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September 2000
FY 1999 - 2000 ANNUAL REPORT
Message from the Executive Director For both the CPA profession and the New York State Society, fiscal 1999–2000 was a time of significant change. This annual report provides an overview of key events. At the national level, large CPA firms continued a trend toward consolidation and increased investment in nonaudit and attest functions. Under the leadership of Chairman Arthur Levitt, the Securities and Exchange Commission proposed new ethics rules that would threaten the very nature of some of these newly created firms and encourage state regulators to follow suit. The American Institute of CPAs (AICPA) has rolled out a number of far-reaching proposals that seek to position the trusted profession for the 21st century. A proposed professional services designation dubbed the XYZ credential would incorporate the CPA designation in a much broader professional context. This proposal has sparked a great deal of debate, often spearheaded by the New York delegates on the AICPA Council and the Society’s board of directors. I regard these debates as healthy and extremely helpful in clarifying where the profession wants to go in the next decade or more. Democracy is not always neat, but it is always preferable to the alternatives. Working with the board of directors, the staff has worked hard to reduce the Society’s deficit while refocusing its services to better meet the needs of its members. As I begin my third year of service as executive director, I can report substantial progress toward the goal of ensuring that the New York State Society of CPAs is operating efficiently while staying focused on providing members the tools they need to excel in their careers. The exciting challenge is to make 2000–2001 even more focused on providing quality professional opportunities for the membership of this great organization. Let me know how we are doing!
Sincerely,
Louis Grumet
The Society has attracted new members through its new associate member categories: CPA firm employee, international, student, CPA candidate, and academic. Although nearly all Society member benefits apply, associate members cannot vote on member matters or serve as officers or directors. CPA FIRM EMPLOYEES. The growth areas in most public accounting firms today are tax and consulting, and many firms employ more and more professional non-CPAs in these areas who make vital contributions to the firms and the profession. Individuals employed in a professional capacity by a CPA firm but who are not CPAs or on a CPA track can now participate in NYSSCPA activities and contribute more to the profession. Firms benefit since all their professional employees can take advantage of networking opportunities available at Society committee meetings and other programs. INTERNATIONAL ASSOCIATES. Chartered accountants and CPAs licensed outside the United States who belong to recognized institutes of accountancy can join the Society as international associates. The Society expects that these new members will offer insight on the issues and impacts of economic globalization. STUDENT ASSOCIATES. Until now, students wishing to enter the CPA profession had limited opportunities to bond to their chosen career. The student associate membership category provides access to additional self-help and networking opportunities, chapter organizations, and the Society’s committee structure, among other benefits. CPA CANDIDATES. After graduating from college, students qualify for the CPA candidate category that now includes individuals who have passed the CPA exam but have not yet fulfilled the experience licensure requirement and those studying for the CPA exam. A person can remain in this category for up to five years. ACADEMIC ASSOCIATES. The academic category includes non-CPA auditing, accounting, and tax professors. The creation of this new membership category is another step in the Society’s and the profession’s effort to build stronger bridges to academia. Success in Old and New Ways of Communicating The Trusted Professional, the Society’s monthly newspaper, has become a reliable source of information about professional and political development in the state, focusing on events, actions and programs that impact the membership. In 1999, the newspaper began publishing regular chapter reports to help encourage communications among members. The CPA Journal expanded its reach with the incorporation of Vermont and Delaware State Society members into its readership as part of their membership services. It was a most eventful year for www.nysscpa.org, the Society’s website. In a technology dominated by continuous change, the Society continued to innovate and most importantly, provide the membership with useful tools to exchange information with each other and their Society. Members can communicate with Society staff, engage in dialogue amongst themselves on committee bulletin boards, review chapter events and happenings and review and register for courses with the Foundation for Accounting Education (FAE). The success and importance of www.nysscpa.org was underscored by a number of court victories in an action brought by the society for the infringement of its website’s domain name. On December 2, District Court Judge Leonard B. Sand of the Southern District of New York awarded nearly $47,000 in attorney’s fees to the NYSSCPA in its action against Eric-Louis Associates for misusing the Society’s NYSSCPA service mark and domain name. Eric-Louis Associates used the service mark on its website and demanded that the Society pay them to stop using its own service mark. After filing suit against Eric-Louis, the court granted both temporary and permanent injunctions barring the “cybersquatter” from using the mark. In May 2000, the website homepage was substantially upgraded, providing a user-friendlier interface. In fact, the number of times that the search engine is being accessed has decreased noticeably since the reorganization, which is attributed to the simpler interface. November 1999 marked two milestones for the website—a record 1 million hits and the end of password access to committee and chapter areas. A “hit” represents any item retrieved from a web server. For the first time, the Society’s site recorded more than 1 million hits in a one-month period—1,029,974 hits in November 1999 compared to 540,133 in November 1998, close to a 100 percent increase. The website has continued to experience this level of use. November 1999 also saw the elimination of password access to the site’s committee and chapter areas—a direct result from member input at the Leadership Forum in August, when NYSSCPA chapter and committee leaders met to discuss policy issues and future plans for the Society. Although website activity has increased steadily, several leaders felt that the use of the committee and chapter areas had become stagnant, in part because passwords inhibited use. Society members no longer need to enter a user name and password to get the latest information about committees and chapters, including meeting minutes, newsletters, officer listings, event calendars, and other highlights. In addition to facilitating use for NYSSCPA members, eliminating passwords opens all sections of the site to other users and increases the potential audience for committee and chapter activities. The website’s technology has also been upgraded to expand its usefulness to members. The Membership Data Center now provides members with the opportunity to review and amend their chosen professional interest code, an important element in the Society’s ongoing effort to provide services and programs that meet the needs of members. Just as importantly, the website can provide members with a record of the CPE taken with the Foundation for Accounting Education (FAE). No more guessing, it’s all there for your inspection. Expanded Member Services The Society’s extensive network of volunteer committees provides a great deal of innovation and vitality. At its June 1999 meeting, the board of directors unanimously approved a new committee structure proposed by the Committee on Committee Operations (COCO) to keep that vitality strong. COCO’s recommendation to change the committee structure is an effort to make committees more responsive to the needs of members. The new structure includes six divisions—four reflecting the current specialty areas of CPA firms. These include a broadened Consulting Division to accommodate fast growth and the newly restructured Industry Division to reflect the needs of a large segment of the Society’s membership. One division focuses on the future enhancement of the profession, emphasizing recruitment and higher education, and one will focus on Society operations. The reorganization has struck a chord of approval from the membership since committee service has already risen more than 30 percent compared to the 1998–99 year. The Society expects that the new structure—designed to better address member needs—will continue to encourage greater committee participation. Society Forms New Industry Committee Division To establish closer links with more than 11,000 members in industry, NYSSCPA took several actions including board approval for a new staff position to directly assist efforts to meet the needs of this important segment of the membership. The Society also formed a new industry committee division in October 1999. The oversight committee recently held its organizational meeting and will focus on the concerns and interests of industry members and identify ways the Society can better serve them. The following committees report to the oversight committee: Advertising, Apparel and Textile, Banking, Chief Financial Officers, Cooperation with Bankers and Other Credit Grantors, Cooperation with Community Businesses, Construction Contractors, Entertainment and Sports, Health Care, Hospitality Industry, Insurance Companies and Agencies, International Operations, Not-for-Profit Organizations, Public Schools, Publishing and Printing, Real Estate, and Stockbrokerage. The NYSSCPA Conference for CPAs in Industry, held on April 28 in New York City, provided updates on a wide range of finance, accounting, and management topics of interest to financial professionals in the private sector. In addition to a highly rated session on employment practices liability, other sessions addressed access to various capital sources, global economic trends, health care reform, employment litigation, and e-financial services. Luncheon speaker Thomas Sullivan, vice president of internal audit of the National Football League, discussed the value of continuing education to the industry member. The NYSSCPA/FAE Western Regional Members in Industry and Commerce Conference, held April 19 in Batavia, marked the first time that the Buffalo and Rochester Chapter industry committees collaborated to produce a program. The conference evaluations were uniformly complimentary, and more than 95 percent of attendees indicated that they would register for another conference. The full-day program included speakers on the following topics: evaluating 401(k) plans and providers, structuring financing and loans, cash balance plans, e-commerce, middle-market mergers and acquisitions financing, and lean manufacturing/management. Task Force Studies Forming New Chapters In an effort to better reach out to NYSSCPA members across the state, a task force to study whether or not to form new chapters circulated a survey to members living in New York City. By a nearly 2:1 margin, respondents favored the creation of a chapter or chapters in New York City. The results also indicate a preference for creating additional chapters within New York state. Chaired by Ronald J. Huefner, past president of the Buffalo Chapter and a 1999–2000 member of the Society’s board of directors, the task force first met in July 1999 and most recently in July 2000 to review the results of the survey. New surveys are being sent to Rockland County and counties in the Southern Tier. In addition to Huefner, task force members include Rosemarie Barnickel, Micki Levine, Kevin O’Connor, and Philip Westcott, who, respectively, are past presidents of the Staten Island, Nassau, Mid Hudson, and Southern Tier chapters. Multidisciplinary Practices The NYSSCPA board of directors voted in February 2000 to support the establishment of multidisciplinary practices—firms where CPAs, lawyers, or other professionals partner or share fees. This forward looking action contrasts strongly with the reservations the concept expressed by both the New York State and American Bar Associations. Specifically, the board endorsed the recommendation of the Society’s multidisciplinary practice team that states, “The MDP team recommends that the Society support the development of a regulatory framework that better serves the public in an environment permitting multidisciplinary practice among CPAs, lawyers, and other professionals.” That report notes that MDPs face regulatory hurdles and the accounting and legal professions’ ethics codes contain some incompatibilities that need reconciliation. MDP, where CPAs partner or share fees with attorneys or other professionals, has gained increased attention since a special commission of the American Bar Association issued a report in June 1999 that would permit such practices. The ABA’s governing House of Delegates rejected the report last summer and again in July 2000. Since 1993, the largest auditing firms have provided legal services to their audit clients’ foreign subsidiaries and foreign audit clients subject to Securities and Exchange Commission rules. This practice has grown significantly in a number of European countries, where large auditing firms are closely affiliated with law firms. Tax Season Increases Profession’s Visibility Tax season offers the accounting profession an opportunity to increase its visibility and enhance the CPA image through media and public service programs. NYSSCPA members once again took time out of their busy schedules in 2000 to assist in the profession’s publicity efforts. The Society’s public relations department connected reporters with CPAs throughout the state on a wide array of tax issues to strengthen relations with the media and broaden reporters’ views and in turn, public perception of the profession. From print to broadcast, national to local media, members discussed tax traps, tax breaks that are often overlooked, and other timely issues. Results included placements on Fox News Radio Network and CNNfn as well as in Newsday, New York Daily News, and New York Post, among others. NYSSCPA members also answered callers’ tax questions through participation on telephone public service programs sponsored by Journal News (Westchester and Rockland Counties), New York Daily News, and Post Standard (Syracuse). The Society once again produced and distributed public service announcements to 200 radio stations statewide. The PSAs provided tax tips, positioning the Society and the profession as an educational resource for financial and business issues. FAE Tracks CPE Credit Online MEMBERS CAN ACCESS REPORTS One of the benefits of the NYSSCPA’s new membership database is online tracking of CPE credits earned through the Foundation for Accounting Education. Society members can use this service to obtain reports about their participation in FAE courses. This service is automatic for all individuals who enroll in FAE courses. The Society hopes that the online tracking service will make it easier for members to keep abreast of credits earned—even more important now in light of the State Education Department’s new initiative to audit CPE compliance. Obtaining a CPE report is easy. Members need only Internet access and their member ID number and password. The Society’s information services department has designed the database to allow members direct access to their records at www.nysscpa.org/membership/membership1.htm. Members also can access this page through the Society’s homepage (www.nysscpa.org) by selecting Membership Center under The Society and then clicking on Member Profile from the list on the left. Once at the Membership Data Center, members should select Member Login to enter their user ID and password. The user ID number is the member’s CPA certificate number, and the password—unless previously changed by the member—is the user ID plus the member’s initials. For example, a person named John Doe whose ID number is 123456 will have the initial password 123456JD. Please keep in mind that passwords are case sensitive. After entering the user ID and password, click the Login button to access the membership data. Members can view and print a report of their FAE course participation by clicking on CPE Record and selecting the appropriate year or years. The NYSSCPA maintains members’ online CPE records back to 1994. It is important to remember that the Society only tracks FAE credits earned. The Membership Data Center also allows members to update a variety of personal information. For security purposes, the information services department recommends that all members change their passwords, an option available at the Member Profile area. In February 2000, Yipinet, an Internet-based provider of continuing education and the NYSSCPA’s affinity partner in providing CPE to financial professionals, announced that it has changed its name to eMind.com. In addition to the new name, the site includes additional features and an expanded selection of courses. Additional features include new hubs for securities, personal development, and technology programs, as well as channels for small to medium-sized and large businesses. Members can access eMind.com at www.nysscpa.emind.com or through the eMind.com banner on the Society’s homepage. Honoring Our Past In May 2000, Max Block, Charles Waldo Haskins, Robert Montgomery, Emanuel Saxe, and Elijah Watt Sells became the first inductees into the CPA Hall of Fame. The NYSSCPA recognized the winners at its Annual Election Meeting and Dinner in New York City. Society President Alan E. Weiner initiated the Hall of Fame to honor those who have devoted their careers to the betterment of the profession. The Hall of Fame Selection Committee, which consists of nine members from both inside and outside the accounting profession, chose the honorees from 32 nominations. The committee chair was Dan Goldwasser, an attorney with Vedder Price Kaufman and Kammholz in New York City. In addition to announcing the names of the inductees at the annual dinner, the Society has designated one of the rooms in its Fifth Avenue office as the Hall of Fame Room and will display plaques honoring the award winners. The selection committee will select new inductees each year. Board Votes to Form PAC The NYSSCPA board of directors voted unanimously in February 1999 to form a political action committee, or PAC, to make financial contributions to state elected officials and candidates for office. The board agreed to leave the funding of U.S. congressional members and candidates to the AICPA’s PAC. The Society committee, to be known as the New York State Society CPAPAC, is supported by independent contributions from members and other interested parties. With its vote to form a PAC, the board recognized the Society needed a organized method for providing political contributions, particularly in this electronic age where more and more elected officials and candidates need to raise more funds to support costly media campaigns to disseminate their views. Until the board’s action, the NYSSCPA was the only membership organization of its size in New York state that did not have a political action committee. Moreover, of the 21 largest state CPA societies, only New York and Georgia did not have a PAC. At its January 2000 meeting in Albany, the board of trustees of CPAPAC approved a disbursement policy for funds to state legislators. CPAPAC raised more than $66,000. In 1999, it disbursed $8,000. The board voted to distribute up to $35,000 in 2000. State Legislature Fails to Act on Accountancy Reform Bills In June 2000, the New York State Legislature adjourned for the year without taking action on two bills supported by the NYSSCPA (S. 4402 and A. 8600) to update New York state’s accountancy law. Both bills were “held” in their respective committees. In 1999, two separate legislative approaches were introduced in the State Legislature to amend state accountancy laws that had not changed in any substantial way for more than 50 years. The proposal supported by the Society sought certain changes consistent with the Uniform Accountancy Act, proposed by the AICPA and the National Association of State Boards of Accountancy (NASBA). The resulting bills, S. 4402 and A. 8600, among other things, seek to clarify the definition of public accountancy, change the two-year experience requirement of auditing and accounting to one year of any professional services supervised by a CPA, provide express statutory authority to accept commission and fees from nonattest clients, and allow non-CPAs to own up to 49 percent of a CPA firm. When the bills were first introduced in spring 1999, the sponsors in both houses indicated the desire to learn more about the profession and stated their intent to conduct hearings to gather information and more fully explore the proposed changes. The Assembly held its public hearing on November 16, which lasted almost nine hours and consisted of more than 50 witnesses. The Senate, in February and March 2000, conducted two roundtable discussions: one on the definition of the scope of practice and another on commissions and non-CPA ownership. The members who participated in the public hearings and roundtables represented a prominent and notable cross-section of the profession, including eight past presidents of the Society. During the lawmakers’ information-gathering activities, the Society immediately learned that leaders in both houses had concerns about only two issues: receipt of commissions and fees by CPAs, and non-CPA ownership. Legislators’ discomfort on the commissions issue seemed to dissipate when they found out that the overwhelming majority of licensing jurisdictions (42 out of 54, including all of New York’s neighboring states) allowed CPAs to receive commissions and fees, and that the acceptance of commissions and fees was limited to nonattest clients. The lawmakers realized that to prohibit commissions in the face of the number of jurisdictions that currently allow this compensation method could hurt the state’s image as the world’s financial capital and could potentially violate interstate commerce laws. Moreover, SED failed to show that the public has been in any way harmed in those jurisdictions that allow CPAs to accept commissions and fees. The Society expects that in all likelihood, lawmakers will reintroduce the bills after the November elections. CPA License Plates After months of planning with the New York State Department of Motor Vehicles, CPA license plates became available in September 1999. The plates are available to all of the state’s licensed certified public accountants with New York-registered automobiles. The first CPA to order the plates was Beatrix McKane, of Centerport, N.Y. The idea of CPA license plates came from Society President Alan E. Weiner. He asked Society staff members to look into the possibility of creating CPA plates. After numerous conversations with the DMV and design ideas going back and forth, Weiner had to make the decision as to style and color—red or blue? He did not think that the color red and its reminder of red ink would please CPAs and their clients, so the final design features “CPA” in a blue box. Weiner also decided that the plates should be made available to all licensed New York CPAs, not just Society members. Weiner does not expect any CPA to get a client because of these plates but believes they will help give CPAs a sense of belonging to their profession and a way to express their pride. The initial cost of the standard license plate is $34.50, with an annual renewal fee of $25, which covers the current registration period. (Applicants need not wait until the expiration date of their registration.) Individuals who already have personalized or “vanity” plates can order a personalized CPA plate (with up to six characters) for $63, with an annual renewal fee of $50. CPAs can order customized CPA plates directly from the DMV by calling (518) 474-6660 during business hours. Applicants must submit a copy of their state CPA license. New Insurance Program In April 2000, Camico Mutual Insurance Company became the first professional insurance company sponsored by the NYSSCPA in more than a decade. Last year, the two organizations came to an understanding, which the Society’s board of directors approved in late October. The agreement calls for Camico to provide professional liability insurance to New York firms that have one or more owners who are Society members. In addition to the comprehensive loss-prevention programs offered to its insureds, Camico will share its loss-prevention expertise with all Society members through, for example, seminars and its speakers bureau. Based in Redwood City, Calif., Camico insures more than 18,000 accounting professionals, encompassing more than 3,000 accounting firms. Camico was the first liability carrier to offer a comprehensive loss-prevention program as a value-added component of the policy package. Free continuing professional education is an essential element of the program. COAP Receives Record Number of Applications The Career Opportunities in the Accounting Profession (COAP) program is considered by the NYSSCPA to play an important part in the its overall efforts to recruit CPAs for the future. The Society is pleased to note that it received a record 170 applications for its 2000 summer residency programs at Hofstra and Pace Universities. Sponsored by the NYSSCPA, FAE, academia, and the profession, COAP introduces minority high school juniors to the benefits of an accounting career and helps provide for a more diverse profession. COAP centers on college summer residencies where students attend classes in accounting, business, and interpersonal skills taught by CPA role models and visit accounting firms and other businesses. This year, the residencies took place June 24–28 at Hofstra University on Long Island and June 25–29 at Pace University in Pleasantville. “We work hard to ensure that schools receive information about COAP to distribute to their students,” New York City COAP Chair Patricia Adams said. “We have developed and maintain consistent contact with guidance counselors and COAP alumni to ensure extensive recruitment and a comprehensive selection process. I am glad our efforts have paid off and we have students applying in record numbers.” The Society’s receipt of applications is just the first step in the COAP selection process. The COAP advisory board, which is made up of professionals from public accounting, industry, and academia, interviews every applicant. Scholarship Program Another important program sponsored by the NYSSCPA and supported by members through voluntary contributions is the Excellence in Accounting Scholarship. The Society sends applications to accounting departments, accounting clubs, and financial aid offices in January of each year. The Society created the scholarship fund in 1990 to provide financial assistance and encourage deserving candidates to enter the accounting profession. To qualify, college students must have declared accounting as a major, have completed at least 60 semester credits, and maintain a 3.0 GPA. The NYSSCPA awards scholarships of $1,500 per academic year for full-time students (12 credits or more per semester) and $750 per academic year for part-time students (at least six credits per semester), and presents payments in separate equal installments, one each semester. Students can renew the awards provided they continue to meet all eligibility requirements. “The Scholarship Awards Committee plans to work with chapter officers as well as colleges and universities in each chapter to increase awareness of the scholarship program,” Scholarship Awards Committee Chair Kathleen Brown said. “We expect the joint efforts of the committee and chapters to result in an increase in the number of applications from qualified students in all chapters and a better distribution of scholarship awards among the chapters.” The Scholarship Awards Committee, which includes representatives from all 11 chapters, selects recipients from each chapter area, based on the student’s home address. The number of scholarships in each chapter is allocated by the number of NYSSCPA members in that area. On April 25, the NYSSCPA Minority Group Recruitment and Equal Opportunity Committee held its Buffalo career fair, the committee’s first outside the New York City metropolitan area. Geared primarily toward graduating college seniors, the event gave students the opportunity to meet with representatives from nine participating firms and companies: Advantage Professionals, Arthur Andersen LLP, Becker Conviser, Dunhill Professional Search, Ernst &Young LLP, Freed Maxick Sachs & Murphy PC, National Fuel, Praxair, and Snelling Personnel Services. The Fiscal State of the Society A budget is a blueprint for the future. The NYSSCPA board of directors approved the budget for fiscal year 2000–2001 at its February 4 meeting. The net revenue was $706,000, which keeps the Society on target in the three-year plan developed last year to reduce the $1.2 million deficit that had been growing since the 1993–1994 fiscal year to $417,800. The budget does not include a dues increase. In addition, the board, as part of the discussion on the forecast for the current fiscal year, approved a $546,000 write-off of uncollected receivables and expenses incurred with the liquidation of Dollar for Dollar Productions Inc. Finance Committee Chair Sharon Sabba Fierstein presented the budget, which had already received approval from both her committee and the Society’s Executive Committee.
Highlights of the budget include:
The chapters are a critical element in the NYSSCPA’s overall effort to assist members. Members receive a number of important benefits from participating in chapter events, including valuable networking opportunities, CPE, and enjoyable social activities. The Young CPAs sections at the chapters provide some of the Society’s most innovative programming and community outreach.
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