ARIZONA STATE SENATE
prearranged funeral trusts;
accounts, audits
(NOW: prearranged funeral
trust accounts; audits)
Requires funeral
establishments that offer prearranged funeral trusts to provide certified
public accountant (CPA) audited financial statements each year to the State
Banking Department.
Background
Current law requires the
Board of Funeral Directors and Embalmers (Board) and the State Banking Department
(Department) to enter into an intergovernmental agreement to examine and report
on prearranged funeral trust accounts of funeral establishments and to review
prearranged funeral trust sales and trust account forms and procedures used by
funeral establishments (A.R.S. 32-1391.01).
The examination requires the Department to establish certain facts, such
as the status of monies received under prearranged funeral trust agreements,
names and addresses of persons purchasing such trusts and whether a funeral
establishment is following recognized accounting procedures for such
trusts. Once the examination is
completed, the Department is responsible for forwarding a report to the Board.
Since funeral establishments
are not currently required to provide audited financial statements to either
the Board or the Department, the Department has expressed concern that it
cannot assess whether recognized accounting procedures are followed, nor can it
assess the financial condition of the funeral establishment in order to
determine its ability to meet future obligations under prearranged funeral
trusts. In addition, the Department has
expressed concern over the lack of enforcement with respect to investigations
and examinations of prearranged funeral trust accounts in violation.
S.B. 1289 addresses these
concerns by requiring an annual CPA audited financial statement from a funeral
establishment that offers prearranged funeral trusts be provided to the
Department and incorporated into the examination report. This requirement, according to the
Department, will allow it to receive assurance as to the accounting practices
employed by the establishment and to evaluate the financial condition of the
entity in order to make better recommendations to the Board regarding possible
corrective or enforcement actions, as authorized under S.B. 1289.
There is no anticipated
fiscal impact to the state general fund associated with this measure. If enacted, funeral establishments would be
required to pay the costs of the CPA audit and opinion under this measure.
1. Requires a funeral establishment that offers prearranged funeral trusts to provide annually, within 120 days of its fiscal year end, an audited financial statement prepared by a CPA for the establishment
2. Requires the audited financial statement to include the following:
·
an
examination of the establishment’s internal control structure over the
financial reporting and accounting of the prearranged funeral trust business.
·
any
reportable conditions of establishment’s internal control structure. Defines “reportable conditions.”
·
the
accountant’s opinion as to the statements’ accordance with generally accepted
accounting principles.
3. Stipulates that the audited financial statement will become part of the examination report.
4. Requires the funeral establishment to pay for the costs of the audit and opinion.
5. Requires the Department, if applicable, to recommend specific corrective or enforcement action to the Board to cure any deficiencies or violations found in the examination.
6. Makes a technical change.
7. Provides for a general effective date.
Amendments
Adopted by Committee
Adopted the strike everything amendment.
Senate Action
COM 2/21/01 DPA 6-0-0-0
3rd Read 3/5/01 28-1-1-0
Prepared by Senate Staff
March 5, 2001