§449-15  Audited statements.  (a)  Each
escrow depository, at its own expense, shall submit to the commissioner within
ninety days after the close of its fiscal year its annual financial statements
accompanied by a report of an independent certified public accountant who has
prepared or examined those statements.  For good cause, the commissioner may
grant a licensee an extension of an additional thirty days to file the reports
required by this section.



(b)  The audited financial statements shall be
prepared in accordance with generally accepted accounting principles and the
examination by the independent certified public accountant shall be performed
in accordance with generally accepted auditing standards.  The financial
statements and the independent certified public accountant's report shall
include but not be limited to the following:



(1)  An unqualified opinion on the fair presentation
of the financial statements taken as a whole.  To the extent that this is not
possible, then a detailed footnote explaining the reason why an unqualified
opinion could not be given shall suffice;



(2)  A direct verification of escrow funds and escrow
liabilities.  If less than a one hundred per cent verification is performed,
there shall be a separate letter from the independent certified public
accountant indicating:  the number of accounts verified; the percentage of the
verification; the basis for determining the sample size; the method used in
selecting the sample items to verify; a description of the sampling technique
used; the discrepancies noted; and how the discrepancies were resolved;



(3)  Footnotes to the audited financial statement
showing the escrow funds and escrow liabilities and, to the extent that these
amounts differ, a reconciliation of the amounts; and



(4)  A statement as to whether the escrow depository
is in compliance with this chapter.  If the independent certified public
accountant reports any incident involving noncompliance, the statement shall
address whether the noncompliance may have a material adverse impact on the
ongoing operations of the company.



(c)  Except with the written approval of the
commissioner, an escrow depository shall not be deemed in compliance with this
section if the independent certified public accountant expresses a qualified or
adverse opinion or a disclaimer of opinion.  A request for approval shall be
filed by the escrow depository concurrently with the filing of the audited
financial statements and the independent certified public accountant's report. 
The request shall be in letter form and shall contain the arguments as to why
the audited financial statements and the independent certified public
accountant's report should be considered acceptable.  Failure to comply with
this section shall be grounds for the suspension or revocation of the escrow
depository's license in accordance with section 449-17.  Failure to comply with
this section shall authorize the commissioner to order an independent audit at
the expense of the escrow depository.



(d)  Failure to furnish any report or
information as and when required under this section shall be grounds for the
commissioner to impose an administrative penalty of $200 per day for each day
that the audit is overdue.  In addition, if the report or information is not
filed within thirty days of the required deadline, the commissioner may
prohibit the escrow depository from accepting new business until the report or
information is filed. [L 1967, c 144, pt of §1; HRS §449-15; am L 1985, c 269,
§50; am L 1989, c 248, §1; am L 1992, c 205, §14]