Each licensee shall adopt as its fiscal year the period from July 1st to and including the following June 30th.
Chapter 7Records, Reports, and Examinations
Section § 31500
This law requires that each license holder must use July 1st to June 30th as their fiscal year.
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Section § 31501
This law says that anyone with a license must keep books, accounts, and records in the way the commissioner directs. These records must be stored in a specific location and preserved for a certain amount of time, as decided by the commissioner’s regulations or orders.
Each licensee shall make and keep such books, accounts, and other records in such form and in such manner as the commissioner may by regulation or order require. All records so required shall be kept at such place and shall be preserved for such time as the commissioner may by regulation or order specify.
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Section § 31502
This law states that unless a licensee gets permission from the commissioner, they cannot list any asset on their financial books at a value higher than what they actually paid for it.
No licensee shall, except with the prior approval of the commissioner, enter or carry on its books or records any asset at a valuation exceeding the actual cost of such asset to such licensee.
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Section § 31503
This law lets a commissioner order a business to adjust the value of an asset in its financial records to accurately reflect the asset's current worth.
The commissioner may by order require a licensee to write down any asset on its books and records to a valuation which represents its then value.
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Section § 31504
If you hold a license, you're required to submit an audit report to the commissioner within 90 days after your fiscal year ends, unless the commissioner gives you more time. This report must include financial statements, like a balance sheet and income statement, audited by an independent accountant, following standard accounting rules.
The audit needs an accountant's opinion confirming that the financials align with these accounting principles. You might also need to include additional information if the commissioner asks for it.
Each licensee shall, not more than 90 days after the close of each of its fiscal years or within such longer period as the commissioner may by regulation or order specify, file with the commissioner an audit report containing:
(a)CA Financial Code § 31504(a) Financial statements (including balance sheet, statement of income or loss, statement of changes in capital accounts, and statement of changes in financial position or, in the case of a licensee which is a California nonprofit corporation, comparable financial
statements) for or as of the end of such fiscal year, prepared with audit by an independent certified public accountant or an independent public accountant in accordance with generally accepted accounting principles;
(b)CA Financial Code § 31504(b) Report, certificate, or opinion of such independent certified public accountant or independent public account, stating that such financial statements were prepared in accordance with generally accepted accounting principles; and
(c)CA Financial Code § 31504(c) Such other information as the commissioner may by regulation or order require.
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Section § 31506
Any company or individual that holds a specific license, along with their directors, officers, employees, and related business entities, must submit reports to the commissioner whenever required by regulations or orders. These reports must follow specific formats, include certain details, and may need to be signed and verified as specified by the commissioner. Affiliates of the licensee also need to report their transactions with the licensee if requested.
Each licensee, each director, officer, and employee of a licensee, and each parent and subsidiary of a licensee shall file with the commissioner such reports as and when the commissioner may by regulation or order require. In addition, each affiliate of a licensee (other than a parent or subsidiary of the licensee) shall file with the commissioner such reports regarding transactions between the affiliate and the licensee as and when the commissioner may require. Each report shall be in such form, shall contain such information, shall be signed in such manner,
and shall (if the commissioner so requires by regulation or order) be verified in such manner, as the commissioner may by regulation or order require.
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Section § 31507
This law mandates that the commissioner must inspect each licensee at least once a year. The commissioner also has the authority to examine any licensee, their parent or subsidiary, any of their offices (whether in-state or out-of-state), and affiliates (excluding parents or subsidiaries) - but only concerning business they conduct with the licensee.
Moreover, directors, employees, and anyone with access to the records of the company or its affiliates must cooperate with these examinations and provide access to necessary documents. Additionally, for comprehensive examinations, the commissioner can hire professionals like accountants or attorneys, and the licensee must cover these costs within 10 days of billing.
(a)CA Financial Code § 31507(a) The commissioner shall examine each licensee not less frequently than once each calendar year.
(b)Copy CA Financial Code § 31507(b)
(1)Copy CA Financial Code § 31507(b)(1) The commissioner may at any time examine any licensee or any parent or subsidiary of a licensee.
(2)CA Financial Code § 31507(b)(2) The commissioner may at any time examine any office of any licensee within or outside of this state.
(3)CA Financial Code § 31507(b)(3) The commissioner
may at any time examine any affiliate of a licensee (other than a parent or subsidiary of the licensee) but only with respect to matters relating to transactions between the affiliate and the licensee.
(c)CA Financial Code § 31507(c) The directors, officers, and employees of any licensee or of any affiliate of a licensee being examined by the commissioner and any other person having custody of any of the books, accounts, or records of the licensee or affiliate shall exhibit to the commissioner, on request, any or all of the books, accounts, and other records of the licensee or affiliate and shall otherwise facilitate the examination so far as it may be in their power to do so. However, in the case of an examination of an affiliate of a licensee other than a parent or subsidiary of the licensee, only books, accounts, and records of the affiliate that relate to transactions between the affiliate and the licensee shall be subject to this subdivision.
(d)CA Financial Code § 31507(d) The commissioner may, if in his or her opinion it is necessary in the examination of any licensee or of any affiliate of a licensee, retain any certified public accountant, attorney, appraiser, or other person to assist him or her, and the licensee shall pay, within 10 days after receipt of a statement from the commissioner, the fees of that person.
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Section § 31508
This law requires licensees to get permission from the commissioner before allowing someone else to handle their financial records. If an outsider is managing these records, they must follow the same rules as the licensee. Similarly, if a non-affiliate manages the records of the licensee's affiliate, they must also follow the same regulations.
(a)CA Financial Code § 31508(a) No licensee shall, except with the prior approval of the commissioner, cause or permit any other person to make or keep any of its books, accounts, or other records.
(b)CA Financial Code § 31508(b) In case any person other than a licensee makes or keeps any of the books, accounts, or other records of such licensee, the provisions of this division and of any regulation or order issued under this division shall apply to such person with respect to the performance of such services and with respect to
such books, accounts, and other records to the same extent as if such person were such licensee.
(c)CA Financial Code § 31508(c) In case any person other than an affiliate of a licensee makes or keeps any of the books, accounts, or other records of such affiliate or, in the case of an affiliate other than a parent or subsidiary of the licensee, the books, accounts, and other records of the affiliate that relate to transactions between the affiliate and the licensee, the provisions of this division and of any regulation or order issued under this division shall apply to such person with respect to such books, accounts, and other records to the same extent as if such person were such affiliate.
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Section § 31509
This law allows the commissioner to make public any report that is submitted to them under the specified division, or according to any related regulation or order.
The commissioner may publish any report filed with him or her under this division or under any regulation or order issued under this division.
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