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Indiana Code Title 26. Commercial Law § 26-3-7-6.1

Current as of January 02, 2024 | Updated by Findlaw Staff

Sec. 6.1. (a) A financial statement submitted under this chapter must comply with the following:

(1) Be prepared by an independent accountant certified under IC 25-2.1.

(2) Comply with generally accepted United States accounting principles.

(3) Be at a review level or audit level.

(4) Contain:

(A) an income statement;

(B) a balance sheet;

(C) a statement of cash flow;

(D) a statement of retained earnings;

(E) the preparer's notes;  and

(F) other information the agency requires.

(5) An aged accounts receivable listing detailing accounts that are ninety (90) days due, one hundred twenty (120) days due, and more than one hundred twenty (120) days due.

(6) A copy of the daily position record for the end of the licensee's fiscal year.

(b) If a person, an applicant, or a licensee is the subsidiary of a parent entity, and financial statements are not prepared by or for the person, applicant, or licensee in the ordinary course of business, the director may consider the following to be the equivalent of a review level or audit level financial statement, for purposes of this section:

(1) Either:

(A) a compilation level financial statement prepared in accordance with generally accepted United States accounting principles by an independent accountant certified under IC 25-2.1;  or

(B) an audited or review level financial statement of the parent entity, current as of its most recent fiscal year end, that is in full compliance with the requirements of this section.

(2) An unconditional guaranty of the parent entity in the form required by the agency, with a term of at least one (1) year, under which the parent entity agrees without condition to satisfy in full any and all existing and future monetary obligations of the person, applicant, or licensee covered by all applicable licenses covered under this chapter.

(c) Except as provided in subsection (e), for any particular person, applicant, or licensee, the director may consider the following documents and materials, taken together, to be the equivalent of a compilation level, review level, or audit level financial statement for purposes of this section after making the determination required under subsection (b):

(1) Copies of state and federal tax returns for the person, applicant, or licensee, for the two (2) years before the most recent fiscal year of the person, applicant, or licensee.

(2) Copies of state and federal tax returns for the principals, members, shareholders, or other owners of or stakeholders in the person, applicant, or licensee.

(3) Current reports or similar accounting documents showing all outstanding payables and receivables, with each due date and party, including contact information.

(4) A business plan covering the next five (5) fiscal years of the person, applicant, or licensee and signed by a principal, member, shareholder, owner, or executive or other officer of the person, applicant, or licensee.

(5) A proposed agreement between the person, applicant, or licensee and the agency, in the form required by the agency, where the person, applicant, or licensee agrees to use certain risk management practices, which the director determines are necessary or appropriate under the circumstances, to mitigate the risk of loss by the person, applicant, or licensee in the futures or options market.

(6) Other documents or materials as the director may by rule identify.

(d) If a financial statement is required under this chapter, a person, applicant, or licensee may submit the equivalent of a review level or audit level financial statement under subsection (b) or (c) if the person, applicant, or licensee obtains preapproval from the director before the financial statement is or would be required to be submitted under this chapter and complies with the following:

(1) At least forty-five (45) days before the financial statement is or would be required to be submitted under this chapter, the person, applicant, or licensee submits to the director a letter regarding the financial statement requirement that includes the following:

(A) Identifies the person, applicant, or licensee submitting the letter and each section of this chapter that the person, applicant, or licensee is or will be required to submit a financial statement.

(B) Encloses all the documents and materials required under subsection (b) or (c).

(C) A detailed explanation regarding why, under the particular circumstances, the director should consider all the documents and materials required under subsection (b) or (c), as submitted, to be the equivalent of a review level or audit level financial statement.

(D) States whether the person, applicant, or licensee is seeking to submit the documents and materials required under subsection (b) or (c) only once, in perpetuity, or for some other set period.

(E) Sets forth contact information for the person, applicant, or licensee.

(2) Upon receipt by the director of a letter under subdivision (1), the director shall do the following:

(A) Conduct a review of the letter and its enclosures, including contacting the person, applicant, or licensee if necessary and reviewing any other documents, information, or other materials already available to the director.

(B) Determine whether the enclosures should be considered to be the equivalent of a review level or audit level financial statement under the circumstances and for the reasons set forth in the letter.

(C) Issue a notice of financial statement determination to the person, applicant, or licensee that sets forth the director's determination under clause (B), that includes the reasons under subdivision (3), and whether the determination will apply only once, in perpetuity, or for another set period, as determined by the director.

(3) In reviewing the letter and its enclosures to make the determination under subdivision (2)(A) and (2)(B), the director shall consider the following:

(A) Whether the documents and materials required under subsection (b) or (c), as submitted by the particular person, applicant, or licensee, adequately supply the director and the agency with sufficient information regarding the person, applicant, or licensee for the agency to perform its statutory functions under this chapter with respect to the person, applicant, or licensee.

(B) Whether it would be reasonable and appropriate for the director to continue to accept the documents and materials required under subsection (b) or (c) from the person, applicant, or licensee, in perpetuity or for some other set period, including, the length of the guaranty required under subsection (b)(2).

(4) Any letter under subdivision (1) and any response under subdivisions (2) and (3), including the director's determination under subdivisions (2)(B) and (3), applies only to the person, applicant, or licensee that submitted the letter under subdivision (1).

(e) The director may not accept documents and materials listed in subsection (c) to be the equivalent of a review level or audit level financial statement from a person, an applicant, or a licensee if the person, applicant, or licensee offers:

(1) deferred pricing;

(2) delayed payments;  or

(3) contracts linked to the commodity futures or commodity options market in connection with grain purchases.

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Cite this article: FindLaw.com - Indiana Code Title 26. Commercial Law § 26-3-7-6.1 - last updated January 02, 2024 | https://codes.findlaw.com/in/title-26-commercial-law/in-code-sect-26-3-7-6-1/

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