0) Call to Order

After a call of the attendance, President Kinsella noted that a quorum was present and called the meeting to order at 10:03 a.m.

1) Approval of Policy to Hold All Conferences of 125 or Less at the FAE Conference Center

Ms. Kinsella asked Mr. Schmelkin to provide a summary of the proposed policy to hold all FAE conferences with 125 attendees or less at the FAE Conference Center.

As background, Mr. Schmelkin noted that in order to control escalating expenses for events held at New York City hotels and private clubs, the NYSSCPA created a special section within the 19th floor office space at 3 Park Avenue (the “Conference Center”) to accommodate large Society
and FAE events. He said that due to certain limitations of the space, 125 attendees was the largest reasonable number to comfortably hold events at the Conference Center before resorting to an outside venue.

In the ensuing discussion, a Trustee asked if there were plans to address the adequacy of the toilet facilities at the Conference Center, as well as the lack of a separate food service area and coat check facility. Mr. Schmelkin stated that the NYSSCPA Executive Committee recently approved a capital budget amendment to begin addressing those issues. He noted that an architect would need to be engaged and the construction process begun after the current FAE CPE season finished.

He added, however, that the audio visual capabilities of the Conference Center had recently been enhanced with projection screens and microphones, in order to improve the educational experience for attendees.

In response to a question, Mr. Schmelkin said that staff planned all FAE conferences with an assumption that they would be held at the FAE Conference Center, only approaching outside venues when it became likely that attendance would exceed 125. He noted that conference attendance estimates were generally based on prior years’ performance, adjusted upward in cases where a conference topic was addressing current issues impacting a major segment of the CPA profession. He added that if a committee presented a valid business reason to use space other than the FAE Conference Center for events with less than 125 attendees, corporate or individual sponsors must be identified and contractually bound to contribute to the expense of bringing an event to an outside venue. He said that such arrangements must provide sufficient funding so that FAE did not reduce its anticipated program net revenue that otherwise would have been generated by holding an event at the Conference Center.

A Trustee asked if the number of attendees under the proposed policy should be revisited if it were to become apparent that a lower threshold should be instituted. Mr. Grumet stated that staff would continue to monitor conference attendees’ evaluations and report any major complaints about the FAE Conference Center to the Trustees. Ms. Kinsella agreed with this approach and recommended that the Trustees consider revisiting all its governance policies as a matter of diligence.

Mr. Maier then moved that

1) All FAE events with reasonably anticipated attendees of 125 or less must be held at the FAE Conference Center, and

2) Exceptions may only be entertained when a committee presents a valid business reason to use outside space and has identified sponsors to provide sufficient funding so that FAE does not reduce its anticipated program net income that otherwise would have been generated by holding that FAE event at the Conference Center.

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

A Trustee suggested that the new policy be included in the NYSSCPA committee chair handbook, and staff agreed to do so. Mr. Woehlke added that NYSSCPA committee chairs would also be notified of the new policy by Ernest Markezin and that an article would be published in The Trusted Professional.

2) Bank of America Financing

Ms. Kinsella called upon Mr. Woehlke to provide background regarding the Bank of America finance arrangement with the NYSSCPA. Mr. Woehlke stated that in connection with its office relocation to Park Avenue, the NYSSCPA negotiated a finance package with Fleet Bank (now the Bank of America) which included a $500,000 line of credit. He noted that the bank required FAE to guaranty that line of credit which was previously approved by the Trustees before the move; however, it was time to renew the line of credit, thus requiring renewed Trustee approval of FAE’s guaranty. Mr. Woehlke said that, as negotiated, FAE’s guaranty exempted its donor-restricted assets. He also informed the Trustees that the last time the NYSSCPA needed to draw down on its line of credit – then with the Bank of New York – was in 2001 to address FAE’s fiscal situation resulting from a slow CPE season. In assessing FAE’s risk from this guaranty, he pointed out that the NYSSCPA had built up a cash reserve of approximately $440,000 as of August 31, 2006, which lessened the need to draw down on the line of credit. He noted that the fund was being supplemented by the NYSSCPA at a rate of over $15,000 per month. In response to a question, Mr. Woehlke said that the NYSSCPA Executive Committee recommended and approved the renewed line of credit.

A Trustee expressed concern about banks’ tendencies in general to shut down dormant lines of credit. Mr. Woehlke said that staff met routinely with the Bank of America representative regarding its accounts and would be notified whether a dormant line were in jeopardy of getting shut down.

Mr. Woehlke then referred the Trustees to draft corporate resolutions that had been e-mailed to the Trustees with the meeting agenda materials. He noted that the resolutions approved the guaranty in concept and delegated to Gail, Scott, and Lou the authority to carry the transaction through to conclusion by signing the final bank documentation.

A Trustee asked about references in the documentation to a $2 million credit facility. Mr. Woehlke gave a breakdown of how the $500,000 line of credit fit into the overall $2 million credit facility, which comprised a $1 million plus irrevocable letter of credit, which was being used as collateral with the Society’s landlord, the $500,000 working capital line of credit that was the subject of their current discussion and a $500,000 construction loan for the build-out of the Park Avenue office space which was never drawn upon and had expired. He said FAE was only being asked to guaranty the $500,000 working capital line of credit, which was the intent of the documents. A Trustee suggested that the wording in the documents be made more explicit that FAE’s guaranty was limited to the $500,000 line of credit. Mr. Woehlke agreed to do so, He said that staff would negotiate these changes into the documentation, reminding the Trustees that the resolutions authorized Gail, Scott, and Lou to carry the transaction through to conclusion by signing final drafts of the bank documentation.

Mr. Maier then moved to approve the following corporate resolutions authorizing the execution of the Guaranty, subject to FAE’s authorized signatory’s satisfaction with the changes discussed to the actual credit documentation:

WHEREAS, Bank of America, N.A., successor by merger to Fleet National Bank ("Bank"), is unwilling to extend or continue to extend certain financial accommodations to NEW YORK STATE SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS ("Borrower"), unless such obligations are guaranteed, in whole or part, by THE FOUNDATION FOR ACCOUNTING EDUCATION, INC. (“FAE”); and

WHEREAS, FAE has considered the value to itself of the business benefit that is expected from the accommodations to be extended or continue to be extended to Borrower and the required guaranty to be executed;

NOW, THEREFORE, BE IT RESOLVED, that FAE guarantee the $500,000 working capital line of credit offered to Borrower by Bank in accordance with a guaranty (the “Guaranty”) in such form and subject to such terms, conditions, and limitations as may be agreed upon by the Authorized Officers (as defined below) and Bank, and the Guaranty shall be in addition to amounts guaranteed for Borrower under any other resolution of FAE;

RESOLVED FURTHER, that the financial accommodations to be extended or continue to be extended to Borrower will result in a direct or indirect material benefit to this corporation;

RESOLVED FURTHER, that

Any ONE (1) of the following:

Gail M. Kinsella, President
Scott J. Jaffee, Treasurer
Louis Grumet, the Executive Director

of FAE, acting individually or in any combination as may be set forth above (the "Authorized Officers"), are hereby authorized and directed, in the name of this corporation, to execute and deliver to Bank, and Bank is requested to accept, the Guaranty;

RESOLVED FURTHER, that the Authorized Officers are hereby authorized and directed, as security for the Guaranty, to grant in favor of Bank, a security interest in or lien on any real or personal property belonging to or under the control of this corporation, and to execute and deliver to Bank any and all security agreements, deeds of trust, mortgages, financing statements, fixture filings or other instruments, agreements and documents as Bank may require and the Authorized Officers may approve;

RESOLVED FURTHER, that any and all of the instruments, agreements and documents referred to above may contain such recitals, covenants, agreements and other provisions as Bank may require and the Authorized Officers may approve, and the execution of such instruments, agreements and documents by the Authorized Officers shall be conclusive evidence of such approval, and that the Authorized Officers are authorized from time to time to execute amendments, renewals or extensions of any and all such instruments, agreements and documents;

RESOLVED FURTHER, that Bank is authorized to act upon these resolutions until written notice of revocation is received by Bank, and that the authority hereby granted shall apply with equal force and effect to the successors in office of the Authorized Officers.

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

3) Change of Meeting Date from September 20 to September 21;
Scheduling of Conference Call for September 13, 2006

The Trustees discussed the need to change its next scheduled meeting date of September 20, 2006, at 10:00 a.m. to September 21, 2006 at 9:00 a.m. to allow for a joint meeting with the NYSSCPA Board to review the consolidated financial audit, followed by a discussion of FAE activities and the relationship between the two organizations. Mr. Grumet also extended an invitation to the Trustees to attend the NYSSCPA Board dinner on the evening of September 20, 2006, noting that the executive director of the California CPA Society and its educational foundation would be speaking. He agreed to have staff send a formal invitation to the Trustees with more details.

In addition, Mr. Schmelkin stated that an additional meeting was required to review FAE’s POP program for the upcoming CPE year. After a brief discussion, the Trustees agreed to set that meeting for September 13, 2006, at 1:30 p.m.

Mr. Jaffee then moved to approve the rescheduling of the September Board meeting date of September 20, 2006, at 10:00 a.m. to September 21, 2006 at 9:00 a.m., and the scheduling of an additional meeting on September 13, 2006, at 1:30 p.m. Mr. Hendler seconded the motion. The motion passed unanimously.

4) Other Matters

The Trustees discussed the educational mission of the NYSSCPA to its members as a program entrusted to FAE. They also discussed the possibility of changing FAE’s fiscal year-end to better coincide with its seasonal financial performance. Mr. Grumet noted that such a decision would require input and coordination with the NYSSCPA. Ms. Kinsella asked that staff provide an analysis of the pros and cons related to a revised fiscal year-end, and staff agreed to do so.