Finance Committee Meeting Minutes

The meeting was called to order at 9:05 AM.

APPROVAL OF MINUTES - The minutes of the previous meeting held on September 24, 2001, were reviewed by members. After a brief discussion, upon a motion duly made and seconded, the minutes were approved unanimously.

INVESTMENT SUB-COMMITTEE - Nadine Lee briefed the committee on the Sanford Bernstein and The Bank of New York investment presentations, based on the draft of their sub-committee's November 26, 2001 minutes circulated with the agenda. A general discussion ensued. Mr. Lifson called for the ratification of the policies recommended in the November 26 minutes, and upon a motion made and duly seconded and unanimously passed, the actions and policies recommended therein were approved.

A question was also raised about the desired frequency of Investment Sub-committee meetings. The Committee suggested that it should be the primary responsibility of the members of Investment Sub-committee to determine the need and frequency of their meetings by directing suggestions to the Chair and by the Chair considering the sub-committee's needs from time to time.

COMMITTEE ACTION PLAN- Mr. Lifson went over the draft Finance Committee Action Plan as distributed with the agenda and on November 1, which reflected suggestions, received during the comment period between the September 24 meeting and October 31. The CAP was read and reviewed line-by-line and a lively discussion ensued. A motion to approve the committee action plan, as amended by the Committee's further comments, was made by John Kearney, and seconded by Howard Weiner whereupon; the CAP was unanimously approved by the Committee in the form attached hereto. Staff was instructed to forward the CAP to the Board and other applicable Society bodies for ratification.

ROLE OF TREASURER - There was an extensive discussion on job responsibilities and chain of command. Lou Grumet reminded the committee that the Treasurer is a by-law-mandated office. Mr. Grumet further noted that there is a Society-wide absence of clearly defined operational guidelines and job responsibilities for the Treasurer and other officers. Mr. Grumet thanked the committee for their input in this area and suggested that staff present in due course job descriptions of the Treasurer and other officers to the Board of Directors, for their consideration and approval. The committee agreed that this was the role and responsibility of the Board, and offered to serve as a resource to the Board or the staff in this area upon their further request.

ROLE OF NYSSCPA COMMITTEES - The relationship between the NYSSCPA finance and audit committees was discussed. Traditionally, the Finance Committee has never been involved with and barely been informed of year-end results. Mr. Lifson commented that there was an apparent disconnect between what the Finance Committee did (largely, review interim financials and the annual budget, but with no involvement with the year end figures) as compared with the Audit Committee's extensive review with the auditors of the year-end, audited results which are included as part of the consolidated group's results.

Jo Ann Golden pointed out from an operational standpoint the need for the Finance Committee to review annual audited financial statements. Frank Aquilino was of the opinion that since the finance committee has direct access to the financial statements during the year, it might not be necessary for them to review the audited statements.

The committee came to the conclusion that for purposes of checks and balances, the monthly internal financial statements should be made available to the Finance Committee. If there are material differences between the final audited and unaudited financial statements, such differences and the reasons should be reported to the Finance Committee after the year-end audited financials are approved by the Board. Staff agreed to do this commencing this fiscal year.

RECORDING DUES REVENUE - The method of recognizing monthly membership dues revenue was explained to the committee by Lynn Chambers. Kevin McCoy said an allowance for dues that cannot be collected should be recorded. Based on Mr. McCoy's proposal, the committee recommended and Mr. Grumet and Ms. Chambers agreed to set aside a 4% reserve of total billings as an estimate of the dues billed that will not be paid. The balance of the dues billed will be recognized as income ratably. Periodic reviews of actual collections will be made to fine-tune this estimate, with upward or downward adjustments of the 4% reserve to be recognized ratably over the remainder of the fiscal year as and when information indicates the reserve to be too much or too little. The first adjustment will be made effective December, since indications are that revenue has been recognized too slowly in the current fiscal year to date.

BUDGET OVERVIEW - Mr. Grumet talked about the new budget format. He said the program budget would allow greater staff accountability, tie the budget to programs and not individual expense lines, and is meant to conform to the strategic planning process now taking place with the Board of Directors. In tandem with staff evaluations, it will allow better resource allocation to run the programs in conformance with the Board's directions. The programs are Communication overseen by Joanne Barry, Education overseen by Alan Schmelkin, Governance overseen by Jim Woehlke and Bill Pape, Government Relations overseen by Jim Woehlke and Dennis O'Leary, Member Proficiency overseen by Bob Colson, Ernie Markezin and Jim Woehlke, and Networking and Recruiting overseen by Bill Pape. Several policy and operational issues were raised. Mr. Lifson inquired about how FAE could realize the 26% projected increase in education revenue and 33% reduction of direct programming expenses. Mr. Grumet is confident that POP can be revamped.

BUDGET FRAMEWORK - Mr. Lifson and Mr. Grumet then gave the committee an explanation of the budget package, explaining that the budget was prepared on a consolidated basis, including all legal entities that are included in our consolidated, audited financial statements using the accrual basis of accounting. Costs were aggregated by program, to indicate, "what the money is spent on" and a program summary detailed "how the money is spent" by cost category for each "program." A detailed analysis of revenues by source was also provided, while a department summary provided details to compare program revenues to program expenses when program net contribution information was sought. Detailed write-ups describing each program were also provided. It was noted that previous budgets and the historical data that the committee was accustomed to reviewing monthly did not include FAE and other related, consolidated entities results.

The committee then reviewed each program and the entire budget proposal to better understand the assumptions and methodology. Minor suggestions were made and noted by Lynn for the next draft.

After some discussion, it was clear that everyone was pleased with the new consolidated, membership service line format, which made it easier to evaluate the overall sources and uses of our funds. Kudos were given to Lynn and her staff for effectively implementing the Executive Director's plan to present a budget that much more clearly reflects the programs undertaken by the Society and its affiliated enterprises on behalf of its members.

THE BUDGET GAP - The committee then expressed overwhelming concern for the proposed consolidated deficit indicated in the draft budget, especially in light of the Society's surprise, current year results. While the Society is operating at or near current budget at nearly a break even, the FAE is experiencing an estimated loss well in excess of $1 million in the current fiscal year to end May 31, 2002.

An active discussion of revenue enhancements and program reductions ensued. The committee agreed that serious and prompt action is needed. A new budget is required; the current draft requires material revision to return the consolidated group to a surplus. The losses not only must be stemmed, but a budget replacing some of the current year losses is in order. After additional alternative ideas for closing the budget gap were discussed, it was left with Mr. Grumet and his staff to meet with key directors and officers (including FAE persons) to present budget alternatives to the Finance Committee at the next meeting on Friday, January 18, 2002 at 9:00 AM. There being no further business, the meeting adjourned at 2:30 PM.

Respectfully Submitted,
Mondy S. Gold

Approved 1/18/02

Investment Committee Minutes 11/26/01

Presiding Officer	Nadine Lee (via teleconference)
Board Members Present:	Frank Aquilino, Sandra Napoleon-Hudson, Nancy Newman-Limata
Board Members Absent:	John Kearney
Staff Members Present:	Lynn Chambers, David Haar
Location:	NYSSCPA Office 530 Fifth Avenue, 5TH Floor New York NY 10036
Time:	9:20 AM - 11:30 AM

Meeting called to order at 9:20 AM. This was a joint meeting of the NYSSCPA and FAE Investment Committees.

Prior Minutes - Thomas Riley made a motion to approve the minutes from the January 2001 Investment Committee meetings, and the motion was unanimous.

Chair - Nadine Lee agreed to serve as chair of the committee.

New Business - The committee reviewed the Investment Guidelines for Society.

Jo Ann Golden stated that she would like quarterly statements from both the Bank of New York and Bernstein sent to committee members. Lynn Chambers agreed to discuss that mailing arrangement with both institutions.

Nancy Newman-Limata remarked that the quarterly investment returns need to be recalculated on the reports presented by staff, as the return seemed to include 100% of the monthly transfers instead of a pro-rated amount. Ms. Chambers replied that it would be done, and the material would be resent to committee members.

Bank of New York had not arrived at this point, so the meeting was temporarily adjourned at 9:40 AM.

Sanford Bernstein Presentation - The meeting was reconvened at 9:50 AM, and Paul Cobuzzi from Sanford Bernstein distributed a handout containing information on the funds invested with his organization. Mr. Cobuzzi reviewed the financial information, ratios, and graphs included in his material. Committee members questioned Mr. Cobuzzi concerning some of this information. He concluded his presentation at 10:50, and was excused.

Bank of New York - Bob Douglas and Warren Costikyan from the Bank of New York distributed information to all members. Mr. Douglas and Mr. Costikyan reviewed the information with the committee members, and answered questions from the committee on a variety of subjects. Committee members were especially concerned about the September 11th events' affect on the Bank of New York operations, including lockbox deposits and ACH transfers. At the end of their presentation, Bank of New York was excused from the meeting.

General Business - The committee members discussed the presentations made by each company. The committee was satisfied with the performance of both the Bank of New York and Sanford Bernstein. A resolution was unanimously passed to retain the services of both firms.

The committee is required to meet annually, but a second meeting may be scheduled in either in January or April, if necessary.

There being no further business, Ms. Lee made a motion to adjourn the meeting that was unanimously approved. The meeting was adjourned at 11:30 AM.

Respectfully Submitted,

David Haar Approved
12/14/01

Finance Committee Committee Action Plan (CAP)

Who We Are

The Finance Committee reviews and advises the Board and supports the Treasurer on financial aspects of the operation of the Society and its financial planning for the future. The Committee also establishes broad policy guidelines relating to the Society's budgets, target levels of capital, working capital and borrowings, investments and financial performance criteria.

What We Do

The Committee reports to the Executive Committee of the Board of Directors and is responsible for reviewing and making recommendations on various financial data including the annual budget and financial statements. Tasks include general financial oversight and budgeting, identifying revenue sources and opportunities, analyzing borrowing needs and sources, and development of investment policies and supervision of their implementation.

Sources and uses of financing the Society's operations are monitored and evaluated, including:

The Committee also evaluates and makes recommendations regarding investment policies, including:

Who Should Join

Society leadership with substantial committee or chapter experience.

Benefits of Committee Membership

Being part of maintaining a financially sound organization to represent the members of the New York State Society of CPAs.

Approved by the Finance Committee 1/9/02.