October 2000

Those of you who read the Electronic Accountant and similar news sources may have noticed that the American Institute of CPAs and Securities and Exchange Commission Chairman Arthur Levitt appear to be waging a battle over the independence issues. Levitt, speaking before the National Association of State Boards of Accountancy (NASBA), has reportedly accused the AICPA of abandoning both the public’s and accounting industry’s trust and auditor independence. Furthermore, he suggested that the smaller independent accounting firms stand up to the AICPA as reported by John M. Covaleski in the Electronic Accountant.

During this same speech Levitt also criticized the AICPA’s web portal project and the “Cognitor” credential. (Cognitor is the current name given to the “XYZ” international business credential that the AICPA is pursuing). The cover story of the Sept. 25 issue of Business Week headlines the ‘Accounting Wars.” I strongly encourage you to read the Business Week article. The outcome of this “Holy War” will almost certainly affect the way we practice in our profession today.

On September 13, President-Elect Nancy Newman-Limata and Vice President for Chapters Jo Ann Golden testified before Levitt and the SEC on behalf of the Society. Our testimony, designed primarily to preserve and protect the public interest, praised the SEC for some of its efforts while presenting our concerns for others. Full details on the testimony can be found online at www.nysscpa.org. (For those readers who are not online, see the front-page article of this issue of the Trusted Professional.)

I want to thank Nancy and Jo Ann as well as Bill Stocker, Mike Peress, and Julian Jacoby of the Auditing Standards and Procedures Committee; Allen Fetterman of the Professional Ethics Committee; Robert Waxman and the members of the SEC Practice Committee; and Brian Caswell and Dan Goldwasser, who reviewed the material the Society presented to the SEC. Significant time and effort was expended by all to produce the oral testimony (which was limited to less than 10 minutes) and written commentary, which was sent to the SEC on September 25.

One of the chief concerns of the NYSSCPA is the potential “spillover” effect the proposed SEC rule-making might have on the entire profession. Obviously, the SEC’s proposed changes would be directed at public companies. But, it is very conceivable that the same criteria could be adopted by other organizations such as the state education departments, which would apply the same principles to any licensees in their jurisdiction that perform attest services. This scenario would, in fact, create a potential hardship for very small clients that rely on the CPA’s advice and assistance outside of the annual audit.

Switching to more benign issues, let me update to you on the items discussed at last two Executive Committee meetings.

In May 1999, former Society President George Foundotos appointed Ronald J. Huefner as chair of the Task Force on Chapters. The task force’s purpose was to study the need for additional chapters. The task force completed a thorough study, including a cost-benefit analysis of the present chapter configuration.

The task force’s findings were based on the results of surveys of existing chapters and the membership. The task force began in by asking each chapter president to broadly assess his or her own chapter. Society members were then surveyed and more than 1,300 responses were received —the largest response to any Society-sponsored survey conducted in the past 10 years.

The Executive Committee was presented with a thorough report, and I would like to personally thank Ron and the members of the task force—Rosemarie Barnickel, Micki Levine, Kevin O’Conner and Philip Westcott—for presenting a thorough report to the Executive Committee and for their hard work in undertaking this enormous task. The task force recommended the following measures:

New chapters should be established in Manhattan, Queens, and Brooklyn to serve the needs of members in the New York City area.
A new chapter should be established for the northern counties (from Glens Falls north) to better serve members in this geographically large area, now served by the Albany-based Northeast Chapter.
A new chapter should be established in Rockland County. Members in this county have historically not been active in the Mid Hudson Chapter and expressed overwhelming support for their own chapter.
A new chapter should be established in the Elmira–Ithaca area. Members here have historically not been active in the Southern Tier Chapter, and they also expressed overwhelming support for their own chapter.
These new chapters should be established effective June 1, 2001, on a three-year provisional basis.
Criteria for the continuation of such provisional chapters were suggested.
The Society should be proactive in establishing the new chapters and in offering individual members the choice of affiliations that best fits their needs.

The board voted to accept the task force’s recommendations during its October 4 meeting. For the committee’s full report, see the front page article or visit www.nysscpa.org.

The last item to report on is the status of the audit of the NYSSCPA, FAE, and Benevolent Fund for the year ended May 31, 2000. I am pleased to report that the audit was completed on a timely basis and the Executive Committee was presented with a draft of the financial statement and management letter comments on September 19. The board voted to accept the report on October 4.

I am excited to report that on net assets of $558,000, the $1.1 million accumulated deficit -- that had been growing since the 1993-1994 fiscal year – is down to $417,800 for the year ending May 31, 2000. This decrease in the deficit comes despite a one-time write-off of the Dollar for Dollar program totaling approximately $547,000.