a.
Draft Audited Financial Statements for year ending May 31,
2006
Mr. Riley
introduced Suzanne Jensen, Chair of the Audit Committee and
Ian Benjamin, Partner, GGK LLP to review the results of the
organizations’ annual consolidated audit and management
letter.
Ms. Jensen
presented an overview of the process by which the audit committee
worked with GGK and with management in the consolidated audit
of the NYSSCPA, Foundation for Accounting Education, Inc.
and the NYSSCPA Benevolent Fund, Inc. She reported that the
audit proceeded in a standard fashion and that there were
no material issues or disagreements. She then noted several
key aspects of the audit, including the first full audit of
the Society’s 401(k) plan in several years and the substantive
testing of internal controls. She added that the process included
an executive session between the audit committee and GGK.
She said that both received the full cooperation of staff
during the process and that no instances of fraud had been
discovered.
Ms. Jensen
raised an issue regarding chapter expense documentation which
she said did not rise to the level of the management letter.
She said that chapter expense documentation presented several
challenges because of difficulties in timely obtaining chapter
bank reconciliations. She said the audit committee had recommended
that chapters be given an option for staff to perform their
bookkeeping functions in order to alleviate delays.
Mr. Benjamin
then gave several highlights of the audit. He reported that
the audit risk areas of 1) revenue recognition and deferral,
2) accounting for restricted contributions, 3) salaries and
related expenses, and 4) travel and entertainment expenses,
required no adjustments. In addition, he said that there were
no significant changes in previously adopted accounting policies
or their application within the organization, and that there
were no disagreements with management relating to any material
matters. He noted that GGK had not tested the organizations’
internal controls to an extent required to give a professional
opinion regarding them; however, he said that substantive
testing had been completed and that the quality of the organizations’
internal functions had improved significantly since GGK’s
first year as auditor. He stated that GGK’s assessment
of the consolidated financial statements was therefore that
of an unqualified standard opinion.
Mr. Cheung
then provided a summary of the consolidated statements of
financial position, activities and cash flows (including notes)
and of the consolidating schedule of activities. He reported
total assets of $9,232,274 as of the fiscal year ending 2006,
compared to $6,760,918 reported at the year ending 2005. He
attributed the increase in assets primarily to an increase
in cash and cash equivalents, which stood at $4,549,833 as
of May 31, 2006 as compared to $2,565,561 as of May 31, 2005.
He explained that membership dues invoices, which had been
mailed to members later than usual in 2005 in order to obtain
Board approval of dues increases, had been more timely mailed
to members in 2006, thus resulting in an earlier large influx
of cash.
A discussion
ensued regarding the NYSSCPA’s strategic plan goals
and several additional classifications and schedules of functional
expenses. It was noted that this information had either been
provided to the boards previously, or was available through
the Society’s website on which was posted the organization’s
IRS form 990. Mr. Benjamin stated that all the information
required to be included in the audited statements was in fact
included and presented to the Boards, with the addition of
a consolidating schedule of activities from the prior year
which was added at the request of the NYSSCPA Executive Committee.
Mr. Benjamin stated however that he would be happy to include
any additional information that the Boards requested, and
staff agreed to do so as well.
An executive
session was held between the FAE and NYSSCPA Boards with Ms.
Jensen and Mr. Benjamin in attendance (for actions, see items
c. and d. below).
b.
Composition of Audit Committee (for discussion)
Ms. Jensen
stated that the Audit Committee currently consisted of five
CPAs who were independent of the audited organizations’
respective boards. She noted, however, that the Audit Committee
felt strongly that board member representation would be both
useful and welcomed. She also suggested that multi-year terms
be considered for Audit Committee members, noting that she
had been the only member of the committee who had served during
a prior year’s audit. She noted that staff was assisting
the committee in drafting a more extensive charter or committee
action plan.
c.
Change to Conflict of Interest Policy Re Related Party Receivable
Write-offs (for discussion)
During
a discussion of the management letter, the Boards considered
a recommendation by GGK’s auditors that the organizations’
respective boards adopt policies addressing the write-off
of receivable balances from related parties. The recommendation
was approved without objection by both the FAE and NYSSCPA
Boards.
d.
Appointment of Auditors
The NYSSCPA
and FAE Boards unanimously accepted the results of the consolidated
audit and unanimously approved the reappointment of GGK as
the organizations’ respective auditors for fiscal year
2006-2007.
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