Md. Code Regs. 09.34.01.06 - Business Application-Financial Stability
A. The following are the categories of
cemeteries and burial goods businesses for purposes of determining financial
stability:
(1) A for-profit cemetery or a
cemetery which sells burial goods making initial application;
(2) A nonprofit cemetery which does not sell
burial goods making initial or renewal application;
(3) A for-profit cemetery or a cemetery which
sells burial goods applying for renewal of permit;
(4) A burial goods business or new burial
goods business making initial application, or existing burial goods business
applying for renewal;
(5) A new
cemetery which sells burial goods or new cemetery which does not sell burial
goods; and
(6) A cemetery which no
longer sells goods or space and in which an average of five or fewer interments
have occurred within the past 3 fiscal years.
B. To determine financial stability of each
category of affiliated cemetery or burial goods business, the responsible party
shall:
(1) Submit an application on a form
supplied by the Director;
(2) Be in
good standing with the Maryland Department of Assessments and Taxation or have
an equivalent status, as determined by the Director;
(3) Submit any additional documentation
required as set forth in §§C-H of this regulation; and
(4) If the applicant is a cemetery, state
whether the cemetery is organized as a for-profit or nonprofit operation and
whether it sells burial goods.
C. The responsible party for a cemetery
described in §A(1) of this regulation shall submit:
(1) A balance sheet; and
(2) A review by a certified public accountant
retained by the affiliated cemetery, prepared in accordance with generally
accepted accounting principles, as to the financial stability of the
cemetery.
D. The
responsible party for a cemetery described in §A(2) of this regulation
shall submit an affidavit which states that the cemetery does not sell burial
goods and has nonprofit status.
E.
The responsible party for a cemetery in §A(3) of this regulation shall
submit:
(1) A comparative balance sheet;
and
(2) A review by a certified
public accountant retained by the affiliated cemetery, prepared in accordance
with accepted accounting principles, as to the financial stability of the
cemetery.
F. The
responsible party for a burial goods business in §A(4) of this regulation
shall submit the documents required by §B(1) and (2) of this
regulation.
G. Development Stage
Enterprise Financial Sheet.
(1) The
responsible party for a cemetery described in §A(5) of this regulation
shall submit a development stage enterprise financial sheet, prepared in
accordance with generally accepted accounting principles, by a certified public
accountant retained by the affiliated cemetery.
(2) If the certified public accountant
retained by the affiliated cemetery has substantial doubt about the reporting
entity's ability to continue in business beyond 1 year from the development
stage enterprise financial sheet, the certified public accountant shall
specifically reference this concern in the development stage enterprise
financial sheet.
H. The
responsible party for a cemetery described in §A(6) of this regulation
shall submit an affidavit stating that the cemetery no longer sells space or
goods and that there has been an average of five or fewer interments per year
in the past 3 fiscal years.
I. The
balance sheet and the comparative balance sheet in this regulation shall
include:
(1) Note disclosures which, if
applicable to the affiliated cemetery or burial goods business, shall include:
(a) A description of how cemetery roadways,
garden features, and other features of the cemetery are accounted for, whether
as fixed assets and depreciated, or as cost of the grave space inventory and
part of cost of sales as spaces are sold,
(b) The method of providing for allowance for
cancellations on installment contracts,
(c) The method of accounting for developed
burial gardens, constructed mausoleum crypt or niche inventories, and related
cost of sales,
(d) Receivables sold
with recourse,
(e) The method of
accounting for preconstruction sales of burial gardens, mausoleum crypts, or
niche spaces,
(f) A description of
how the obligation for undelivered merchandise sold as preneed is accounted
for,
(g) The method of recognizing
preneed sales of services and related costs,
(h) The nature and amount of any perpetual
care assets included in the classified balance sheet, which may or may not be
in accordance with generally accepted accounting principles,
(i) The existence and nature of any
nonstatutory trust funds,
(j) Loans
or other amounts receivable from, or payable to, merchandise and service trust
funds or perpetual care trust funds not otherwise reported on the face of the
classified balance sheet or in the supplementary information, and
(k) A description of loans or other amounts
receivable from, or payable to, shareholders, directors, trustees, or officers;
and
(2) Supplementary
information which, if applicable to the affiliated cemetery or burial goods
business, shall include:
(a) Amounts of
installment contracts receivable for which customer payments are more than 120
days beyond their scheduled payment dates and the dollar amounts that are
beyond the 120 days, and
(b)
Details of liabilities due upon collection of final payment on installment
contracts receivable.
J. The balance sheet and comparative balance
sheet, related note disclosures, and supplementary information submitted to the
Office shall be that of the most recently ended fiscal year of the affiliated
cemetery. The comparative balance sheet shall also include a comparison with
the statements submitted for the reported fiscal year in the previous
application.
K. If the certified
public accountant has substantial doubt about the reporting entity's ability to
continue in business beyond 1 year from the balance sheet date, the certified
public accountant shall specifically reference this concern in the review
report or related note disclosures, or both.
L. If the cemetery or burial goods business
is owned by a publicly traded company, or is owned by a company or individual
that normally reports its financial statements on a consolidated basis, the
balance sheet may be prepared on a combined basis for all of its cemeteries or
burial goods businesses located in Maryland, only if the publicly traded
company, company, or individual that owns multiple cemeteries or burial goods
businesses guarantees its obligations to consumers among all of its Maryland
properties or businesses that are included in the combined report.
M. The Office may waive the financial
stability requirement of this regulation only if the affiliated cemetery or
burial goods business has fulfilled the financial stability requirements of
this regulation within the past 2 years.
Notes
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