Section 310.111.2 - Financial Statement(a) Financial Statements required to be filed by these rules or by any official form of the Department shall be prepared in accordance with generally accepted accounting principles. Financial statements should be audited by either an independent certified public accountant or independent public accountant, except where the particular form or this Section permits the use of unaudited statements for interim periods or generally.(b) The financial statements required to be filed by a franchiser refer to a balance sheet as of a date within 90 days prior to the date of the application, and profit and loss statements for each of the three fiscal years preceding the date of the balance sheet and for the period, if any, between the close of the last fiscal year and the date of the balance sheet. The balance sheet as of a date within 90 days prior to the date of the application need not be audited. However, if this balance sheet is not audited, there shall be filed in addition an audited balance sheet as of the end of the franchiser's last fiscal year unless such last fiscal year ended within 90 days of the date of the application in which case there shall be filed an audited balance sheet as of the end of the franchiser's next preceding fiscal year. The profit and loss statements shall be audited up to the date of the last audited balance sheet filed, if any.(c) Where a franchiser owns directly or indirectly more than 50% of the outstanding voting securities of any other corporation, the financial statements required to be filed should normally reflect on a consolidated basis the financial condition of the franchiser and each of its subsidiaries.(d) In extraordinary cases the Commissioner may waive the requirement for audited statements if the statements have been prepared by an independent certified public accountant or independent public accountant and the Commissioner is otherwise satisfied as to the reliability of such statements and as to the ability of the franchiser to perform future commitments. Such waiver will ordinarily be granted only upon a showing that the franchiser has not had prior audited statements; that the close of the most recent or current fiscal year is so near the time of filing of the application that it would be unreasonably costly or impractical to provide audited statements with the application; and that audited statements will be furnished within a reasonable time after the end of the most recent or current fiscal year. In such cases the Commissioner may impose an impound condition and such other conditions and restrictions as in his discretion may be appropriate.(e) The use of unaudited financial statements as provided herein does not relieve the applicant or any person from any liability for false and misleading statements contained in such financial statements.Cal. Code Regs. Tit. 10, § 310.111.2
1. Renumbering of Section 310.111.4 to Section 310.111.2 filed 11-21-79; designated effective 1-1-80 (Register 79, No. 47).
2. Amendment filed 10-28-82; effective thirtieth day thereafter (Register 82, No. 44). Note: Authority cited: Section 31502, Corporations Code. Reference: Section 31111, Corporations Code.
1. Renumbering of Section 310.111.4 to Section 310.111.2 filed 11-21-79; designated effective 1-1-80 (Register 79, No. 47).
2. Amendment filed 10-28-82; effective thirtieth day thereafter (Register 82, No. 44).