August 1999

1998-1999 Annual Report

Dear Member,

Today's CPA is working in an environment of dramatic change. The Society needed to build on its foundation to respond and deliver services to meet the needs of our increasingly diverse membership in this time of change. Last year's president and board of directors scrutinized all of the Society's operations, assigned priorities, and embarked on a course of action. The result: A strengthened and energized Society. We have but one major mission--To better serve our members.

As you will see in this annual report, we made significant progress toward our objective. The following are highlights of our achievements:

* We began to restore the Society and the Foundation to financial health and started to chip away at our $1.2 million negative fund balance.

* We introduced legislation to modernize the state's, 52-year-old accountancy law and formed CPAPAC, a political action committee to strengthen our voice and secure our future with legislators.

* We dramatically reversed the decline in members serving on committees with a 34 percent increase in committee service applications over last year.

* We halted the decline in membership, achieved the best retention rate in 10 years, and created five new associate membership categories to enrich our membership ranks.

* We transformed our trade show into a professional, dynamic event, one that was 43 percent more profitable than the year before.

* We launched two new major communications outlets--The Trusted Professional, our monthly newspaper, and a comprehensive website, www.nysscpa.org, that received six million hits since its September 1998 launch.

We emerged from our restructuring much healthier. Now we're in a position to serve our members, and to help them compete and succeed in a profession transformed by intense competition, technology, and globalization. Now we can build a strong and enduring home for the trusted professionals of today and tomorrow.

I personally welcome your comments. As in the past, please do not hesitate to contact me at (212) 719-8301, (800) 633-6320 or lgrumet@luca.com.

Sincerely,

Louis Grumet

Executive Director

Build the Foundation

At the start of the new fiscal year, the Society required major structural and financial change in order to accomplish our primary mission of meeting the needs of our members. In order to effectively serve the membership, we needed to erase our $1.2 million dollar negative-fund balance.

The board served as an active partner in addressing these issues and identifying solutions. We reorganized departments by streamlining our staff, enhancining technology, and eliminated projects not part of our mission. We took a hard look at all Society operations and asked this question: Were they serving our members? We created a Member Relations Division to address members' needs. Our goal was to be responsive to all our membership groups, including members in public, education, industry, and government, as well as young CPAs.

We redefined the technical services division, changing its mission from policy formation and program creation to membership services. We added three functions: government affairs (eliminating the need for an Albany-based lobbying firm used in the past); human resources (overseeing all employee-related matters, including the development of a new leadership-approved human resource manual); and legal counsel (reviewing all Society and FAE contracts and advising on staff and business issues).

We placed The Trusted Professional and www.nysscpa.org, under the Communications Division. Our reorganized marketing department now focuses on recruiting and retaining members, marketing for the Foundation for Accounting Education, as well as supporting special Society projects such as CPAPAC, www.nysscpa.org, The CPA Journal and the book title division. We integrated all advertising and sales functions. This included assigning responsibility for the trade shows and the business activities of The CPA Journal to the Communications Division. We created a public relations team to focus solely on media and community outreach activities to position the profession with the public and other targeted audiences. We also provided increased support to the chapters to enhance their visibility. We dissolved the television series, Dollar for Dollar, to channel resources more directly into service to members.

We eliminated duplicate programs. First, we folded four websites into www.nysscpa.org. Within six months of its creation it drew more hits than the combined four previous websites. We redesigned the look and streamlined the site for better access to content and created an extensive range of useful links members need. The site's integration of new technology avoids system crashes experienced by the prior online service.

Other highlights of the site include: membership directories for the Buffalo, Staten Island, Rochester and Westchester chapters; a professional library with comprehensive reference material including FASB Summaries and Exposure Drafts, GASB Summaries, a Risk Management and Liability Guidebook, and tax forms; as well as such features as Ask an Expert, Sound Advice, back issues of The CPA Journal and The Trusted Professional, committee forums and the FAE online catalog and course registration.

The site helped to administer the May trade show more efficiently, as more than a third of the attendees registered online. Similarly, the majority of exhibitors registered online and we collected more than $100,000 in exhibitor fees, eliminating the need to print and mail the brochure to these pre-registrants. The on-line Forensic and Litigation Services Directory, produced initially as a hard copy at a cost of $7,000, is now available only as an online service, enabling members to submit and make changes on their own listings and to pay by credit card in a safe and secure manner. The Society also saved by combining the committee and chapter handbooks into one convenient Leadership Directory. And, by limiting the distribution of the FAE catalog to clients and using less expensive brochure mailings to prospects, we cut print production costs by $15,000.

We were also forced to initiate legal proceedings against a recruiting firm for unauthorized use of our "NYSSCPA" service mark and for unauthorized reproduction of Society copyrighted material on their own website. The lawsuit aims to protect the Society's intellectual property which George Foundotos defined as "...an important part of the NYSSCPA asset portfolio."

We created The Trusted Professional, our monthly newspaper that eliminated five NYSSCPA/FAE publications. The newspaper provides timely information about Society events and professional issues, newsmaker interviews, FAE course listings, and committee and chapter information. Our distribution list includes members, CPA Candidates, governmental officials, other state societies, educators, nonmembers who attend FAE programs, and the media. The Trusted Professional has given us the vehicle for delivering information efficiently. Incorporating the financial statements, for example, saved $10,000 in mailing costs.

We installed an electronic time sheet system that tracks staff time invested on specific projects enabling us to develop more accurate cost allocations for budgeting purposes. We instituted a contract approval process and streamlined purchasing guidelines, to assure that the Society is getting maximum value from vendors and is legally protected. We also installed an office security system to protect our members, course registrants, staff members, visitors, and our assets.

We initiated a three-year technology plan that included a new Y2K compliant information management system, new computer system, and a new centralized telephone system. Enhanced technology gives us the tools to more accurately deliver the benefits and services that members need. It also will help us to increase staff efficiency. And, our new phone system means that members now have easier access to staff and quicker turnaround time in obtaining the information they need.

Even with these dramatic changes, the negative fund balance required more action in order for us to provide members with services they need. Thus, the board voted to raise membership dues after a two-year freeze. As Society President Alan E. Weiner explained in his letter to members in April that accompanied the 1999­2000 dues statement, "We've also slightly increased dues to be financially sound." For the first time in several years, the NYSSCPA/FAE is returning to sound financial health.

Talk to the members

We focused much attention on this area through frequent visits of the officers and executive director to all segments of the membership to identify their needs. We opened the lines of communication through a series of surveys to members and chapters. We created forums on the website and conducted surveys through The Trusted Professional.

Members wanted more chapter events, affordable and quality CPE, value-added membership services, and improved communications with the Society. We offered new Foundation for Accounting Education conferences on chief financial officers and assurance services while enhancing popular ones like emerging technologies, health care, not-for-profit, and entertainment and sports. FAE's low-cost, Pay-One-Price (POP) subscription program for unlimited CPE gained in popularity, attracting more than 1,400 participants. We're enhancing FAE's market-driven education program by applying for Continuing Legal Education approval of relevant programs and also exploring online CPE.

The Society reached out to members in industry, and Executive Director Louis Grumet met and spoke with many industry committee members and also sent a letter/survey to many of them to evaluate a number of services and respond with suggestions. We also began a program to create an industry coordinator network in which representatives from companies would serve as Society contacts to address member needs and to promote relevant programs, and held a focus group to learn more about industry issues.

We launched The Accountants' Boot Camp^TM Preview Workshops, designed to show CPA firm partners and owners how to make their practice more valuable. The first three half-day sessions drew 271 attendees.

At the May 1999 CPAs' Finance, Business & Technology Show & Conference (the Jacob K. Javits Convention Center), FAE's slate of CPE courses was a big draw for CPAs. Over 1,600 members and other financial professionals also visited the booths of more than 100 exhibitors who showcased their latest products and services. By staging the event and offering many new features like a cybercafe, value-added prizes, and raffles (including a chance to win a 1954 reproduction Maserati), the all-new show attracted more exhibitors and turned in a 43 percent greater profit over last year. The positive reaction of attendees and exhibitors confirmed our goal of turning around the image the show had suffered in recent years.

The executive committee also voted to pursue a professional liability insurance plan to offer its members in light of the growing need for this coverage. The Society plans to form a strategic alliance with the insurer it chooses that will provide a practice risk management/loss prevention program to reduce claims and competitive premiums.

We introduced three new value-added member services--Republic Discount Brokerage Services, MCI WorldCom, and BMW of North America--that will respectively save members money in stock purchases, telecommunications services, and the purchase or lease of BMW vehicles. The Society's affinity partners continued to generate additional nonmember revenues that we can use to support Society programs. Partners include MBNA America credit card, Hertz, Resume-Match, and HEAT USA. We also realized additional sources of revenue from a technology supplement published by The CPA Journal, the addition of two new book titles, and banner advertising on our website.

We put new vitality into our chapter relations program. We held more frequent town meetings, looked at ways to personalize our service to upstate chapters, changed the chapter forums to provide more opportunities for members to express their concerns, created online directories for four chapters, and added barcodes on the chapter newsletters so that they will be delivered in timely fashion.

Make committees relevant

Committee service is vital to our Society. It's the place where tomorrow's leaders are groomed. Alarmingly, over the past several years, it has declined. The steepest drop occurred last year: The number of members on committees decreased from 1,600 members to l,200 members, less than four percent of the membership. It was a strong wake-up call. We made changes in both the structure of our committees and the ways in which our members serve. To enable members to focus on their committee agendas, staff members now take and write the minutes, adhering to a brisk schedule to post minutes on the website in timely fashion. In addition, a new travel reimbursement policy not only increased the daily allowance expense from $400 to $500 for upstate travelers, but also reimburses them for all trips to meetings.

The Committee on Committee Operations (COCO) also proposed a restructuring plan to the board of directors to foster communications among the committees by grouping them into divisions organized by business sector and activities. The proposal called for eliminating or merging committees with overlapping scopes and missions. It also provided for the creation of 18 new committees to meet the needs of our members in industry.

To attract members to apply for committee service, 400 members who did not reapply received invitation letters. We asked managing partners to encourage their CPAs to serve. [These efforts turned around the downslide in committee service, increasing the number of member committee applications over 1,700 at press time, more than a 30 percent gain compared to last year.]

We also restructured the Leadership Academy, formed to develop future generations of Society leaders, to assure that it meets its mission. A steering committee of senior leadership and academy members assessed the needs of the Academy and set future goals. Highlights of the past year included a two-day conference in October that provided CPE, a protégé and mentor wine and cheese reception, and an Albany legislative trip to educate young leaders about the New York state legislative process.

What do our members need?

The theme of great change, underscored by the Uniform Accountancy Act (UAA) sparked one of the most intense member-driven discussions in the history of the Society. By engaging members in dialogue at meetings throughout the state and by maintaining forums on the website and The Trusted Professional, the Society got a sense of what members thought about the UAA.

The board concluded that New York state's 52-year-old accountancy law needed to be modernized to meet new business realities. Following dozens of meetings with committees and chapters, the Society drafted and Senators Lavalle and Spano introduced Senate bill S. 4402 and Assemblymen Bragman and Sullivan introduced Assembly bill A. 8600 into the New York State Legislature to accomplish this goal. The proposed legislation includes many of the provisions of the UAA and redefines the scope of practice of CPAs to clarify which activities are subject to state regulation.

To strengthen the Society's voice with legislators on important issues like the UAA, the board created CPAPAC. It provides the Society with the financial resources to be heard by legislators. Since April, members contributed more than $50,000, a fantastic start. The Society created high-impact communications messages including a special CPAPAC Q&A brochure/contribution envelope distributed in the May issue of The Trusted Professional, personal letters from the president-elect and executive director, and a forum on the home page of the website.

The Society addressed ethics and regulatory issues by approving a new bylaw on ethics regarding how and when members can receive commissions and referral fees. The new ethics rule 503 states that a Society member can accept commissions as long as the member does not perform an audit, review, compilation, or examination of prospective financial information for the client.

The Society also assisted the Financial Accounting Standards Committee to respond to the following exposure drafts: Proposed SOP-Accounting for and Reporting on 401(h) Features of Defined Benefit Plans, Proposed Audit and Accounting Guide-Audits of Investment Companies, Proposed SOP-Accounting by Producers and Distributors of Films and Financial Accounting Series--Invitation to Comment--Methods of Accounting for Business Combinations: Recommendations of the G4+1 for Achieving Convergence.

Make membership valuable

Realizing that the future of the Society depends on a membership that reflects the diversity of the population, the board unanimously voted in February to change the bylaws to create five new associate membership categories. In April, members voted for the changes, opening membership to international affiliates, CPA firm employees, academics, students, and candidates.

The decision will attract professionals who are closely associated with the CPA Profession such as chartered accountants, consulting and tax professionals on the staffs of CPA firms, and non-CPA professors of accounting. In addition, accounting students and candidates will have an opportunity to get a taste of Society programs and the profession while preparing to become CPAs.

On the retention side, the Society halted a three-year decline in membership and achieved the best retention rate of the past 10 years, losing the fewest members because of resignations and nonpayment of dues. An expanded direct mail campaign focusing on the value and importance of membership, coupled with telemarketing, helped set the new record.

We also consolidated all recruitment programs including the Career Opportunities in the Accounting Profession (COAP) under one staff member. Now in its thirteenth year, the COAP residency program attracts more than 100 minority high school students each year to the campuses of Pace and Hofstra University to learn about the opportunities and skills needed to succeed in the accounting profession. In addition, we created a new COAP fundraising kit and began an ongoing campaign to distribute it to corporate and individual donors. The Society also reached out to the Big 5 firms to coordinate more closely their recruitment efforts and programs with ours. We also revamped our scholarship program to increase nominations of talented college students. The Society also supported the Minority Group Recruitment Committee in staging a career day for college students and the Recruitment for CPA Careers Committee's career day for high school juniors. In addition, members participated in career days and education nights across the state. We also met with members of the American Association of Black Accountants, the American Association of Hispanic Accountants, the Institute of Management Accountants, Public Accountants and Chartered Accountants to improve relationships with these professional organizations.

Place members in the media

One of the primary goals of the public relations department is to match members and their areas of expertise with appropriate media outlets in their geographic areas. Thus, when P. Gerard Sokolski gave testimony on tax simplification before the House Ways and Means Committee, the Society issued alerts to the print media in Rochester where he lives as well as throughout the state.

Other examples included then President George Foundotos' commenting on the Taxpayer Protection Bill to The Wall Street Journal; Alan Weiner, then President-Elect speaking to The New York Times about taxes; members Eric Cohen and Peter Frank talking about how Y2K issues affects taxpayers with Elle, and Grumet discussing the UAA in Accounting Today. Foundotos and Weiner also wrote guest columns for the Long Island Business News. Appearances by Weiner and Ginger Broderick on CNN discussing taxes were converted into a CNN Video for distribution to 30,000 high school students worldwide.

During tax season, we provided a valuable public service by staging tax information taxlines with the cooperation of three newspapers throughout the state. Southern Tier members answered questions as part of a panel set up with the Press Sun and Bulletin for Binghamton-area residents, Syracuse members fielded questions at the Post-Standard, and Metro area members took questions on The Daily News hotline. In addition, upstate members provided tax season guidance for local radio, newspaper, and cable television outlets while others appeared on television programs for such major media as Bloomberg Television, CNN, CNNfn, Fox Five, and New York One.

The Society also distributed public service announcement tax tips to radio stations throughout the state and provided Money Management columns on personal financial planning for reprint in publications.

The All-New l999 CPAs' Finance, Business &Technology Show & Conference held May 25­27 at the Jacob K. Javits Convention Center in New York City provided the Society with a major media event opportunity. Pre-event coverage appeared in Accounting Technology, Accounting Office & Administration Report, and in The Long Island Business News.

Sixteen reporters and editors attended the show. It received prominent national coverage on Faulkner & Gray's online publication, Electronic Accountant, which included 30 pages of photographs, articles, speakers, show information and a link to www.nysscpa.org.

Our show was the first of its kind covered by Electronic Accountant's new, sophisticated technology.

To maintain strong ties with the media, we arranged for one-to-one press briefings with Foundotos and Grumet with journalists from The Wall Street Journal, Accounting Today, The Practical Accountants, Reuters, and Electronic Accountant.

Overall, the public relations department's press exposure in the print, television, radio, and online outlets reached audiences of 40-50 million. And, the online audience resulting from this year's exposure on CNNfn Online and Electronic Accountant took our name and profession into cyberspace as well.

In addition, the Cooperation with the Financial Media Committee held two seminars that attracted representatives from Money, Crain's New York Business, CNNfn, Newsday, Reuters, Practical Accountant, and Accounting Technology. We also held a seminar in Albany for members of the Legislative Correspondents Association for understanding the state budget.

Make the Society the Members' Preferred Home

The Society's theme, Home of the Trusted Professional, succinctly conveys a goal we are aiming for--to make the Society the place members want to be for the knowledge, skills and vision they need to succeed as tomorrow's trusted professionals. During the past year, we undertook many changes to assure the delivery on our promise of meeting the needs of our members and in defending the CPA licensure, the credential that distinguishes us as the public's trusted professionals.

It is important for you to participate in the surveys we plan to continue on the website, The Trusted Professional, and by letter. We want to be certain about what works for you...and what doesn't. As we are ready to step together into the new millennium, we are confident that our collective efforts will assure that the NYSSCPA remains a viable force in shaping the profession in the exciting years ahead.