EC09 - C - 0
Call to Order

EC09 – C– 1
Minutes

a/b. Approval of Minutes of May 5, 2009, and May 14, 2009, Executive Committee Meetings

Mr. Moynihan asked if members had any changes or comments to the minutes of the May 5, 2009, and May 14, 2009, executive committee meetings. Mr. Falbo moved to approve the minutes, and Mr. Adair seconded the motion. After discussion, the motion passed unanimously. Ms. Jensen abstained.

c. Approval of Minutes of June 23, 2009, Executive Committee Meeting

Mr. Moynihan asked if members had any changes or comments to the minutes of the June 23, 2009, executive committee meeting. Ms. Jensen moved to approve the minutes, and Mr. Adair seconded the motion. After discussion, the motion passed unanimously with no abstention.

d. Draft Minutes of July 14, 2009, Board of Directors Meeting (for information only)

Mr. Moynihan noted that the draft July 14, 2009, Board of Directors’ meeting minutes were provided for the Executive Committee’s information.

a. Code of Conduct Task Force

Mr. Moynihan stated that the Society’s Code of Conduct would need to be reviewed, due to the New York Accountancy Reform Law. He and Mr. Grumet had been working to form a task force consisting of notable and experienced Society members in order to review the existing Society Code of Conduct. It was expected that Mr. Caswell would chair the task force.

As the task force membership had yet to be finalized, the names of the task force members could not be divulged at the time of the meeting. Such announcement would be expected at the September 2009 Board of Directors’ meeting.

Mr. Grumet added that the State Board for Public Accountancy had approved a parallel task force, which would be chaired by Ms. Rona Cherno.

b. Review of Draft of Agreed-Upon Procedures

The matter was deferred to a future meeting.

c. FAE Update

The matter was deferred to a future meeting.

d. Town Hall Meeting Schedule

The matter was deferred to a future meeting.

e. Quality Matters Update

The matter was deferred to a future meeting.

f. Endorsement of Ernest A. Almonte for GAO Position

The matter was deferred to a future meeting.

g. Board Vacancy

The matter was deferred to a future meeting.

h. Review of 2009 Leadership Conference

The matter was deferred to a future meeting.

a. Quality Enhancement Policy Committee

The matter was deferred to a future meeting.

b. 2010 Leadership Conference

The matter was deferred to a future meeting.

a. Chapters

The matter was deferred to a future meeting.

b. Society Comments

The matter was deferred to a future meeting.

c. Committees

The matter was deferred to a future meeting.

a. Nominating Process Update

The matter was deferred to a future meeting.

b. Financial Statements for Two Months Ended July 31, 2009

The matter was deferred to a future meeting.

c. Audited Financial Statements for Fiscal Year 2008/2009

Mr. Banerjee announced that after his presentation on the year-end financials to the Board of Directors at Turning Stone, a number of year-end adjustments were made by staff. Some were made prior to the unaudited statements that had been presented to the auditor and some were made afterward as a result of the audit. Mr. Banerjee further noted that, in order to reconcile the statements presented at Turning Stone and the final audited statements, one would have to consider both sets of adjustments made by staff after Turning Stone. These changes were a result of:

• Correction of staff errors, and
• The re-migration of all accounting reporting functions to computer accounting modules from Excel spreadsheets, which was a main source of errors in the past and required a number of journal entries to rectify.

Mr. Banerjee noted that, due to the usage of the computer accounting modules, interim financial statements could now be generated more quickly and efficiently, with a higher degree of reliability. Upon full implementation of Aptify, the aforesaid financial statements could be generated even more frequently and efficiently.

Mr. Stubbs inquired since when had the computer accounting module-generated reports been in use. Mr. Banerjee indicated that they had been in use since June 2009.

Mr. Banerjee provided a presentation on the audited financial statements of the Society for the fiscal year 2008/2009. It was noted that the Society’s auditor had provided an unqualified opinion on the Society’s financial statements for FY2008/2009, and the Society had posted a net consolidated deficit of $797,356 during this period.

Mr. Adair inquired whether the Society had an investment committee. Mr. Banerjee responded that an Investment Subcommittee had been in existence. Mr. Falbo added that the Society, in fact, did not have a standing investment policy that had been approved by the Board of Directors. Mr. Grumet noted that the Investment Subcommittee had previously considered an investment policy of high yield, and Mr. Grumet expressed concerns that such an investment policy would be inappropriate for an organization such as the Society. Mr. Falbo also added that a majority of the Society’s consolidated investments had belonged to FAE, which had its own investment policy. This would, in effect, limit the freedom of the Society in determining its investment policy as a whole.

Mr. Lesser asked how often the Investment Subcommittee would meet. Mr. Falbo noted that the Investment Subcommittee had met in June 2009 and would also be holding quarterly meetings during FY2009/2010.

a. Legislative and Regulatory Update

The matter was deferred to a future meeting.

b. Association Management System Update

The matter was deferred to a future meeting.

c. Dues Update

The matter was deferred to a future meeting.

d. FAE/Benevolent Fund Proposed Merger

The matter was deferred to a future meeting.

e. Review of NYSSCPA Administrative Procedures

The matter was deferred to a future meeting.

Mr. Rosenblatt noted that the Industry Division Oversight Committee had already held two meetings since June 1, 2009, and he was pleased with the attendance so far. His focus for the committees in the industry division would be as follows:

• Increase Society and committee membership ? in light of the New York Accountancy Reform Law, he had asked each committee chair to 1) increase his or her committee membership, 2) remove inactive committee members, and 3) ask existing committee members to invite guests to join the committees and the Society.
• Guest speakers ? following the model of the Banking, CFO, and Real Estate committees, guest speakers and technical sessions would be encouraged at all industry committee meetings.
• Conference planning ? offer and share best practices on planning a successful conference. Revenue generation and effective marketing efforts would be vital.

Mr. Rosenblatt indicated that there had existed some overlap between the Investment Management Committee and the Investment Companies Committee. He would soon be meeting with the chairs of these two committees, Mr. John Myklusch and Mr. Peter Berlant, respectively.

Mr. Rosenblatt noted that there would be a 95% certainty that Mr. David Walker would be speaking at the upcoming Real Estate Conference in January 2010.

Mr. Rosenblatt concluded by stating that active communication would be the key to the success of the committees, similar to the theme that Mr. Moynihan stressed during the 2009 Annual Leadership Conference at Turning Stone. Mr. Rosenblatt would be focusing his attention to ensure that the industry division committees would follow this motto.

a. Review of Draft Audit Report

Mr. Allan Blum provided the draft consolidated financial statements and the Auditor’s Report for May 31, 2009 and 2008 and the August 11, 2009, Audit Committee Presentation for discussion. Notable items included:

• Approximately $31,500 adjustments in the allowance for doubtful account;
• Approximately $100,000 adjustment in accrued payroll due to timing differences. It was the auditor’s opinion that the amount was not material to warrant prior-period adjustments;
• Grant payable in the amount of $40,000 for the Accounting Doctoral Scholarship Program and a related $10,000 amount that had already been expensed during FY2008/2009;
• The auditor’s suggestion that all members of the Society’s accounting department should be cross-trained such that they would readily have knowledge of any information that the auditor would ask for and that it would serve to maintain continuity within the department and aid possible detection of accounting mispractices;
• Policies and procedures for chapters were officially presented and approved at the April 2008 Board Meeting. The late date of such resolution was the reason why the Westchester Chapter had only submitted their expenses once during FY2008/2009;
• Cash gratuities at events (e.g., golf outings) should be discontinued. The auditor would leave this issue for Society management and the Board of Directors to rectify;
• Speakers’ honoraria were still being paid, but new procedures had been in place during FY2008/2009;
• The write-off of fully depreciated property and equipment amounting to $74,415 during FY2008/2009 was deemed appropriate;
• All revenue and cash accounts were checked by the auditor, and deferred revenue was recorded properly;
• An adjustment of approximately $60,000 that had reduced advertising revenue was found, which caused concerns for the auditor. It was recommended that monthly account analysis should be performed;
• New disclosures and significant accounting policies summary for FY2008/2009, including FAS 157 (Fair Value Measurements) and significant investments;
• FAS 117-1, Endowments of Not-for-Profit Organizations, and it was deemed that the Society’s endowment for lecture series and scholarships of $51,900 at the end of FY 2008/2009 was immaterial.

Mr. Lesser inquired when the first time was that the issue of payroll accrual adjustment was brought to the attention of the Society. Mr. Blum responded that this was the first instance that he was aware of since Loeb & Troper LLC’s audit engagement with the Society in June 2008. Mr. Banerjee stated that, due to timing differences between the time-sheet date and payroll date, the potential prior-period adjustments related to accrued payroll each year since FY2007/2008 would have been about $90,000 consistently each year. Mr. Banerjee added that, beginning with FY2008/2009, the use of the time-sheet date for the last business day of the fiscal year would be implemented for the Society.

Mr. Moynihan indicated that he would be in favor of removing the FAS 117-1 disclosure from the Notes to the Consolidated Financial Statements due to immateriality, and that he would also be in favor of the Board of Directors developing an investment policy for the Society. Mr. Blum suggested that a disclosure statement indicating what the endowment was used for (page 10 of the Notes to Consolidated Financial Statements) should remain, while the related note on page 11 should be removed. Mr. Moynihan asked members of the executive committee if there would be any objection to the aforementioned changes to the notes, and no one indicated as such.

Mr. Adair noted that the disclosure statement related to accounts receivable (Note 3, page 7 of the Notes to Consolidated Financial Statements) for “Other” should be detailed, and he also asked whether there had existed any receivables from Society employees. Mr. Blum responded that he would investigate the amount of the “Other” receivables and that there had existed no receivables from Society employees.

b. Review of Draft Management Letter

Mr. Blum provided the draft management letter and additional comments as they had related to the audited financial statements for FY 2008/2009. Notable items included:

• Year-end adjustments;
• Cancellation of invoices;
• Approval of journal entries ? it was noted that 4 out of the 10 journal entries chosen for testing during the audit engagement did not have approval on the journal entries themselves. However, proper approvals were found to have been given to all the underlying transactions;
• Chapters ? it was noted by the auditor that protocols must be followed;
• Controls over credit card information ? “benign” comments were expressed in the management letter by the auditor, and more details would be provided as part of the special audit engagement on this issue;
• Grant payable;
• Federal deposit insurance coverage limits ? it was noted by the auditor that perhaps a lower cash balance be kept at the Society’s bank account, but any separate investments using the excess cash would not be FDIC insured.
• Accrual of payroll;
• Cross-training of employees;
• Dual signatures for checks ? Mr. Banerjee stated that the Society had started developing a secured website to help facilitate the controls for this issue;
• Protocol for IRS Form 990 approval.

Mr. Lesser asked for the number of year-end adjustments that had been made. Mr. Blum indicated that there were 3.

Mr. Moynihan suggested that the Board of Directors should discuss the protocol for the IRS Form 990 approval at the September 2009 Board of Directors’ meeting. Mr. Moynihan asked Mr. Blum if Loeb & Troper LLP would be the ultimate signer of the IRS Form 990 and how much the IRS Form 990 engagement would cost the Society. Mr. Blum responded that Loeb & Troper LLP would be the ultimate signer of the IRS Form 990 and that the preparation and review of the IRS Form 990 were services already included in its existing engagement with the Society. Ms. Wood inquired about a realistic timeframe for the IRS Form 990. Mr. Blum responded that the normal deadline for submission for the Society to the IRS would be October 15, 2009. However, an extension may first be granted until January 15, 2010, and then again until April 15, 2010. Mr. Moynihan concluded that he would recommend that the Board of Directors adopt a protocol at its September 2009 meeting, and then he would ask the Board of Directors to provide a positive and affirmative approval of the IRS Form 990 at its December 2009 meeting in order to meet the April 15, 2010, submission deadline.

Mr. Grumet stated that it was his intention to have a staff team led by Ms. J. Barry—and including Mr. Banerjee and Mr. Yung—prepare the IRS Form 990 for FY2008/2009. A computer software program for the IRS Form 990 (the identical one that was used by Loeb & Troper LLP) had been obtained by the Society. Mr. Banerjee would be responsible for inputting the financial figures for the IRS Form 990, and Ms. J. Barry (with the assistance of Mr. Yung) would be responsible for providing all the narratives required by the IRS Form 990. Mr. Blum added that, if Loeb & Troper LLP were to be charged with the preparation of the IRS Form 990, the Society would be responsible for providing all the required narratives, and his firm would utilize their industry knowledge to ensure that the IRS Form 990 was completed to proper standards, prior to submitting to the IRS.

Mr. Blum indicated that he would be meeting with the Mr. Banerjee, Ms. J. Barry, and Mr. Yung during early September to go over the policy and requirements for the IRS Form 990. He would then provide a summary to the Board of Directors at its September 2009 meeting.

Mr. Adair asked Mr. Blum to re-word the prior-year comments in the first paragraph of page 4 of the management letter.

Ms. Levine, in her capacity as the Chair of the Audit Committee, recommended the consolidated financial statements and auditor’s report for May 31, 2009 and 2008, the management letter, and the additional comments to the Board of Directors for acceptance.

Ms. Wood moved to recommend the consolidated financial statements and auditor’s report for May 31, 2009 and 2008, the management letter, and the additional comments to the Board of Directors for acceptance. Mr. Wei seconded the motion. After discussion, the motion passed unanimously with no abstention.

a. Internal Audit Committee

Mr. Rosenblatt requested the approval of the proposed Internal Audit Committee. Mr. Moynihan asked whether there would be a critical mass of interest from Society members. Mr. Rosenblatt indicated affirmatively. Ms. Jaeckle moved to approve the Internal Audit Committee, and Mr. Stubbs seconded the motion. Mr. Kirkland asked if there would be an industry outreach plan for the recruitment for the committee. Mr. Rosenblatt responded that he would be contacting his network, and Mr. Markezin stated that the Quality Enhancement Department would be reaching out to Society members based on their interest code. After discussion, the motion passed unanimously with no abstention.

b. Family Office Committee

Mr. Rosenblatt requested the approval of the proposed Family Office Committee. Mr. Moynihan asked whether there would be a critical mass of interest from Society members. Mr. Rosenblatt indicated affirmatively. Mr. Stubbs moved to approve the Family Office Committee, and Mr. Kirkland seconded the motion. Mr. Huttlinger inquired whether the committee would be populated mostly by industry members. Mr. Rosenblatt responded that, in his initial assessment, it would. After discussion, the motion passed unanimously with no abstention.

Mr. Pape presented the membership report, noting that, as of August 18, 2009, there were 28,293 members, compared to 28,621 at approximately the same time in the previous year. The members included the following (based on changes since June 1, 2009, with 28,012 members): 397 total applicants, 53 reinstatements and readmissions, 28 deaths, 137 resignations, and 4 ethics-related terminations. Mr. Pape noted the creation of the new categories in the report on membership in “CPA in Public Accounting” and “CPA in Non-Public Accounting,” such that it could better capture the impact the new accountancy reform law would have on membership between public and nonpublic accounting entities.

Mr. Adair moved to accept the membership report, and Mr. Lesser seconded the motion. After discussion, the motion passed unanimously with no abstention.