0) Call to Order

Following a joint session with the Executive Committee of the New York State Society of Certified Public Accountants’ (NYSSCPA) Board of Directors (item 2 below), the Trustees reconvened separately at 11:37 a.m. President Bloom called the meeting to order at that time by noting a quorum was present

1) Approval of Minutes of FAE Board of Trustees July 12, 2005, Meeting

Mr. Bloom asked if there were any changes to the minutes of the FAE Board of Trustees meeting held on July 12, 2005. Mr. Jaffee asked that the minutes be edited to correct the spelling of his last name in several places with two “e’s”, instead of one. Mr. Hendler also noted that his first name, Elliot, should be spelled with two “l’s” and one “t”.

There being no further corrections, President-elect Kinsella moved to approve the minutes of the July 12, 2005, meeting and Treasurer Jaffee seconded the motion. The motion passed unanimously.

2) Audited Financial Statements for year ended May 31, 2005

The FAE Trustees attended a joint meeting with the NYSSCPA Executive Committee for a presentation by Goldstein Golub Kessler LLP (GGK) of the draft audited financial statements of NYSSCPA and consolidated entities for the year ended May 31, 2005. The consolidated entities included NYSSCPA, FAE and the Benevolent Fund, Inc. At the conclusion of the joint meeting, the NYSSCPA Executive Committee voted to recommend acceptance of the audit to the full NYSSCPA Board of Directors.

After the joint meeting, the Trustees convened separately. President-elect Kinsella moved to accept the audited financial statements as presented at the joint meeting. Mr. Strangis seconded the motion. The motion passed unanimously.

Mr. Cheung reviewed the Financial Statements for the two-month period ended July 31, 2005, noting that FAE was approximately $65,000 ahead of budget. Mr. Cheung also pointed to a $50,000 real estate tax escalation surcharge, stating that a reclassification was not necessary at this time because it would catch up as of January 1, 2006.

Mr. Strangis expressed general concern over a number of unfavorable variances in the financial statements. Mr. Cheung responded that several annualized budget items had been divided by twelve months in order to compare them against actual monthly figures. He stated that because of varying financial peaks throughout the year, the budget and actual figures may show initially larger variances which would even out as the year progressed. Mr. Strangis responded that he did not recognize a similar trend with respect to revenues, and suggested that this be more fully explored going forward.

b) Change in Check Signatories

President Bloom noted that the Trustees had approved check signature authority for the 2005-2006 fiscal year at its July 12, 2005, meeting; however, one of the signatories, Robert Colson, had subsequently left his position of employment with the NYSSCPA. Staff was therefore requesting that FAE signature authority be amended to replace Mr. Colson with NYSSCPA Committees Director, Ernest J. Markezin.
Treasurer Jaffee moved to approve the following resolution:

RESOLVED, that the following persons are hereby appointed to serve as authorized signatories on all banking and investment accounts of the Foundation for Accounting Education, Inc.:

Arthur Bloom
Scott Jaffee
Gail M. Kinsella
Alan T. Frankel
Edward Martin
Louis Grumet
Alan Schmelkin
Joanne S. Barry
James A. Woehlke
Dennis M. O’Leary
Ernest J. Markezin

RESOLVED, FURTHER, that this resolution supersedes only that portion of the July 12, 2005, Board banking resolution, which pertained to authorized signatories for FAE accounts.

RESOLVED FURTHER, that the officers are hereby authorized and directed to sign and deliver any documents necessary to carry out the intent of this resolution.

President-elect Kinsella seconded the motion. The motion passed unanimously.

a) Operating Summary

President Bloom asked Mr. Schmelkin to give a report on FAE Operations for the period June 1 to August 31, 2005. Mr. Schmelkin reported that FAE had realized $1.391 million in revenue from FAE programs, as compared to $1.431 during the same period in 2004. He stated that the $40,000 variance was attributed to lower registrations and a higher cancellation rate for industry programs. He reported that attendance figures during this period for non-industry conferences and seminars remained substantially similar to the prior year, garnering 3,006 attendees versus 3,017 in 2004.

Mr. Schmelkin then walked the Trustees through detailed operating statistics of classes and attendance by major program categories. Mr. Schmelkin also provided a three-year comparative analysis of attendance contrasting FAE seminars, AICPA-originated programs and those seminars obtained from other CPE vendors. He noted that NYSSCPA members appeared to be deselecting AICPA programs consistent with the trend seen in last few years.

A lengthy discussion ensued regarding FAE industry course attendance as compared to national averages. Several Trustees expressed concern that FAE had a disproportionately higher number of cancellations and lower registrations than the national averages. The Trustees discussed a number of issues which might be responsible for the disparity including occupational deadlines which conflict with class scheduling, FAE industry course marketing, the lack of employer reimbursement for continuing education and professional fees, and the fact that CPE is not yet mandated in New York State for industry CPAs. It was also suggested that the Society Board approve adding the purchase of self-study programs as an option on membership dues statements, in order to promote employer reimbursement for self-study CPE.

The Trustees then discussed whether an outside consulting firm should be engaged to perform an in-depth analysis of industry course marketing and attendance issues. The Trustees, however, agreed by consensus to first allow staff to perform its own internal analysis for later Trustee consumption. Mr. Strangis volunteered to consult with Mr. Schmelkin and other staff members, including the marketing department, during the development of the internal report. He also agreed to join Mr. Bloom and Mr. Jaffee to work on the FAE’s Curriculum Committee.

b) Cancellations

i. Review of Cancellation Policy

Mr. Schmelkin provided an overview of FAE’s course cancellation policy. He stated that several years ago, the FAE Trustees and the NYSSCPA Board had both agreed that cancellations of educational events must be held to a minimum. He noted that a more specific policy was developed whereby FAE must run a program, even if it results in a financial loss, as long as at least eight registrants have signed up at least two weeks in advance of the course date. Otherwise, the course could be cancelled. Mr. Schmelkin noted that as a membership service, a number of exceptions to this rule were often implemented due to the particular timing of a specific event, its subject matter or its location, especially toward the end of any CPE season.

ii. Industry Seminars

1. Industry Oversight Committee

Mr. Schmelkin stated that he and Monte Kaplan, Associate Director of Education Services, would be meeting with both the Industry Oversight and Chief Financial Officers committees for feedback on and discussion of low attendance numbers at industry courses.

2. CFO Committee

See above.

III. Audits of Employee Benefit Plans

The Trustees duly noted a complaint that arose from the cancellation of a course on Audits of Employee Benefits Plans. The seminar was cancelled because it had only four registrants and there were several other alternative sites where the registrants could still attend that class.

Mr. Schmelkin referred to FAE’s cancellation policy (above) and stated that the policy was followed in this instance. Mr. Schmelkin also explained how low attendance can adversely impact seminar dynamics, detracts from educational value, and makes it much more challenging for speakers and less enjoyable for attendees. In the ensuing discussion, the Trustees agreed by consensus that the cancellation of the Employee Benefit Plans Audits seminar was appropriate.

Mr. Schmelkin provided an historical overview of the POP (Pay One Price) program, noting that it was originally started to allow deep discounts on registration fees for NYSSCPA members and their respective firms when registering for classes at least two weeks in advance. By assuring a critical mass for a session and therefore reducing cancellations, it also enabled speakers to obtain lower transportation expenses. He stated that the program had been modified in several respects over the years due to program over-usage and a decline in popularity; however, he noted that the POP program remained a vital part of FAE course planning for a large number of NYSSCPA members and firms.

Mr. Schmelkin then referred Trustees to a survey (including a summary of responses) which was conducted of both current 2004-05 POP users and of those who had previously purchased POP but did not participate in the current year. Mr. Schmelkin stated that the survey responses were helpful to staff in developing its recommendations for the continuation of the POP program in 2005-2006.

The Trustees then reviewed staff’s recommendations for the continuation of the POP program in 2005-2006, and a lengthy discussion ensued. After discussion, President-elect Kinsella made the following motion:

RESOLVED, that the FAE POP program be continued during the 2005-2006 program year as follows:

1) Eliminate $50 surcharge on FAE Conference POP usage, except for a $100 surcharge on certain “specialty conferences” (i.e., the Investment Partnership Conference), with appropriate exclusionary wording to be developed by marketing staff;

2) Eliminate printing and distribution of individual and firm POP booklets, replaced by assigning a series of coupon numbers to each POP purchase;

3) Allow website registrations using assigned POP numbers;

4) Modify current $295 Member Conference registration prices to $275 for all 3 Park Avenue conferences, and $295 for all hotel conferences.

Treasurer Jaffee seconded the motion. The motion passed unanimously. Mr. Martin did not participate in the vote.

President Bloom introduced Cheryl Wellman, Chair of the Scholarship Awards Committee. Ms. Wellman gave a presentation to the Trustees on the Excellency in Accounting Scholarship program, including a review of the existing structure and of structural changes adopted by the FAE Trustees in November 2004 which would be effective starting in 2006. Mr. Grumet added that the Trustees would be responsible for planning towards this 2006 implementation date, including appointing a new scholarship program oversight committee.

Mss. Wellman and Lewis, and Mr. Pape then addressed a number of questions regarding current program administration at the school level, criteria for selecting award recipients, and the geographic spread of colleges and recipients.

On behalf of the Scholarship Awards Committee, Ms. Wellman asked the Trustees to approve the recommended 2005 scholarship disbursements. She pointed out that the total requested disbursements amounted to $65,750; however, the budgeted allocation was $40,363. She explained that this allocation was derived formulaically from annual contributions made through the Society’s dues check-off boxes. Because of the shortfall between the requested and allocated amounts, Ms. Wellman noted that the awards committee was requesting FAE authorization to fund the $25,387 shortfall from the scholarship fund corpus.

A discussion ensued with respect to the scholarship fund. Mr. Cheung noted that there was approximately $1.4 million currently in the fund, and that it was managed by an outside company Sanford Bernstein & Company. Mr. Woehlke added that the NYSSCPA Investment Committee oversees this relationship, but that the FAE Board of Trustees was the appropriate body to approve fund disbursements.

Mr. Cheung continued that the fund had earned $16,000 during fiscal year 2005 after expenses, and that awards during this time had exceeded fund earnings. He added, however, that average annual fund contributions were $54,000, and that the lower collected amount to date was due in part to the late mailing of NYSSCPA membership dues notices. It was noted that the late mailing was necessary in order to allow time for the NYSSCPA Board to vote on membership dues increases.

Treasurer Jaffee then moved to approve the Scholarship Committee’s total recommended scholarship disbursement of $65,750, including $25,387 from the scholarship fund corpus. President-elect Kinsella seconded the motion. The motion passed unanimously.

Ms. Wellman then stated that her committee had developed a preliminary implementation outline and recommendations for Trustees consideration of the 2006 scholarship structure. The outline was included with the agenda materials, and Ms. Wellman summarized it as follows:

1) The creation of three $10,000 COAP scholarships per year, paid out to each recipient at a rate of $2,000 per year for five years;

2) The establishment of Excellency in Accounting Scholarship criteria for qualified programs of study, and the award of 65 scholarships per year at $2,500 each, with one scholarship per college;

3) The implementation of an Ambassador Program whereby local NYSSCPA members would serve as representatives to their respective colleges with qualified programs, and act as a liaison between the college and awards committee;

4) The establishment of an annual scholarship award banquet to recognize the awarded students and scholarship contributors, in order to create a synergy between the two groups;

5) The establishment of a database of award recipients in order to track their future career paths;

6) The establishment of a fundraising committee to address the increased rate of cash disbursements from the scholarship fund to support the new structure; and

7) The full implementation of the recommendations within twelve months.

Ms. Wellman encouraged the Trustees to form the fundraising committee as soon as possible, to examine the scholarship fund and its ability to support the recommended structure in the future. She referred the Trustees to a preliminary projection of cash flows and changes in fund balances, which was prepared by her committee. A discussion ensued.

Mr. Pape informed the Trustees that the investment firm, Sanford Bernstein & Company, had prepared a report several years ago with detailed recommendations for scholarship fund perpetuity. He stated that he would locate the report and distribute copies to the Trustees.

Mr. Grumet suggested that every NYSSCPA chapter hold a “student night” to get firms and students together. He also recounted successful efforts by the New Jersey State CPA Society to raise $1 million for scholarships, due in large part to person-to-person fundraising. He suggested that FAE’s scholarship fundraising committee include outgoing members who would be comfortable and willing to engage in similar person-to-person fundraising efforts.

With respect to the recommendation that the scholarship committee itself determine what constitutes a qualified accountancy program, it was noted that accountancy program requirements had been changed. It was therefore suggested that the committee defer to what the New York State Department of Education deemed a qualified accountancy program under the new requirements.

Treasurer Jaffee moved to form a scholarship fundraising committee, and President-elect Kinsella seconded the motion. The motion passed unanimously. President Bloom stated that he would be forming the committee in the coming weeks.

The Trustees encouraged Ms. Wellman and the Scholarship Committee to proceed with their work, and come back to the Trustees at a later meeting with updated recommendations based on the Trustees’ discussion of scholarship criteria, cash disbursements and fundraising.

b) Approval of Scholarship Disbursements

See above.

A discussion ensued, during which it was noted that the incumbent’s proposal contained no financial risk to FAE, while the recommended proposal involved a level of financial risk to FAE. Ms. Barry responded with a brief summary of the risks and revenue anticipated from the show, based on prior experiences. The Trustees agreed by consensus to defer a vote on the recommended proposal until a later time, subject to receiving a financial risk analysis including projected costs and revenue. Ms. Barry agreed to e-mail the report in advance of the next meeting.

President Bloom reported that he was in the process of considering several persons for appointment to fundraising chairs for COAP and the Scholarship Fund.

November 2, 2005 (Wednesday)
December 13, 2005 (Tuesday)
January 25, 2006 (Wednesday)
April 26, 2006 (Wednesday)