Neville Grusd
Nancy A. Kirby

04 – E – 0
Call to Order

04 – E – 1
Minutes

a. Approval of Minutes of March 10, 2004 Meeting

Mr. Hoops asked Executive Committee members if they had any changes to the minutes of the March 10, 2004, meeting. There being none, Mr. Love moved to approve the minutes, and Mr. Bloom seconded the motion. The motion passed unanimously. Ms. Doran and Messrs. Jones and Rubin did not participate in the vote.

b. Approval of Minutes of March 29, 2004 Conference Call

Mr. Hoops asked Executive Committee members if they had any changes to the minutes of the March 29, 2004 conference call. There being none, Mr. Love moved to approve the minutes, and Mr. Riley seconded the motion. The motion passed unanimously. Ms. Doran and Messrs. Jones and Rubin did not participate in the vote.

04 – E – 2
President’s Report

a. AICPA Update

Mr. Hoops reminded Executive Committee members that the full Society Board passed a resolution on April 21, 2004 supporting mandatory peer review transparency and urging the AICPA to poll the full governing bodies of all the state societies on this issue for a better reflection of the sentiment of the rank and file profession.

Mr. Hoops reported that subsequent to the Board’s action, he and Messrs. Kearney and Grumet successfully met with their respective counterparts at the AICPA regarding this issue and possible next steps. He reported that ultimately the AICPA Board of Directors agreed with the NYSSCPA Board on peer review transparency and passed a resolution to that effect. Mr. Hoops stated that the issue would be considered further by the AICPA Council at its upcoming spring meeting in Scottsdale, Arizona.

b. Office Relocation

Mr. Grumet announced that construction on the Society’s future offices at 3 Park Avenue would commence in June, and projected that the actual move would likely commence towards the end of summer or early fall, and was slated to take place over several stages. In response to a question, Mr. Grumet stated that the Society’s lease for its current location would expire as of October 31, 2004, which should be enough time to accommodate the construction delay.

With respect to Foundation for Accounting Education courses, Mr. Schmelkin added that seminars and conferences would respectively be held at the Society’s current offices and at several convenient hotel locations through the summer months until such time as construction at the new location was completed.

c. COAP Fundraising Update

Mr. Hoops announced that the COAP Fundraising Committee, chaired by Frank Fusaro, had raised $96,000 in advertising revenue from the Annual Meeting program booklet. Mr. Hoops congratulated Mr. Fusaro and the COAP Fundraising Committee on a great job.

d. FAE Update

Mr. Schmelkin gave a report on the Foundation for Accounting Education (FAE), including the success of several recent FAE events. He noted in particular that the SECTION 404 Conference attracted 230 registrants and a seminar co-sponsored with the Institute of Internal Auditors drew 70 attendees, with a 50-50 breakdown between the organization’s respective registrants.

Mr. Hoops summarized several governance issues that FAE would be tackling in the coming year including changes in the way FAE officers would be appointed and several other governance changes that would require changes to FAE’s bylaws. He noted that at its April 21, 2004 meeting, the Society Board reached a consensus with respect to appointing a task force to work with the FAE trustees to further investigate the governance proposals. Several committee members reaffirmed their support of the governance changes in light of an anticipated, increasingly important role of FAE, should New York proposed legislation concerning CPA CPE be passed into law.

Mr. Woehlke then gave a summary of the typical organizational structure of a 501(c) (6) organization and an affiliated 501 (c) (3) foundation. Notwithstanding this typical structure, Mr. Woehlke cautioned that because the Society was organized as a not-for-profit corporation with members, while FAE had no members, there could potentially be legal impediments to some of the proposed recommendations concerning the election of FAE trustees. Mr. Woehlke suggested that instead of having Society members directly elect FAE Trustees, they should be included in a process leading ultimately to election by the Society Board of Directors. This approach, Mr. Woehlke stated, would not conflict with FAE’s non-member legal structure. He added that, with regard to the recommendation that a FAE trustee participate as a voting member on the Society’s Board of Directors, a Society bylaw amendment would be required. He noted that prior to approval of such a bylaw, the FAE president could be added to the Board as a nonvoting guest with the privilege to participate in Board discussions by Board action.

Mr. Hoops asked executive committee members if they approved of the governance changes and approach as outlined, and the committee by consensus responded in favor.

e. Annual Dinner Update

Mr. Hoops reminded Executive Committee members that the 2004 Annual Election and Dinner would be held that evening at the Manhattan Marriott Marquis. He noted that 220 persons were expected, including 20 guests.

a. 2004 Leadership Conference Update

Mr. Kearney gave an update on the 2004 Leadership Conference, scheduled for July 11 to 13 at the Sagamore Resort in Bolton Landing, New York. He noted that CPE would be offered to attendees and various Society leaders and constituencies would be attending, including chapter representatives.

a. Financial Statements for Period Ending April 30, 2004

Mr. Bloom reported on the financial statements ending April 30, 2004, noting that the Society’s and FAE’s cash positions remained strong. He noted that The CPA Journal receivables increased considerably. Combined NYSSCPA and FAE income was reported as $662,000 and net income was ahead of budget by $379,000. Mr. Hoops commended staff for its successful efforts in realizing such a favorable budget.

A discussion ensued with respect to the intercompany account balance of $2.676 million which was listed as an asset to the NYSSCPA and a liability to FAE on the internal interim financial statements.

After discussion, Mr. Nowicki moved that, subject to comment and approval by the Society’s auditors, legal counsel, and bank, the intercompany account balance should be eliminated with the transaction treated as a contribution from the Society to FAE. If advisable the transaction should be effective May 31, 2003. The motion passed unanimously.

a. Report on Chapters

Vice Presidents Nowicki and Napoleon-Hudson each gave reports on chapters.

During the ensuing discussion, Ms. Napoleon-Hudson suggested to incoming President-elect Kearney that chapter representatives be informed as to their responsibilities to their respective chapters at the leadership conference. Mr. Nowicki stated that he would also be happy to sit down with incoming chapter representatives to discuss their roles and responsibilities. Mr. Kearney responded favorably to both suggestions. Mr. Schmelkin added that he would check to see which chapter representatives have RSVP’d to the leadership conference and reach out to those who have not to encourage their attendance.

Mr. Grumet reminded the committee that the Board in the coming fiscal year would be looking at the newer Society chapters to see whether those should be continued beyond their initial term.

Mr. Hoops commended and the committee applauded Mr. Nowicki and Ms. Napoleon-Hudson for their service in the 2003-2004 fiscal year as Society Vice Presidents for chapters.

b. Legislative Update

Vice President Love reported that a number of meetings had been scheduled with the Society’s and Big Four lobbyists, but that progress on the Society’s New York Assembly bill had stalled due to legislative budget priorities.

• Comments submitted to the Information Systems Audit and Control Association by the NYSSCPA Technology Assurance Committee, chaired by Gary Carpenter, regarding Proposed Information Systems Auditing Guidelines on Business Continuity Planning; Computer Forensics and Mobile Computing; and Proposed Information System Auditing Procedure on Penetration Testing and Vulnerability Analysis; dated March 31, 2004; Principal Drafters: Gary E. Carpenter, Lucas Kowal, Joel Lanz, Bruce H. Nearon, Yossef Newman, Yigal Rechtman and Bruce I. Sussman.
• Comments submitted to the AICPA by the NYSSCPA Accounting and Review Services Committee, chaired by Ira M. Talbi, regarding Exposure Draft of Proposed Statement on Standards for Accounting and Review Services – Performance of Review Engagements; dated April 9, 2004; Principal Drafters: Michael Arroyo, Joseph A. Maffia, Ira M. Talbi and Barry Wexter.
• Comments submitted to IFAC Ethics Committee by the NYSSCPA International Accounting and Auditing Committee, chaired by Robert N. Waxman, regarding ISA 600 (Revised), “The Work of Related Auditors and Other Auditors in the Audit of Group Financial Statements” and IAPS, “The Audit of Group Financial Statements”; dated March 30, 2004; Principal Drafters: William Stocker and Elizabeth K. Venuti.
• Comments submitted to Financial Accounting Standards Board by the NYSSCPA Financial Accounting Standards Committee, chaired by Robert A. Dyson, regarding Exposure Draft: Proposed Statement of Financial Accounting Standards, Accounting Changes and Error Corrections – a replacement of APB Opinion No. 20 and FASB Statement No. 3; dated April 9, 2004: Principal Drafters: Patricia A. Crecco and Robert N. Waxman.
• Comments submitted to Financial Accounting Standards Board by the NYSSCPA Financial Accounting Standards Committee, chaired by Robert A. Dyson, regarding Exposure Draft: Proposed Statement of Financial Accounting Standards, Exchange of Productive Assets, an amendment of APB Opinion No. 29; dated April 9, 2004: Principal Drafters: Robert A. Dyson, Abraham E. Haspel, Linda Lam and Robert N. Waxman.
• Comments submitted to Financial Accounting Standards Board by the NYSSCPA Financial Accounting Standards Committee, chaired by Robert A. Dyson, regarding Exposure Draft: Proposed Statement of Financial Accounting Standards, Earnings Per Share, an amendment of FASB Statement no. 128; dated April 9, 2004: Principal Drafters: Patricia A. Crecco, Mark Mycio and Robert N. Waxman.
• Comments submitted to Financial Accounting Standards Board by the NYSSCPA Financial Accounting Standards Committee, chaired by Robert A. Dyson, regarding Exposure Draft: Proposed Statement of Financial Accounting Standards, Inventory Costs, an amendment of ARB No. 43, Chapter 4; dated April 9, 2004

a. Dues Update

Mr. Grumet reported that to date a third of the 2004-05 membership dues had been received.

b. E-Mind Update

Mr. Grumet reported that an arbitration hearing to resolve a contractual dispute between the Society and eMind, a provider of online CPE for professionals, had been scheduled for May 27, 2004.

c. Additional report

Mr. Grumet reported on both a FAE speaker cocktail party and on a press event at which awards were presented to the winners of the Society’s Excellence in Financial Journalism competition. He noted that both events were well-attended and well-received.

The Executive Committee discussed the Ethics Committee’s proposals for bylaws changes, which were presented by Ethics Committee Chair Ian Benjamin.

Mr. Grumet stated that because of the cross-collaboration between the NYSSCPA and AICPA with respect to their joint enforcement of ethics issues under JEEP (Joint Ethics Enforcement Program), several issues raised in the Ethics Committee’s proposal would require collaboration with the AICPA. Mr. Grumet, therefore, suggested that the Society temporarily defer pushing the ethics suggestions until the AICPA has made progress tackling issues of transparency. Several committee members agreed with this approach.

fter a discussion, Mr. Hoops asked that the Ethics Committee clarify its proposal in accordance with several issues raised during the Executive Committee discussion, then resubmit their revised proposal to the Executive Committee at its next meeting for referral to a new policy committee for peer review and ethics to be appointed by incoming President John Kearney. The committee by consensus agreed with this approach.

Mr. Woehlke noted that because the Society did not currently have a company-wide information retention policy or program, staff was seeking Executive Committee approval to establish such a policy. He referred committee members to the information retention policy in the agenda packet.

After a brief discussion, Mr. Love moved to approve a resolution that the NYSSCPA Executive Committee adopt the following Information Retention Policy:

NYSSCPA Information Retention Policy

The objective of the NYSSCPA Information Retention Policy is to implement an information retention program that meets the following criteria:

1. All records shall be retained for the period required by applicable state and federal laws and regulations.
2. Adequate records shall be developed and maintained to document the companies’ compliance with all relevant laws and regulations.
3. All records necessary for business reasons shall be retained for a period of time that will reasonably assure the availability of those records when needed.
4. Records vital to the ongoing operation of the business shall be identified and appropriately safeguarded.
5. All records not necessary for legal or business reasons and not required to be retained by law or regulation shall be destroyed in order to reduce the high cost of storing, indexing, and handling the vast amount of documents that would otherwise accumulate and to maximize the performance of the computer systems.
6. Destruction of records shall take place only in compliance with a standard written program approved by the Executive Director to avoid any inference that any document was destroyed in anticipation of a specific problem.
7. Documents that are not otherwise subject to retention for business reasons may need to be retained because of unusual circumstances, such as litigation or a government investigation.
8. The privacy and security of records shall be appropriately assured.
9. This policy shall apply to records maintained on all types of storage media, including electronic storage.
10. Records, such as notes, memoranda, letters, reports, computer disks, tapes, and so forth, located in individual offices, at home, on-line, or any other offsite location are subject to this policy and shall be managed consistent with this policy.

The Executive Director is hereby authorized and directed to formulate and implement a program to effectively carry out this policy.

Mr. Riley seconded the motion. The motion passed unanimously.

Mr. Woehlke noted that the Society’s 401(k) plan for employees capped the amount an employee could contribute on his or her own behalf at 17% of income, subject to a federally-set overall dollar limit of $13,000, plus a $3,000 catch-up amount for employees over the age of 50. Mr. Woehlke noted that upon further study confirmed by outside legal counsel and the plan administrator, the 17% limit no longer served any purpose and could potentially affect the ability of employees at the lower end of the pay scale to realize their retirement goals in a more-timely fashion. Mr. Woehlke stated that staff was therefore asking for Executive Committee approval to amend the 401 (k) Plan Adoption Agreement to Remove the percentage limitation on employee contributions. He added that the amendment would not impact any amounts contributed by the Society to the plan other than those amounts contributed by employees themselves.

After a brief discussion, Mr. Nowicki moved that the Executive Committee approve changing the Society’s 401(k) plan limits to remove the percentage limitation on employee contributions in the plan and to allow Society employees to contribute up to maximum permitted dollar limit set by federal regulation. Ms. Doran seconded the motion. The motion passed unanimously. Mr. Love did not participate in the vote.

Mr. Pape presented the membership report which included 212 new members (including 142 new associate members), 6 reinstatements, 15 deaths, and 6 resignations. These changes reflected a total membership of 30,280 as of May 13, 2004, as compared with 29,544 at the same time the previous year.

Ms. Napoleon-Hudson moved to approve the membership report, and Mr. Riley seconded the motion. The motion passed unanimously. Mr. Kearney did not participate in the vote.