Section 12313 - Financial Statements and Reporting Requirements(a) Each licensee must prepare financial statements covering all financial activities of that cardroom business licensee or TPPPS business licensee, as applicable, for each fiscal year, in accordance with generally accepted accounting principles, unless otherwise provided in this section. If a cardroom owner type licensee owns or operates lodging, food, beverage, or any other non-gambling operation at the gambling establishment, the financial statements must reflect the results of the gambling operation separately from those non-gambling operations. (1) A Group I licensee must engage an independent accountant licensed by the California Board of Accountancy to audit the Group I licensee's annual financial statements in accordance with generally accepted auditing standards.(2) A Group II licensee must engage an independent accountant licensed by the California Board of Accountancy to, at a minimum, review the Group II licensee's annual financial statements in accordance with standards for accounting and review services or with currently applicable professional accounting standards. The Group II licensee may elect to engage an independent accountant licensed by the California Board of Accountancy to audit the annual financial statements in accordance with generally accepted auditing standards.(3) A Group III licensee must prepare financial statements including, at a minimum, a statement of financial position, a statement of income or statement of operations, and disclosure in the form of notes to the financial statements. If the Group III licensee is unable to produce the financial statements, it must engage an independent accountant licensed by the California Board of Accountancy to perform a compilation of the Group III licensee's annual financial statements in accordance with standards for accounting and review services or with currently applicable professional accounting standards, including full disclosure in the form of notes to the financial statements. The Group III licensee may elect to engage an independent accountant licensed by the California Board of Accountancy to compile or perform a review of the Group III licensee's annual financial statements in accordance with standards for accounting and review services, or to audit the annual financial statements in accordance with generally accepted auditing standards.(4)(A) A Group IV licensee must prepare financial statements that include, at a minimum, a statement of financial position and a statement of income or statement of operations. If the Group IV licensee is unable to produce the financial statements, it must do one of the following: 1. Engage an independent accountant licensed by the California Board of Accountancy to perform a compilation of the Group IV licensee's annual financial statements in accordance with standards for accounting and review services or with currently applicable professional accounting standards. Management may elect not to provide footnote disclosures as would otherwise be required by generally accepted accounting principles.2. Submit to the Bureau, no later than 120 calendar days following the end of the year covered by the federal income tax return, copies of the Group IV licensee's complete, signed, and duly filed federal income tax return for the tax year in lieu of the financial statements as otherwise required under this section.(B) The Group IV licensee may elect to engage an independent accountant licensed by the California Board of Accountancy to compile or review the Group IV licensee's financial statements in accordance with standards for accounting and review services, or to audit the financial statements in accordance with generally accepted auditing standards.(b) The Bureau may require a Group II, III, or IV licensee to engage an independent accountant licensed by the California Board of Accountancy to compile or review the licensee's financial statements in accordance with standards for accounting and review services, or to audit the financial statements in accordance with generally accepted auditing standards, if there are concerns about the licensee's operation or financial reporting, including but not limited to:(1) Inadequate internal control procedures;(2) Insufficient financial disclosure;(3) Material misstatement in financial reporting;(4) Inadequate maintenance of financial data; or(5) Irregularities noted during an investigation.(c) Unless otherwise provided in this section, a licensee must submit copies of the annual financial statements with the independent auditor's or accountant's report issued to meet the requirements under this section, to the Bureau and the Commission no later than 120 calendar days following the end of the fiscal year covered by the financial statements. If a management letter is issued, a copy of the management letter must also be submitted to the Bureau, including the licensee's reply to the management letter, if any.(d) The Bureau or Commission may request additional information and documents from either the licensee or the licensee's independent accountant, regarding the annual financial statements or the services performed by the accountant.(e) The Bureau or Commission may require the licensee to engage an independent accountant licensed by the California Board of Accountancy to perform a fraud audit in the event that fraud or illegal acts are suspected by the Bureau or Commission.Cal. Code Regs. Tit. 4, § 12313
1. New section filed 2-2-2015; operative 7-1-2015 pursuant to Government Code section 11343.4(b)(2) (Register 2015, No. 6).
2. Governor Newsom issued Executive Order N-40-20 (2019 CA EO 40-20), dated March 30, 2020, which extended certain financial reporting deadlines for gambling businesses, due to the COVID-19 pandemic.
3. Governor Newsom issued Executive Order N-83-20 (2019 CA EO 83-20), dated October 28, 2020, which withdrew and superseded certain provisions from Executive Orders N-40-20 and N-71-20, relating to deadlines to complete annual financial reports and audited reports, due to the COVID-19 pandemic.
4. Amendment filed 12-12-2020; operative 1-1-2021 pursuant to Government Code section 11343.4(b) (Register 2020, No. 51). Filing deadline specified in Government Code section 11349.3(a) extended 60 calendar days pursuant to Executive Order N-40-20.
5. Amendment of subsection (c) and amendment of NOTE filed 3-11-2021 as an emergency; operative 3-11-2021 (Register 2021, No. 11). Emergency filed 3-11-2021 extended 60 calendar days pursuant to Executive Order N-40-20 and an additional 60 calendar days pursuant to Executive Order N-71-20. A Certificate of Compliance must be transmitted to OAL by 1-7-2022 or emergency language will be repealed by operation of law on the following day.
6. Reinstatement of section as it existed prior to 3-11-2021 emergency amendment by operation of Government Code section 11346.1(f) (Register 2022, No. 5). Note: Authority cited: Sections 19811, 19823, 19824, 19840, 19841, 19853 and 19984, Business and Professions Code. Reference: Sections 19841, 19857 and 19984, Business and Professions Code.
1. New section filed 2-2-2015; operative 7-1-2015 pursuant to Government Code section 11343.4(b)(2)(Register 2015, No. 6).
2. Governor Newsom issued Executive Order N-40-20 (2019 CA EO 40-20), dated March 30, 2020, which extended certain financial reporting deadlines for gambling businesses, due to the COVID-19 pandemic.
3. Governor Newsom issued Executive Order N-83-20 (2019 CA EO 83-20), dated October 28, 2020, which withdrew and superseded certain provisions from Executive Orders N-40-20 and N-71-20, relating to deadlines to complete annual financial reports and audited reports, due to the COVID-19 pandemic.
4. Amendment filed 12-12-2020; operative 1/1/2021 pursuant to Government Code section 11343.4(b) (Register 2020, No. 51). Filing deadline specified in Government Code section 11349.3(a) extended 60 calendar days pursuant to Executive Order N-40-20.
5. Amendment of subsection (c) and amendment of Note filed 3-11-2021 as an emergency; operative 3/11/2021 (Register 2021, No. 11). Emergency filed 3-11-2021 extended 60 calendar days pursuant to Executive Order N-40-20 and an additional 60 calendar days pursuant to Executive Order N-71-20. A Certificate of Compliance must be transmitted to OAL by 1-7-2022 or emergency language will be repealed by operation of law on the following day.