§ 105.303. Reporting Procedures.

(a) The audited financial statements shall include:

(1) A statement of financial condition as of the audit date.

(2) A statement of income and expenses for the calendar year or other audit period.

(3) A statement of changes in financial position for the period covered by the statement of income and expenses.

(4) A statement or statements of stockholders' or shareholders' equity for the period covered by the statement of income and expenses describing the additions and reductions to the equity accounts.

(5) Adequate footnote disclosures, including disclosure of any adjustments reflected in the audited financial statements which are yet to be recorded in the association's books which are to be maintained as prescribed by Subchapter 1 of this Chapter.

(6) A reconciliation of income and expenses for the audit period and net worth as of the audit date with those amounts reported in SL 100 forms furnished to this Department.

Prior period figures of the statement of financial condition, the statement of income and expenses, and the statement of changes in financial position shall be included with the audited financial statements for comparative purposes. The Commissioner may waive the requirement for comparative figures upon receipt of a letter from the statutory auditor which satisfactorily explains the impracticality of including comparative figures.

(b) The audited financial statements shall be accompanied by the statutory auditor's report which shall be prepared in accordance with generally accepted auditing standards and Rule 58.1, Title 16, of the California Administrative Code. Except with the prior approval of the commissioner, an association will not be considered in compliance with Section 8750 of the law if the report of the statutory auditor expresses a qualified or adverse opinion or a disclaimer of opinion on the financial statements of the association, as such opinions are described in Rule 58.1, Title 16 of the California Administrative Code, and if the qualified or adverse opinion or the disclaimer of opinion can be deleted from the accountant's report either by adjustment of the financial statements by the association or by extension of auditing procedures by the statutory auditor. A qualified or adverse opinion or a disclaimer of opinion will be accepted by the commissioner if it results from a deferral of recognition of the gain or loss on the sale, exchange, or other disposition of real estate loans, manufactured home chattel paper, securities, redeemable ground-rent leases or redeemable preferred stock in accordance with the authority in Section 105.102.

(c) The auditor's report shall include a statement that the requirements of Section 105.303 have been met by his audit and that he has complied with the provisions of Section 105.302 concerning independence.

(d) The auditor's report shall include a statement that the accountant has taken into consideration the recommendations in the latest edition of the publication “Audits of Savings and Loan Associations” published by the American Institute of Certified Public Accountants.

(e) When the Commissioner has requested additional information, the statutory auditor shall prepare a supplemental report, bound separately from the statutory audit report, responding to the Commissioner's request.

(f) Based upon information coming to his attention in the conduct of the statutory audit, including his review of the system of internal check and control, the statutory auditor shall prepare a separate letter report to the board of directors of the association covering:

(1) A report in compliance with generally accepted auditing standards on internal control.

(2) Any infractions of or noncompliance with the Savings and Loan Association Law and regulations having accounting significance which could have a material effect on the financial position or results of operations.

(3) Any indications that the internally prepared financial reports are not reviewed and approved by the board of directors on a reasonably frequent periodic basis or that the contents of such financial reports, including projections, are insufficient or inadequate to provide a proper basis for review and decision by the board of directors.

(4) Any other matters which in the auditor's opinion may be appropriate such as any significant deficiencies in accounting procedures or in the system of internal check and control which have been determined not practicable for corrective action or which have previously been corrected by management.

HISTORY

1. Change without regulatory effect renumbering former Section 163 to Section 105.303 (Register 87, No. 14). For prior history, see Register 82, No. 43.

Note

Note: Authority cited: Sections 5255, 8751 and 8753, Financial Code. Reference: Sections 8750-8753 and 8755, Financial Code.