DBO – Annual report pursuant to California Financial Code section 17406
The provisions of California Financial Code section 17406 require that each escrow agent licensee submit to the Commissioner of the Department of Business Oversight (Department), on or before 105 days after the close of its fiscal year, an annual report prepared by an independent certified public accountant (CPA) or an independent public accountant. The annual report includes audited financial statements and required supplemental information. The Department’s records show that your fiscal year ends on March 31, 2017. Your annual report must be received by the Department no later than July 17, 2017.
The penalties for failure to file the annual report by the due date of July 17, 2017 or failure to include any matter required in the annual report is $100 per day for the first five days the report is overdue and $500 per day thereafter for each day the report is overdue in accordance with the provisions of California Financial Code section 17408. Failure to file the report within ten days from the due date or failure to include any matter required in the report may also result in the suspension or revocation of the escrow agent’s license in accordance with provisions of California Financial Code section 17602.5 and/or prompt an immediate examination.
Please refer to the instructions regarding the preparation of the annual report. It is important that your accountant becomes familiar with the requirements of California Financial Code section 17406 and California Code of Regulations section 1741.5 prior to the commencement of the audit. Your CPA must submit a copy of the audited financial statements and the required supplemental information directly to the Department at the same time the annual report is provided to you. The annual report submitted to the Department must be accompanied by a cover letter on the CPA’s letterhead.
The Summary of Personnel form LF 596 must be completed for each licensed location. If your company has a Time Certificate of Deposit (TCD) for liquidity purposes, your bank must provide the TCD form EL 323A on their letterhead. The original TCD letter provided by your bank must be submitted to the Department with your report. If you have a payable to a stockholder, officer, or director, please submit the Subordination Agreement form EL 336 fully executed with a copy of the note.
Please have your CPA submit the annual report to Sultanna Wan, Senior Examiner (Specialist), at 320 West Fourth Street, Suite 750, Los Angeles, CA 90013.
If you have any questions on the attached forms, please call Paul Liang at the number below.
JAN LYNN OWEN
Commissioner of Business Oversight
Specialist, Escrow Law