Financial Reporting and Ongoing Monitoring

Article 64A of Chapter 58 of the North Carolina General Statutes requires continuing care providers to submit periodic financial and actuarial reports to the North Carolina Department of Insurance to support ongoing financial monitoring and regulatory oversight.
These reporting requirements allow the Department to assess a provider’s financial condition, operating performance, liquidity, solvency, and long-term ability to meet continuing care and continuing care at home obligations.

Annual Audited Financial Statements

N.C. Gen. Stat. §§ 58-64A-195 and 58-64A-200

All continuing care providers must obtain an annual audit performed by an independent certified public accountant and file audited financial statements with the Commissioner within 150 days after the end of each fiscal year.

Audited financial statements must:

Be prepared in accordance with generally accepted accounting principles

Be comparative, presenting the most recent fiscal year and the immediately preceding fiscal year (unless the provider is filing audited financial statements for the first time)

Audited financial statements must include:

Independent auditor’s report
Balance sheet
Statement of operations
Statement of cash flows
Statement of changes in net assets or equity
Notes to the financial statements

Consolidated, Combined, or Stand-Alone Reporting

Depending on the provider’s organizational structure, audited financial statements must be prepared on a consolidated, combined, or stand-alone basis as required by statute and generally accepted accounting principles.

In all cases, audited financial statements must include supplemental schedules showing a statement of operations for each continuing care retirement community operated in this State.

If a provider is licensed to offer Continuing Care at Home, revenues and expenses related to that program must be reported separately from other operations.

Extension of Annual Audit Filing Deadline

The Commissioner may grant 30-day extensions of the audited financial statement filing deadline upon a showing of good cause.

Extension requests must be submitted in writing
Requests must be received at least 10 days before the filing due date
If an extension is granted for audited financial statements, a corresponding extension applies to the annual Disclosure Statement filing.

Quarterly Reporting

N.C. Gen. Stat. § 58-64A-205

Within 45 days after the end of each fiscal quarter, providers must file the following with the Commissioner:

Quarterly Unaudited Financial Statements

Balance sheet
Statement of operations
Statement of cash flows

Occupancy Reporting

Twelve-month daily average occupancy rates by living unit type

Governance and Organizational Notices

Written notice of:

Changes to board members or other governing body
Changes to the president, chief executive officer, or chief financial officer
Changes to organizational documents, including articles of incorporation or bylaws (copies must be submitted)

Actuarial Study Requirements

Providers must submit an actuarial study at least once every three years for:

Each continuing care retirement community operated in this State, and
Any Continuing Care at Home program offered by the provider

Actuarial studies must:

Be prepared in accordance with accepted actuarial standards of practice
Include an actuarial opinion addressing the provider’s ability to meet future obligations

If the actuary is unable to form an opinion, or if the opinion is adverse or qualified, the actuarial study must clearly explain the reasons.

The Commissioner may require actuarial studies to be submitted more frequently if necessary to assess a potential hazardous condition.

Certain limited-service providers may be exempt from the full actuarial study requirement but must submit actuarial projections as required by statute or the Commissioner.

Additional Reporting Required by the Commissioner

N.C. Gen. Stat. § 58-64A-215

If the Commissioner determines that additional information is necessary to monitor a provider’s financial condition or operations, or to protect the interests of residents or the public, the provider may be required to submit additional reports, including:

Monthly unaudited financial statements; or
Other financial data, statements, or information relating to:
- The provider
- Any obligated group of which the provider is a member
- A continuing care retirement community
- Related parties, where financial or contractual relationships are material

Important Note

Submission of required financial reports does not constitute approval or confirmation of financial condition. Providers remain responsible for maintaining compliance with all financial, actuarial, and operating requirements of Article 64A.

Questions

Questions regarding financial reporting and ongoing monitoring requirements should be directed to the Department’s Financial Oversight and Special Entities Division.

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