Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) The annual report of a review of trust fund
financial statements required under subdivision (a) of Section 10232.2 and/or
subdivision (o) of Section 10238 of the Code shall include confirmation by an
independent public accountant that:
(1) The broker
maintains those records specified in Sections
2831 and
2831.1 of these regulations, and
reconciles such records in accordance with Section
2831.2 of these regulations.
(2) Each trust fund bank account is maintained by
the broker in compliance with Sections
2832 and
2834 of these regulations.
(3) The accountant has reviewed the accompanying
balance sheet of trust funds held by the broker as of the last day of the fiscal
year, and the accompanying statement of receipts and disbursements of trust funds
and changes in cash for the fiscal year, in accordance with standards established by
the American Institute of Certified Public Accountants.
(4) The accountant is not aware of any material
modifications that should be made to the trust fund financial statements in order
for them to be in conformity with generally accepted accounting
principles.
(5) The adjusted balance(s)
of the bank trust account(s) maintained by the broker as shown in the accompanying
financial statements were on deposit as of the financial statements date.
(6) The trust fund bank account balance(s) and
receipts and disbursements shown on the financial statements agreed with the amounts
reflected on the cash records specified in Section
2831 of these regulations.
(7) The trust fund liability balance for each open
account as itemized in the financial statements agreed with the amount reflected on
the separate beneficiary records specified in Section
2831.1 of these
regulations.
(b) In preparing
the report referred to in subdivision (a), the accountant may incorporate qualifying
representations or disclaimers substantially as follows:
(1) All information included in the financial
statements examined by the accountant are representations of the broker or of
responsible officers of the broker.
(2)
The review by the accountant consisted principally of inquiries of company personnel
and analytical procedures applied to financial data. It was substantially less in
scope than an examination in accordance with generally accepted auditing standards,
the objective of which is the expression of an opinion regarding the financial
statements taken as a whole. The report therefore includes no such
opinion.
(c) In lieu of
complying with subdivision (a) above, a broker may satisfy subdivision (a) of
Section 10232.2 and/or subdivision (o) of Section 10238 of the Code by submitting
the report by a California independent public accountant of an audit of the trust
fund financial statements of the broker in which the accountant expresses an
unqualified opinion that the financial statements fairly present, in conformity with
generally accepted accounting principles, (1) the trust fund position of the broker
at the end of the fiscal year and (2) a compilation of receipts and disbursements of
trust funds for the fiscal year.
(d) The
annual report of a review of trust fund financial statements shall include the
following financial statements:
(1) Balance sheet
of trust funds held by the broker as of the last day of the fiscal year. Each of the
trust fund bank accounts shall be identified, either in the balance sheet or in the
notes thereto, by name of bank and account number.
(2) Statement of receipts and disbursements of
trust funds and changes in cash for the fiscal year.
(3) Schedule of trust fund liability balances
showing each open beneficiary account in connection with trust funds received in
carrying on the activities described in subdivisions (d) and (e) of Section 10131 of
the Code.
1. New section
filed 5-13-82; effective thirtieth day thereafter (Register 82, No.
20).
2. Amendment of subsection (a) and new subsection (d) filed 5-4-89;
operative 6-3-89 (Register 89, No. 23).
3. Amendment of subsection (a)(2)
filed 11-9-2000; operative 12-9-2000 (Register 2000, No. 45).
4.
Amendment of subsections (a) and (c) and NOTE filed 2-28-2006; operative 3-30-2006
(Register 2006, No. 9).
Note: Authority cited: Section
10080,
Business and Professions Code. Reference: Sections
10145,
10232,
10232.2
and
10238,
Business and Professions Code.
