N.Y. PML Law § 240 — New York Code / Act PML / Article 2 / Section 240
Yearly audit
Status: in_force

§ 240. Yearly audit. 1. The franchised corporation shall, at its own\nexpense, cause its annual financial statements to be audited in\naccordance with generally accepted auditing standards by a qualified\nindependent certified public accountant approved by the franchise\noversight board. The annual financial statements shall be prepared on a\ncomparative basis for the current and prior fiscal year and shall\npresent the financial position and results of operations in conformity\nwith generally accepted accounting principles. Three manually-signed\ncopies of the audited financial statements, together with the report\nthereon of the franchised corporation's independent certified public\naccountant shall be filed: one with the franchise oversight board, one\nwith such franchised corporation and one with the office of the attorney\ngeneral, not later than ninety days following the end of the fiscal\nyear. All such annual financial statements and yearly audits shall be\nsubject to audit by the state comptroller and shall be public records.\n  2. The franchised corporation shall require the independent certified\npublic accountant to render the following additional reports:\n  a. a report on material weakness in accounting, internal controls, and\nbusiness and management practices discovered in the ordinary course of\npreparing such audited financial statements. Whenever in the opinion of\nthe independent certified public accountant there exists no material\nweaknesses in accounting, internal controls and business and management\npractices, no report shall be required; and\n  b. a report expressing the opinion of the independent certified public\naccountant that based on his or her examination of the financial\nstatements the franchised corporation has followed, in all material\nrespects, during the period covered by his or her examination, the\nsystem of accounting and internal control as filed with the franchise\noversight board. Whenever in the opinion of the independent certified\npublic accountant the franchised corporation has deviated from the\nsystem of accounting and internal controls filed with the franchise\noversight board or the accounts, records, and control procedures\nexamined are not maintained by the franchised corporation in accordance\nwith generally accepted accounting standards the report shall enumerate\nsuch deviations. The independent certified public accountant shall also\nreport on areas of the system no longer considered effective, and shall\nmake recommendations in writing regarding improvements in the system of\naccounting and internal controls.\n  3. If the independent certified public accountant who was previously\nengaged to audit the franchised corporation's financial statements\nresigns or is dismissed as the franchised corporation's auditor, or\nanother independent certified public accountant is engaged as auditor,\nthe franchised corporation shall file a report with the franchise\noversight board within ten days following the end of the month in which\nsuch event occurs, setting forth the following:\n  a. the date of such resignation, dismissal, or engagement;\n  b. whether in connection with the audits of the two most recent years\npreceding such resignation, dismissal, or engagement there were any\ndisagreements with the former accountant on any matter of accounting\nprinciples or practices, financial statement disclosure, or auditing\nscope or procedure, which disagreements if not resolved to the\nsatisfaction of the former accountant would have caused such accountant\nto make reference in connection with such accountant's report to the\nsubject matter of the disagreement; including a description of each such\ndisagreement. The disagreements to be reported include those resolved\nand those not resolved; and\n  c. whether the former accountant's report on the financial statements\nfor any of the past two years contained an adverse opinion or disclaimer\nof opinion or was qualified. The nature of such adverse opinion,\ndisclaimer of opinion, or qualification shall be described.\n  4. Upon direction of the franchise oversight board, the franchised\ncorporation shall, at its own expense, cause its business and managerial\npractices to be audited.\n