Gerry L. Golub, CPA
Goldstein Golub Kessler, LLP

04 – G – 0
Call to Order

04 – G – 1
Minutes

a. Approval of Minutes of June 16, 2004 Meeting

President Kearney asked Executive Committee members if they had any changes to the minutes of the June 16, 2004 meeting. There being none, Mr. Grusd moved to approve the minutes, and Mr. Bloom seconded the motion. The motion passed unanimously. Ms. Bailey-Brown and Mr. Jones did not participate in the vote. Secretary Nowicki, who was not present at the June meeting, abstained.

04 – G – 2
President’s Report

a. Office Relocation

President Kearney called upon Mr. Schmelkin to give an update on the Society’s anticipated office relocation to Three Park Avenue.
Mr. Schmelkin reported that build-out on the 19th floor had been substantially completed and that work on the 18th floor, which was anticipated to require less work, had begun. He stated that given this progress, it looked as if the Society would be able to move before the middle of October.

In response to a question, Mr. Schmelkin stated that it was not feasible to issue building access cards to the Society’s leadership, due to the cost associated with ordering the cards. He added, however, that building access would be granted to anyone with legitimate business at the Society’s offices after signing in at a lobby station.

b. 2004 Leadership Conference Update

President Kearney thanked committee members for their participation in the July leadership conference held at the Sagamore Resort in Bolton Landing, New York, and commended Alan Schmelkin and members of his staff for a job well done in coordinating the event.

President Kearney reported that feedback from conference participants indicated the event was very well-received. He noted that the event came in under budget, and that next year’s leadership conference was scheduled to return to the Sagamore.

Mr. Schmelkin informed the committee that he would soon compile the written comments from participants into a single document for distribution in the near future.

c. Chapter Officer Visitations

President Kearney gave an update on the chapter officer visitations, noting that all 17 dates for the events had been scheduled pending the finalization of several meeting venues.

d. Benevolent Fund/FAE merger Update

President Kearney called upon Mr. Woehlke for an update on the Benevolent Fund/FAE Merger. Mr. Woehlke reported that the respective boards of FAE and the NYSSCPA Benevolent Fund had reached an informal agreement concerning a proposed merger of the two entities. Mr. Woehlke further reported that he had met with an outside attorney David Samuels, Esq., a former Deputy Chief of the New York State Attorney General's Charities Bureau, who made a number of constructive comments on the transaction.

Upon an executive committee member recommendation, staff agreed to convey a suggestion to the FAE and NYSSCPA Benevolent Fund boards that a tax expert be engaged to flesh out any tax issues concerning any proposed transaction.

e. PAC Update

Mr. Grumet reported that the NYSSCPA Political Action Committee board set its disbursement policy for the balance of the year.

f. Governance Subcommittee

President Kearney noted that he had spoken with counsel James Woehlke regarding the efficacy of forming a governance subcommittee of the Board which would be charged to look at a number of governance practices including officer/director job descriptions, assessment tools for board and executive committee members, leadership training and board meeting attendance.

A lengthy discussion ensued with respect to governance practices. Several committee members expressed opinions regarding what constitutes excusable “cause” for absence from Board meetings, including personal or family obligations and business obligations.

Mr. Woehlke stated that any suggested practices would require Board member buy-in. Secretary Nowicki suggested that chapter leadership also be included in any dialogue regarding governance practices.

President Kearney moved that a governance subcommittee to be chaired by President-elect Langowski be formed to develop a proposal regarding Board governance practices. Mr. Berlant seconded the motion. The motion passed unanimously.

g. Board Dinner

President Kearney reported that AICPA Vice-Chairman Robert L. Bunting accepted an invitation to attend the Society Board dinner on September 21, 2004. He encouraged all Executive Committee members to attend.

a. Legislative Update

President-elect Langowski gave a report on the Society’s legislative initiatives. He noted that legislative activity in Albany was expected to pick up in the fall.

b. Quality Enhancement Policy Committee Update

President-elect Langowski reported that the Quality Enhancement Policy Committee had held an organizational meeting and was scheduled to meet again in September.

c. Selections Subcommittee Update

President-elect Langowski reported on the first meeting of the Selections Subcommittee, whose purpose is to identify candidates for the Board to consider when making its decisions to: (i) designate Board members to serve on the NYSSCPA Nominating Committee, (ii) recommend individuals for service on AICPA Council, and (iii) nominate FAE Trustees. He said that a Board election would be held in connection with these positions at the following Board meetings:

• Board designees for the Nominating Committee – Septembe
• AICPA Council recommendations – December
• FAE Trustee nominations – April

a. Report on Chapters

Vice Presidents Doran and Eassa gave reports on chapters. Both stated that they would address the issue of chapter bank account reconciliations raised by the auditors at the next-scheduled conference call of chapter officers.

b. Recent Society Comments

Vice President Berlant noted that the following Society comments had been issued:

• Comments submitted to the 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, Share-Based Payment, an amendment of FASB Statements No. 123 and 95; dated June 25, 2004; Principal Drafters: Mark Mycio and Margaret A. Wood; and
• Comments submitted to the Financial Accounting Standards Board by the NYSSCPA Financial Accounting Standards Committee, chaired by Robert A. Dyson, regarding An Interpretation of FASB Statement 143, Accounting for Conditional Asset Retirement Obligations; dated July 30, 2004; Principal Drafters: Mark Mycio, Edward P. Ichart and Barry Wexler.

Mr. Berlant commended the committees and drafters for their outstanding work.

a. Committees

Secretary Nowicki related that the Committee Operations Committee was in the process of reviewing its committee action plan, as well as the looking at the issuance of committee report cards and improving the coordination between statewide and chapter committees.

b. Nominating Process Status Report

Secretary Nowicki reported on the status of the NYSSCPA Nominating Committee which, under the 2003 bylaws, has eleven members nine of whom petition to serve and two who are designated by the Board from among its members. He noted that when more than nine people petition to serve on the Nominating Committee, as is the case this year, a membership vote must be taken to winnow the number down to nine. Secretary Nowicki noted that as of an August 13 deadline twelve persons petitioned to serve and a ballot was being prepared for distribution to the membership via regular mail. The ballots would be due September 27, 2004.

a. Financial Statements as of July 31, 2004

Treasurer Bloom reported on the financial statements as of July 31, 2004, noting that positive variances were anticipated to be temporary at that point in the year. He noted that the positive variances were due in part to several open staff positions which were anticipated to be filled later in the year. Combined NYSSCPA and FAE net income for the period ending July 31, 2004 was $271,000 ahead of budget.

b. Dues Report

Treasurer Bloom called upon Ms. Chambers to provide a report on dues. Ms. Chambers reported that dues were coming in at a rate ahead of last year by 8 days.

a. E-Mind Update

Mr. Grumet said that all submissions had been made and the hearing closed in the Society’s arbitration with e-Mind. He stated that the arbitrator’s decision was due September 7, 2004.

b. Comptroller Hevesi’s Financial Oversight of Schools Initiative

Mr. Grumet reported on New York State Comptroller Hevesi’s initiative on increased oversight of public schools’ finances in response to recent scandals. He stated that as part of that initiative, the Society’s role would be to help review the safeguards in place to protect the taxpayers’ investment in education.

Secretary Nowicki suggested the review of public records to identify those CPA firms which audited school districts now presenting problems over the inadequacy of their audits, and to communicate such information to the peer review committee to see if it had missed anything during the process of a firm’s review.

c. Insurance Update

Vice President Eassa, Chair of the Professional Liability Insurance (PLI) Committee, presented the recommendations of the PLI committee that the Executive Committee formally recommend approval by the full Board of a renegotiated endorsement contract with CAMICO Mutual Liability Insurance Company.

Vice President Eassa noted that the Society had endorsed the CAMICO program since 2000, during which time CAMICO, among other things, accomplished several milestones including:

• As of July 30, insured 402 New York firms covering 1,316 CPAs and generating $2.3 million in annual premiums;
• Provided coverage to uninsured Society members;
• Provided Free Ethics CPE at 17 Officer Chapter Visitations 2 years in a row;
• Provided 3 full-day Fraud Seminars in 2003;
• Rented a booth at the Society’s Trade Show for each of the last 5 years;
• Provided sponsorship revenue to the Career Opportunities in the Accounting Profession Program (COAP);
• Regularly taken out paid advertising in both Society publications and on the website; and
• Paid endorsement fees to the Society as indicated in the memo distributed to the Executive Committee.

Vice President Eassa stated that given the success of the program and the continuing benefit to the Society and its members, the PLI committee recommended that the CAMICO/NYSSCPA relationship continue. He then called upon Mr. Sinegal to provide a summary of the renegotiated points in the draft contract.

Mr. Sinegal walked the committee through the renegotiated terms reflected in the draft contract. After discussion, Ms. Doran moved to approve the recommendation of the PLI Committee to renew the endorsement contract with CAMICO as reflected in the draft, and to forward the draft contract to the full Board for its review and approval at its September 22 meeting. Mr. Berlant seconded the motion. The motion passed unanimously.

A discussion then ensued with respect to transparency in all affinity contracts. Mr. Nowicki suggested that staff compile a thumbnail report reflecting affinity contract reporting and revenue provisions and provide the same for Executive Committee information. Mr. Grumet agreed to do so.

d. COAP Update

Mr. Grumet reported that all seven COAP (Career Opportunities in the Accounting Profession) programs ran smoothly and that efforts for next year’s round of programs were already in progress.

e. Updates on FAE Registration

Mr. Grumet reported that FAE registrations were approximately $26,000 ahead of registrations reported during the same period last year.

f. Trade Show Update

Mr. Grumet reported that the Society’s trade show was a success and was expected to produce more than $100,000 in revenue to the Society.

g. Locations of 2005 Young CPA Symposium

Mr. Grumet reminded the Executive Committee that it had approved investigating the financial feasibility of overlapping the Young CPA Forum with the Leadership Conference, instead of maintaining the forum as a Chapter event, and that staff was directed to develop a plan in consultation with the Finance Committee to present to the Executive Committee at a later date. Mr. Grumet reported that staff would soon be prepared to provide a report.

A discussion the ensued. Secretary Nowicki recommended that the overlap of these two activities have input from a steering committee of Young CPAs from throughout New York State.

President Kearney introduced David Ashenfarb, appearing for the Audit Committee, and representatives of Goldstein, Golub & Kessler, LLP (GGK). Mr. Ashenfarb talked about the pre-audit and post-audit committee meetings that had been held with GGK and staff, saying that the audit committee recommended approval of the draft audit by the Executive Committee. The representatives of GGK then reviewed the Independent Auditor’s Report.

Lynn Chambers then gave a presentation to the Executive Committee on the results of the firm’s audit of the financial statements of the Society and consolidated entities for the year ending May 31, 2004, as well as the accompanying notes. Ms. Chambers pointed out the elimination of a prior $2.656M interfund liability between the Society and the Foundation, as well as an $803K increase in net assets for the year. GGK then presented the management letter, including management’s response.

After the presentations and discussion, Mr. Bloom moved to recommend approval by the full Board of the draft audit of the Society and its consolidated entities for the period ending May 31, 2004. Mr. Berlant seconded the motion. The motion passed unanimously.

Ms. Barry presented the membership report which included 177 new members (including 73 new associate members), 11 reinstatements, 21 deaths, and 28 resignations. These changes reflected a total membership of 30,624 as of August 17, 2004, as compared with 29,913 at approximately the same time the previous year.

Mr. Piluso moved to approve the membership report, and Mr. Eassa seconded the motion. The motion passed unanimously.

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.