President
Golden introduced David A. Lifson, Chair of the Finance Committee.
Mr. Lifson began by briefly describing the process by which
the Finance Committee oversaw the work of Society staff
on the 2004 budget. He stated that the budget is very conservative.
Mr.
Lifson summarized the budget programmatically to demonstrate
how the Society anticipates it will spend approximately
$13.2 million on programs such as education, member proficiency,
governance, communications, networking & recruiting,
government relations and other programs.
He noted
in particular that education through FAE comprises over
a quarter of the entire budget. He pointed out that FAE
generates revenue to offset overall education expenses.
Mr.
Lifson then detailed the percentage allocation of dues revenue
by membership categories to programs. For reference, the
programmatic breakdown is appended to the hard copy of the
minutes.
President
Golden praised the presentation format, stating that it
better displays the fluidity and relations between the various
programs of the organization.
Ms.
Chambers and Mr. Schmelkin then summarized the process by
which staff crafted the budget. Ms. Chambers noted that
the process involved substantial interdepartmental communication,
as well as communication with lay leaders at the chapter
level.
With
respect to FAE, Mr. Schmelkin noted that seminars, conferences,
speaker expenses and course materials were costed out on
a line-by-line basis, reviewed with FAE President Nancy
Newman-Limata and President Golden, and finally approved
by the FAE trustees. He explained that the budget was prepared
with very conservative assumptions and provided examples.
He added that although FAE is introducing a significant
new program, tentatively called the FAE University, in Syracuse,
Mid Hudson and Nassau/Suffolk, the budget assumed very modest
revenue from the program. In terms of conference registrations,
next year’s attendance numbers will be based on last
year’s numbers, despite increases that have been realized
in the program in the current year. Lastly, Mr. Schmelkin
noted that FAE has hired a manager of FAE’s in-firm
training program, which is anticipated to generate approximately
40 sales next year.
In response
to a question about the Peer Review Program, it was noted
that Peer Review is entirely supported by the revenues it
generates from participating firms.
With
respect to the programmatic chart breakdown, a member noted
that member proficiency is not listed as a category under
the membership dues breakdown. Mr. Grumet responded that
member proficiency comprises several areas that are broken
down separately: peer review, committees and the CPA Journal.
In response
to a question, it was noted that legislative activity is
reflected in the budget under Government Affairs.
Mr.
Pape briefly discussed the expansion of the COAP (Continuing
Opportunities in the Accounting Profession) program. He
stated that the Society is currently negotiating with Le
Moyne College to host a COAP program next year, bringing
the number of program venues to 5.
One
member inquired into areas of the budget that staff believed
to be areas of concern or presented possible cushions. Mr.
Grumet responded that the POP utilization percentage in
education programs was calculated at a higher rate than
most prior year’s usage, and could be considered a
cushion. The hiring of an outside legislative consultant
could present a budgetary issue.
Mr.
Lifson cautioned that some components of the budget are
not within Society control, such as course attendance, while
some areas are, such as hiring outside consulting services.
He added that the budget was very conservatively crafted
and that, short of a major unanticipated expense, the Finance
Committee fully demands and expects the Society to keep
within the budgetary constraints.
Ms.
Chambers added that anticipated membership increases through
recruitment were not accounted for in the budget. A lengthy
discussion ensued with respect to the conservative nature
of the budget. Mr. Langowski observed that with a budgeted
net revenue of only $200,000, there is very little leeway
within which to work in meeting the budget.
Mr.
Lifson opined that the Society cannot craft its budget based
on extraordinary events or contingencies. He cautioned that
such an approach would force the Society not to spend enough
money to effectively serve members.
Several
members agreed and observed that the Board should hold the
Society to strict conformance with the budget over the course
of the fiscal year. In this respect, Ms. Golden suggested
that FAE Trustees should meet more often than four times
per year, in order to provide the oversight necessary to
compel adherence to the budget.
Mr.
Grusd asked about revenue generated from the annual trade
show. Mr. Schmelkin provided a historical overview of how
the Society has run the trade show. Mr. Schmelkin noted
that presently, the trade show is run by an outside meeting
planner, Flagg Management Associates, which incurs all expenses
related to planning the show. Because of this arrangement,
the Society no longer incurs the traditional expenses, such
as staff time, hotel rentals, etc. In turn, Flagg retains
profits from the event and pays the Society an amount determined
by its contract with the Society. Mr. Schmelkin noted that
the Society is entering the third year of a five-year contractual
arrangement with Flagg, and that the relationship has worked
well thus far.
Mr.
Schmelkin spoke briefly regarding a study commissioned by
six of the largest state societies on CPA continuing education.
He noted that the study initially showed all the participating
Societies were having fiscal problems relating to their
education programs; however in the current year, FAE is
performing well.
Mr.
Hoops expressed a concern raised with him by Board member
Beth Van Bladel that some chapters are budgeted at break-even,
while others are budgeted at a loss. Mr. Pape responded
that he and Ms. Chambers engaged in lengthy conferences
with all chapters regarding their finances. He noted that
some chapters have different expenses than others, due to
their relative levels of activity. He added, however, that
all are expected to break even with regard to any social
events and CPE, although recruitment efforts are afforded
more leeway depending on each chapter’s circumstances.
Ms. Golden noted that Utica Chapter has 90 members, while
Buffalo has over 1,200, so manpower and communications are
different issues under each Chapter budget.
Mr.
Grumet added that some Chapters produce their own newsletters,
while others disseminate their member communications through
The Trusted Professional. Other cost savings have
accrued thanks to central production of several chapter
newsletters. Ms. Barry noted that, for example, that the
Nassau Chapter cut newsletter expenses from $64,000 to $24,000
by having the Society produce their newsletter.
Mr.
Nelson then moved, and Mr. Nowicki seconded, a motion to
recommend that the Board approve the proposed 2003-2004
budget. The motion passed unanimously.
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