EC06 – A – 0
Call to Order

EC06 – A – 1
Minutes

a. Approval of Minutes of November 15, 2005, Executive Committee meeting

Mr. Langowski asked if there were any changes to the draft minutes of the November 15, 2005, Executive Committee meeting. A committee member pointed out that under agenda item EC05-G-2e, Chapter Town Meetings Update, the draft minutes incorrectly indicated that the Utica Chapter would be the final chapter town hall meeting of the 2005-2006 year, instead of the Nassau Chapter. Mr. Langowski also pointed out the following issues under agenda item number EC05-G-3, President-elect’s Report:

1) a spelling correction was needed to Mr. Paul Salmin’s last name; and
2) the words “but that members in general may be welcome to attend” should be stricken from the last sentence of the section.

Mr. Moynihan moved to approve the minutes as corrected, and Mr. Stubbs seconded the motion. The motion passed unanimously.

b. Approval of Minutes of the November 30, 2005, Executive Committee Meeting

Mr. Langowski asked if there were any changes to the minutes of the November 30, 2005, Executive Committee meeting.

There being none, Mr. Grusd moved that the minutes be approved as drafted, and Mr. Riley seconded the motion. The motion passed unanimously.

c. Approval of Minutes of December 20, 2005, Executive Committee Special Meeting, held via conference call

President Langowski asked if there were any changes to the minutes of the December 20, 2005, Executive Committee Special Meeting, held via conference call.

There being none, Mr. Valenti moved that the minutes be approved as drafted, and Mr. Moynihan seconded the motion. The motion passed unanimously.

a. AICPA Update

Mr. Langowski stated that very little had transpired recently on which to report.

b. Chapter Town Hall Meetings

Mr. Langowski reported that the final chapter town hall meeting of the year, held in the Nassau Chapter, had approximately 175 to 200 participants. He reassessed all seventeen chapter town hall meetings, saying that overall they were informative and well-received.

A brief discussion ensued regarding the provision of Ethics CPE at Town Hall meetings. Mr. Grumet noted that the first year of Ethics CPE during Chapter visits garnered 2,700 participants, while 2,200 and 1,600 attended the Ethics courses during the most recent two years. Several expressed concern that these numbers indicated the material had grown repetitive to prior years’ attendees. Mr. Grumet explained that the New York State Education Department (SED) required the organization to include specific course content from year to year; however, he agreed that the course could benefit from any suggestions or input from members and organizational leadership, provided the course continued to meet SED requirements.

c. Foundation for Accounting Education Update

Mr. Schmelkin gave a report on the Foundation for Accounting Education (FAE), noting that its November Investment Partnerships Conference attracted 555 attendees. In addition, the Non-Profit Conference, held at two venues (one upstate, one downstate) drew more than 600 attendees.

Mr. Schmelkin said that a number of FAE programs originally planned to be held in-house at the organization’s offices had to be moved to hotels due to space constraints.

Mr. Schmelkin concluded his report by noting that the FAE POP program was slightly ahead of last year with respect to sales.

Mr. Riley asked Mr. Schmelkin about a turned-down request by the Financial Planning Committee for a paid speaker at its Financial Planning Conference. Mr. Schmelkin noted that the committee wanted to procure sponsorships to pay for four speakers. Mr. Grumet added that all requests for speakers are considered, but cautioned against the creation of an expensive precedent by approving every request.

a. Quality Enhancement Policy Committee

President-elect Riley stated that the Quality Enhancement Policy committee had begun to focus on the Society’s ethics program

b. 2006 Leadership Conference

Mr. Riley reminded members that the 2006 Leadership Conference would be held at the Gideon Putnam, near Saratoga Springs, New York.

a. Reports on Chapters

Vice President Valenti reported that the chapter presidents discussed the recently passed chapter contract approval policy during their latest monthly conference call. He said that the policy was well-received.

b. Recent Society Comments

Mr. Markezin presented the recent Society comments in Vice President Schoenfeld’s stead. He stated that the year had resulted in record commentary for the Society, with 24 comments issued so far this year since June 1, 2005, with several more anticipated. In comparison, 17 were issued during the entire prior fiscal year, while a record 25 were issued during the entire year before that. Mr. Markezin then referred Executive Committee members to the agenda materials which included the following comments:

• Comments submitted to the Financial Accounting Standards Board by the NYSSCPA Financial Accounting Standards Committee, chaired by Margaret Wood, regarding Proposed FSP 113a: Accounting for Unrealized Gains (Losses) Relating to Derivative Instruments Measured at Fair Value under Statement 133; dated January 13, 2006; Principal Drafter: John J. McEnerney;
• Comments submitted to the Financial Accounting Standards Board by the NYSSCPA Financial Accounting Standards Committee, chaired by Margaret Wood, regarding FASB Invitation to Comment: Selected Issues Relating to Assets and Liabilities with Uncertainties (File Reference 1235-001); dated January 13, 2006; Principal Drafters: Robert A. Dyson, Sharon Sabba Fierstein and Margaret Wood; and
• Comments submitted to the Committee on Sponsoring Organizations (COSO) by the NYSSCPA SEC Practice Committee, chaired by Joel Lanz, regarding COSO Guidance for Smaller Public Companies Reporting on Internal Control over Financial Reporting exposure draft; dated January 13, 2006; Principal Drafter: Joel Lanz, Bruce Nearon and Anthony Chan.

President Langowski commended the authors and committees on the comments.

Anthony Cassella, Chair of the Industry Oversight Committee, joined the Executive Committee. Mr. Markezin then referred committee members to a summary of follow up action taken by staff on issues raised by Mr. Cassella during the November 15, 2005, Executive Committee meeting. The summary was included in the agenda materials. Mr. Markezin said that many of these concerns were already being addressed by the Society. Mr. Cassella stated that he was pleased with the response. He added that a contact sheet outlining the administrative contacts at the Society should be provided to all committee chairs at the chair orientation meeting.

A brief discussion ensued regarding the membership database and the data collection process as a way to identify new committee members. Mr. Grumet noted that members are largely responsible for updating their individual data and interests, and said that a wide array of reports and member listings could be generated based on this information. It was suggested that a session be provided to committee chairs on what information is available from the membership database to supplement committee chair orientation sessions.

A committee member suggested that staff look into web community blackboards for member communication. Mr. Schmelkin noted that staff had looked into a leading service which entailed a $40,000 licensing fee, and had researched several other alternatives. Mr. Grumet stated that staff would continue to explore the possibility.

3. Letter from Peer Review Committee Chair Paul Salmin

A letter from Paul Salmin, Chair of the NYSSCPA Peer Review Committee, dated February 6, 2006, was distributed to Executive Committee. In the letter, Mr. Salmin expressed concerns relating to peer review administration and other issues impacting the Peer Review Committee’s functioning. Mr. Langowski announced that, unless there was an objection, he would look into the concerns and issues expressed in Mr. Salmin’s letter and the Executive Committee would take it up at its next meeting.

b. Report of the Nominating Committee

Mr. Nowicki reported that the Nominating Committee met on January 12, 2006, and nominated the following individuals for the positions set opposite their names:

Mr. Nowicki reflected upon the process, stating that he found it to be more open than it had been historically. He suggested going forward that the Society consider a democratic elective process whereby the membership would vote for one of at least two candidates for office. One Executive Committee member commented that, due to the geographic distribution of the Society’s membership, Mr. Nowicki’s proposal would end upstate representation among at-large directors and officers.

a. Financial Statement for Six Months Ending November 30, 2005

Treasurer Grusd reported that the Society realized net revenues of $670,000 for the six month period ending November 30, 2005, which was a favorable variance over budget by approximately $469,000 and approximately $732,000 more than reported at the same time last year. He noted that this figure did not account for the Society’s promised 2005-2006 fiscal year contribution to FAE of $623,000, which would be prorated at $312,000 for the six month period. He reported that the $469,000 favorable variance in net revenue arose from a number of items including: 1) $185,000 in gross profits for member dues, chapters and membership insurance royalties; and 2) $248,000 in salaries for unfilled positions, over-budgeted payroll taxes, depreciation and insurance.

a. State Board of Accountancy and Health Department Updates

Mr. Grumet provided an update on recent negotiations with the State Education Department and Health Department.

b. Legislative Update

This matter was deferred

c. Member Benefits Update

Mr. Woehlke, filling in for Mr. Pape, provided background information regarding FSO Technologies, Inc., a member benefit recommended for approval by the Member Benefits Committee. FSO is an organization that provides websites to businesses on a subscription basis. The arrangement with FSO guaranteed a free core website for participating members plus a modest royalty for the Society on additional services sold to members.

One committee member asked about the due diligence performed on FSO by the Member Benefits Committee. Mr. Woehlke did not have the information necessary to respond to the question.

Mr. Riley then moved to approve FSO, subject to Mr. Grumet’s satisfying himself that the Member Benefits Committee had conducted sufficient due diligence on FSO in their process of arriving at their recommendation. Mr. Moynihan seconded the motion. Following discussion, the motion passed unanimously.

Mr. Woehlke then turned to a proposed member benefit being offered by CCH. The benefit included a member discount on certain titles published by CCH. Mr. Falbo moved, and Mr. Riley seconded, approval of the CCH member benefit. Following discussion, the motion passed unanimously.

d. Report on The CPA Journal, The Trusted Professional and Website

Communications Director Joanne Barry and The CPA Journal Editor-in-Chief Mary Jo Kranacher each gave presentations to the Executive Committee on the production process relating to each publication, emphasizing particularly the quality control aspects of the processes. Ms. Barry also provided similar background regarding the Society’s website.

Mr. Langowski introduced Anthony N. Dalessio, CPA, Partner, KPMG Risk Advisory Services. Mr. Dalessio gave a presentation to the Executive Committee on Enterprise Risk Management (ERM) for organizations.

Mr. Dalessio stated that ERM involved the identification of financial, compliance, operational, strategic and other risks to an organization, followed by an assessment of their respective likelihoods and potential impact. He said that ERM went beyond insurance by delving into the strategic operations of an organization to help it plan proactively towards preventing and responding to specific identified risks.

Mr. Dalessio then outlined a number of organizational barriers to ERM, including the failure to link ERM with corporate strategy and the lack of management, board or leadership support. He stressed that overcoming these issues was crucial to the integration of an ERM timeline, roadmap and action plan into an organization’s culture. Mr. Dalessio continued by noting many organizations found it useful to employ a chief risk management professional on staff or, in smaller organizations, to include the risk management function under the duties of a senior management employee.

In the ensuing discussion, Mr. Grumet gave several examples in which the NYSSCPA Board had responded to certain organizational risks, including the legal review of chapter-originated contracts and the development of a policy addressing who within the organization had authority to speak on behalf of it. He also pointed out that staff regularly made decisions in the normal course of business which, although they did not rise to a Board level, nonetheless involved the strategic analysis of risks.

The committee generally discussed a number of “soft risks” to the organization, such as certain positions on legislation and their impact on members. It also discussed legal risks, the policy-making role of the Board as it relates to staff’s duties to implement such policies, membership risks, and other issues. During the discussion, several committee members cautioned against getting bogged down by exhaustive risk checklists which could instill fear and hamper progress towards organizational goals.

Mr. Grumet suggested that staff compile a list of what it sees as the biggest organizational risks for further discussion at a future Executive Committee meeting. The suggestion was very well-received.

On behalf of the Executive Committee, Mr. Langowski thanked Mr. Dalessio for his presentation, and Mr. Dalessio was excused from the meeting.

This matter was deferred.

Messrs. O’Leary and Woehlke reported to the Executive Committee that the Professional Ethics Committee had made several recommendations for bylaw changes, which had been reviewed by the Quality Enhancement Policy Committee and referred on to the Executive Committee. Mr. Langowski indicated that unless there was an objection, he would refer the recommendations on to a member body which would put the suggestions into appropriate language and consider whether other bylaw changes also should be proposed and report back to the Executive Committee in the 2006-2007 fiscal year. No objection was raised.

Mr. O’Leary then noted that the Professional Ethics Committee had recommending reinstatement of the following two individuals who had previously been expelled from membership:

• Monte Colbert
• Gary David Marks

The Executive Committee inquired into the background of the two cases and was satisfied with the propriety of readmitting them to Society membership. Mr. Riley then moved, and Mr. Falbo seconded, that Mr. Monte Colbert and Mr. Gary David Marks be readmitted to membership in the Society. The motion passed unanimously.

Messrs. Grusd, Grumet, and Cheung reviewed the proposed 2006-2007 budget which had been approved by the Finance Committee and referred on to the Executive Committee for further action. As proposed, the budget contained no dues increase and would have resulted in a combined net deficit of $14,000, including a contribution to FAE of $492,000.

A discussion ensued about whether it was wiser for an organization such as the Society to impose modest dues increases annually or put off dues increases until they were absolutely necessary and impose a larger increase at that time. Mr. Moynihan moved that the proposed budget be amended to include 2% dues increase and Mr. Ellis seconded the motion.

Mr. Falbo then moved to amend the main motion to exclude student memberships from a dues increase, and Mr. Valenti seconded the motion. The motion to amend passed.

Mr. Grusd then moved to recommend the Board’s acceptance of the proposed 2006-2007 budget adjusted to include a 2% dues increase which, however, would not apply to students. Mr. Lauchert seconded the motion. The motion passed unanimously.

Ms. Barry presented the Membership Report which included 216 new members (including 114new associate members), 387reinstatements, 15 deaths, 8 resignations, and 2 ethics terminations. These changes reflected a total membership of 28,946 as compared with 29,698 at that time the previous year.

Mr. Riley moved to approve the Membership Report and Mr. Falbo seconded the motion, which, after discussion, passed unanimously.

a. Annual Goals

Mr. Woehlke noted that pursuant to the current contract with CAMICO, each fall the insurance company was required to propose marketing goals for the ensuing calendar year which were to then subject to approval by the Society. 2005 was the first year this requirement was in effect. Following the last Executive Committee meeting in 2005, CAMICO presented its goals – annual premium sales of $3.5 million and 2,000 insured CPAs in the program – and the Executive Committee was being requested to formalize the Society’s acceptance. Mr. Moynihan moved, and Mr. Stubbs seconded, that CAMICO’s 2006 marketing goals be accepted. Following discussion, the motion passed unanimously.

b. Permission to Share Membership Information

Mr. Woehlke reminded the Executive Committee that it had relaxed the prohibition against sharing Society membership information for the Society’s new member insurance broker, Pearl Insurance. He reported that CAMICO was asking that the prohibition be relaxed as to CAMICO as well so that it could better serve the Society’s membership. Mr. Lauchert then moved, and Mr. Falbo seconded, that CAMICO be granted access to membership information on the same terms as granted to Pearl Insurance. Following discussion, the motion passed unanimously.

Mr. Grumet reported that the2007 trade show co-sponsored by the Society and FAE has been moved to May from its traditional time in summer. He asked the Executive Committee’s permission to link the Society’s 2007 Annual Election Dinner to the trade show both as to date and location.

Following discussion, the Executive Committee approved Mr. Grumet’s proposal by consensus.

An executive session was not held.