LR INFORMATION 1 REQUIREMENT FOR FINANCIAL STATEMENTS To Comply

lr information 1. requirement for financial statements to comply with r4-39-108 updated: november 2009 arizona revised statute section

LR INFORMATION 1. REQUIREMENT FOR FINANCIAL STATEMENTS
To comply with R4-39-108
Updated: November 2009
Arizona Revised Statute Section 32-3021.B.3 states that the
educational entity must be financially responsible. In order for the
State Board to assess the financial condition of an education entity,
this Board requires that an applicant for private postsecondary
education license must submit financial information that accurately
reflects the financial condition of the educational entity and its
ownership.
The burden of proving financial responsibility lies with the
applicant. Applicants are encouraged to submit any information that
will help the Board understand the financial position of the entity or
its owners.
All historical financial statement presentations submitted must be:
1.
Reported on by an independent, certified public accountant
currently licensed by the Arizona State Board of Accountancy or by
the accountancy board in the state of the applicant’s or license’s
headquarters.
2.
Financial statements that are prepared and compiled, reviewed or
audited in accordance with generally accepted accounting
principals. Disclosures/Footnotes and Statement of Cash Flows are
required.
3.
If audited, the audit must be conducted in accordance with the
auditing standards generally accepted in the United States. The
compilation and review must be conducted in accordance with
Statements on Standards for Accounting and Review Services issued
by the American Institute of Certified Public Accountants, to
include the disclosures/footnotes and Statement of Cash Flows.
4.
Additional financial information if required by the Board under
R4-39-108(F).
The following is the minimum financial information that must be
submitted for the following type of entities:
Sole Proprietorship:
====================
1.
A current (not more than six months old) Statement of Financial
Condition of the owner of the education entity.
2.
For an existing educational entity: a set of historical financial
statements (i.e. statement of financial condition, statement of
activities/income with appropriate footnotes and statement of cash
flows that are not more than six months old) for the past fiscal
year.
3.
A detailed, 2-year forecast of activities/income for the
educational entity seeking licensure.
Partnerships:
1.
A current (not more than six months old) Statement of Financial
Condition for each partner having ownership.
2.
For an existing educational entity: a set of historical financial
statements (i.e. statement of financial condition, statement of
activities/income with appropriate footnotes and statement of cash
flows that are not more than six months old) for the past fiscal
year.
3.
A detailed, 2-year forecast of activities/income for the education
entity seeking licensure.
Corporations:
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A. Privately Held Corporations, Limited Liability Corporations,
Limited Liability
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Partnerships:
-------------
1.
Submit the most recent audited, reviewed or compiled financial
statement of the educational entity seeking licensure. The
statements must include a statement of financial condition,
statement of activities/income and statement of cash flows
reported on by a CPA with appropriate footnotes.
2.
If the owners want the board to consider their personal finances
in evaluating the overall financial strength of the entity, the
owners must submit a letter committing their personal finances
to support the institution and a Statement of Financial
Condition for each owner with 20% or greater ownership interest.
A Statement of Financial Condition is required for all 20% or
greater owners of newly formed entities.
3.
If the financial statements are more than six months old, the
institution is required to submit the most current in-house
financial statements.
4.
If another corporation owns the entity seeking licensure,
include the most current financial statement of the senior
parent corporation.
5.
A detailed, 2-year forecast of income/activities for the
educational entity seeking licensure.
B.
Publicly traded Corporations:
1.
Submit the most recent audited financial statement of the
educational entity seeking licensure. The statements must
include a statement of financial condition, statement of
activities/income and statement of cash flows reported on by a
CPA with appropriate footnotes.
2.
If the financial statements are more than six months old, the
institution is required to submit the most current in-house
financial statements. If another corporation owns the entity
seeking licensure, also include the most current financial
statements of the senior parent corporation
3.
A detailed, 2-year forecast of income/activities for the
educational entity seeking licensure.
C.
Non-profit Corporations:
1.
Submit the most recent audited financial statement on the
educational entity seeking licensure. The statements must
include a statement of financial condition, statement of
activities/income and statement of cash flows reported on by a
CPA with appropriate footnotes.
2.
If the financial statements are more than six months old, the
institution is required to submit the most current in-house
financial statements. If another corporation owns the entity
seeking licensure, also include the most current financial
statement of the senior parent corporation.
3.
A detailed, 2-year forecast of income/activities for the
education entity seeking licensure.