committee function should be incorporated into the chapters.

7. The remaining four committees in the Future of the Professions Division (Large and Medium Size Firm Practice Management, Small Firm Practice Management, Advancement Within the Profession and Higher Education) should be left intact in a separate division to be renamed the Development of the Profession Division, unless or until the Executive Committee, or those revisiting the strategic plan at the leadership conference, might propose a restructuring of divisions where the four committees are then deemed to have a more appropriate fit in another or new division.

8. The Executive Committee should consider the concerns of the Industry Oversight Division that the Relations with the Legal Community Committee and the Cooperation with Community Businesses Committee be moved out of the Industry Division.

9. The Secretary should meet periodically with oversight committee chairs, who should report periodically to the entire Executive Committee as needed or as directed by the Secretary.

Mr. Nowicki moved the acceptance of all the COCO recommendations. A discussion ensued. Mr. Grumet noted that the Public Relations Committee had asked for permission to revise its action plan and, therefore, he suggested that the COCO recommendation regarding that committee be deferred.

Mr. Langowski moved, and Mr. Bloom seconded, a motion to amend the pending resolution by deleting item numbers 3 (relating to the Public Relations Committee) and 8 (relating to the concerns of the Industry Oversight Committee) with such items to be placed on the agenda for the May Executive Committee meeting and to delete the language “as needed or as directed by the Secretary” from item number 9. This amendment was approved by consensus. Mr. Kearney then called for a vote on the motion as amended. The amended motion was unanimously approved.