Democracy Expanding to the Foundation for Accounting Education

Democracy Expanding to the Foundation for Accounting Education

By John J. Kearney

Continued from the Home Page

Currently, bylaws, not ballots, determine the composition of FAE officers. As they stand, the FAE bylaws mandate that the FAE president is last year’s Society president, the FAE vice president is this year’s Society president, and the FAE secretary/treasurer is this year’s Society president-elect. This governance approach has had some unintended consequences.

The most important, perhaps, is that the current FAE president is coming off of a very intensive volunteer year. Some NYSSCPA presidents devote as many as 900 hours to Society business during their presidency. This level of commitment doesn’t leave much energy—not to mention partners’ patience—to effectively lead a $3.5 million-a-year educational foundation. This arrangement also means that individuals who haven’t had the time to become overly involved with FAE events are suddenly expected to play a major role in the Foundation, one in which they, initially at least, could be completely out of touch with their key stakeholders.

Another problem with the current FAE leadership approach is lost opportunity. Before FAE’s 1972 incorporation, a senior NYSSCPA committee spearheaded the Society’s CPE program. Chairing this education committee was a significant step in developing leaders who later could serve as Society president. However, under the current bylaws, the opportunity to use the FAE leadership experience as a stepping-stone to becoming Society president is lost.

FAE Bylaw Changes

With all this in mind, the FAE Board of Trustees, under Jeff’s leadership, at their July meeting passed bylaw changes to become effective next June. Under the new FAE bylaws, the FAE trustees will elect their own officers. As part of the new arrangement, the FAE trustees have agreed to fill vacancies on their board from a list of candidates supplied by the Society’s Board of Directors. (For this provision to come into play, the Society needs to submit twice as many nominees as there are vacancies on the FAE board each year. In a normal year, there are three vacancies; next year, there will be five because of the absence of ex officio Society members on the FAE board.)

In generating the list of nominees, I anticipate that the Society’s board will follow the successful Selections Subcommittee process for making Council recommendations to the American Institute of CPAs, which Jeff pioneered. As president-elect, I chaired the Selections Subcommittee, which included four other members, two drawn from the chapters’ boards of directors and two from the “at-large” directors. The subcommittee had two functions last year, and I hope the Society’s board will agree to add a third this year.

Last year, the Selections Subcommittee identified four directors qualified to fill the two slots for directors on the NYSSCPA Nominating Committee. They also recommended eight people to fill the four New York state vacancies on the AICPA Council.

We felt it was very important to make more recommendations than the available slots, to empower the Society’s full board to make the final decision. The full board was invited to add to the subcommittee’s list of nominees. After an energetic discussion, the board determined the finalists by secret ballot.

As part of this selections process, we will reach out to the entire membership for the names of people interested in serving on the FAE board, just as we did last year for those interested in serving on AICPA Council. The Society’s Selections Subcommittee will sort through that list and make recommendations to the Society’s board, which again will be free to add to the list before it votes to determine the final names to submit to the FAE board. We believe this is a highly democratic process, much more open than the system used in the past.

Continuing the Democratic Momentum

The governance change at FAE continues the momentum begun during Jo Ann’s tenure as president. Last year, Jeff implemented the 2003 Society bylaw changes, which we will continue to uphold during my presidency.

Those 2003 bylaw changes seem to be bearing fruit. Last year we received more than 80 expressions of interest in serving on AICPA Council, and the board had an energized discussion and vote in making its final decision.

The bylaws expanded the number of positions on the Nominating Committee for people outside the board. As reported in last month’s Trusted Professional, the Society received petitions from 12 individuals to fill the nine available slots on the Nominating Committee. All CPA members of the Society received a ballot in late August to determine who will serve on the committee. The ballots were due by Sept. 27, and the results will be announced shortly.

In an age when the principles of independence and accountability are taking on increased importance at companies, public institutions and professional firms, the Society and FAE believe it’s necessary to try and set an example as an organization with strong independent governance. Through opening up the process for determining officers, the Society and FAE are fulfilling this objective and creating a leadership system that will have immense long-term benefits.

president@nysscpa.org