16-310.   Same; audit of accounts or trusts by secretary of state;redeposit of improperly paid moneys; actions by attorney general; fundsheld under agreements not subject to legal process; notice of intent tosell and engage in agreements; obstructing or refusing to submit toexamination; audit fee.(a) The secretary of state, or the secretary'srepresentative, shall auditin accordance with this subsection allaccounts or trusts of each prearranged funeral agreement, plan or contractentered into pursuant to K.S.A. 16-301 et seq., and amendments thereto.Audits under this section shall be conducted on a random basis and notmore than 25 audits shall be conducted during any one calendar year, exceptthat the secretary of state may conduct an audit under this section at any timeupon receipt of a complaint.For such purposes, the secretary of state or the secretary'srepresentativeis authorized to administer oaths and to examine under oath the directors,officers, employees and agents of any seller of personal property orfuneral or burial merchandise. Such examination may be reduced to writingby the person taking it and the examiner may make findings as to thecondition of each account or trust examined. Accounting records andinformation required by this section shall be maintained in a formatapproved by the secretary of state. For the purposes of suchaudits, thesecretary of state may require any person or officer of apartnership,association, firm or corporation who sells such merchandise to furnish andsubmit the books, records, papers and instruments of such partnership,association, firm or corporation for examination.

      (b)   In the event the secretary of statedetermines that moneys have beenimproperly obtained from the account or trust by the seller of personalproperty or funeral or burial merchandise during the period covered by theaudit, then the secretary of state may order the seller of personalproperty orfuneral or burial merchandise to redeposit to the account or trust suchmoneys improperly withdrawn within 30 days.

      (c)   The attorney general, at the request of the secretary of state, mayinitiate an action to recover payments required to be redeposited to theaccount or trust under subsection (b), or to recover other moneys receivedor disbursed in violation of this act. In addition, the attorney generalmay seek to enjoin any violation of this act.

      (d)   In the absence of fraud, all funds held in an account or trustestablished pursuant to a prearranged funeral agreement, plan or contractshall not be subject to attachment, garnishment or other legal process,nor be seized, taken, appropriated or applied to pay any debt or liabilityof the seller of personal property or funeral or burial merchandise, buyeror beneficiary, by any legal or equitable process or by operation of law.

      (e)   No person, partnership, association, firm or corporation shall enterinto any prearranged funeral agreement, plan or contract until such person,partnership, association, firm or corporation has filed with the secretaryof state a notification of its intention to selland engage in suchprearranged agreements, plans or contracts. Such notice shall include thename of the person, partnership, association, firm or corporation, itsprincipal place of business and the name and address of the bank or savingsand loan association, trustee or trustees to be utilized under theprovisions of this section.

      (f)   Whenever any person, partnership, association, firm or corporationrefuses to submit the books, records, papers and instruments to theexamination and inspection of the secretary of state, or of any of thesecretary's representatives, or in any manner obstruct orinterfere withthe examination or audit authorized by this section, or refuse to beexamined under oath concerning any of the affairs of its prearrangedfuneral agreements, plans or contracts, the secretary of statemay requestthe attorney general to institute proceedings for the appointment of areceiver for such person, partnership, association, firm or corporation.

      (g)   Any person, partnership, association, firm or corporation whichrefuses or neglects to comply with the requirements of this act for aperiod of 90 days after demand to do so is made upon it by the secretary ofstate shall be subject to the penaltiesprovided in K.S.A. 16-305, andamendments thereto. The attorney general, upon the request of the secretaryof state, shall then begin an action for the appointment of areceiver for suchperson, partnership, association, firm or corporation and to dissolve the same.

      (h)   Whenever an audit is made pursuant to this section, the person,partnership, association, firm or corporation so audited shall pay to the secretary of state suchexpenses relating to the audit as assessed by the secretary of state pursuantto K.S.A. 75-442 and amendments thereto.

      History:   L. 1987, ch. 77, § 2; L. 1988, ch. 94, § 3; L. 1989,ch. 48, § 74;L. 1992, ch. 172, § 1; July 1.