Required Annual Financial Statements for Licensed Private Career Schools (LPCS) and English As A Second Language (ESL) Schools
Annual financial statements and statistical reports are used for the purposes of school licensure, establishing fees or assessments pursuant to the New York Education Law (Education Law) as well as to document a school's financial viability
Previously, under the Commissioner’s regulations, ESL schools were permitted to submit audited or reviewed statements of revenue. Now, however, the financial reporting requirements for ESL and LPCS schools are the same, under new regulations set forth at 8 NYCRR § 126.8(e), effective September 29, 2021. The following table summarizes the financial statement reporting mandates listed in the Education Law and Commissioner's Regulations for LPCS and ESL schools:
Type of Statement
Criteria for Determining Type of Statement
Audited Financial Statement
Prepared in accordance with Generally Accepted Accounting Principles (GAAP)
Can be used for all schools but must be used for schools which meet the following requirements:
Unaudited/Reviewed Financial Statement
Prepared in accordance with Generally Accepted Accounting Principles (GAAP)
Can only be used for schools which have:
1. Gross tuition income less than $500,000 or
2. Combined Federal and State student financial aid is less than $100,000 in a school fiscal year and
3. Filed an audited financial statement for the previous fiscal year (unless the school’s license or certification is due for renewal, in which case an audited financial statement must be provided for the prior fiscal year).
The Commissioner’s regulation §126.1(w) defines an audited financial statement to mean “a financial statement prepared by a licensed public accountant or a certified public accountant in accordance with generally accepted accounting principles issued by the American Institute of Certified Public Accountants.”
The Commissioner’s regulation §126.1(u) defines a reviewed financial statement to mean “a financial statement reported in accordance with standards established by the American Institute of Certified Public Accountants and conducted by a licensed public accountant or a certified public accountant.”
If BPSS determines that an LPCS or ESL school has submitted false or inaccurate statements or that a significant, unsubstantiated decline in gross tuition has occurred, the Commissioner may require the school to file an audited financial statement even during alternate years when an unaudited reviewed financial statement would ordinarily be allowed.
Financial Reporting Deadline Date
Previously, July 1st was the annual deadline by which all LPCS and certified ESL schools were required to submit annual financial statements for their most recently completed fiscal year. However, new regulations set forth at § 126.8(e)(3)(iii), which became effective on September 29, 2021, now require that this submission be made no later than 120 days after a school’s fiscal year end date. The commissioner may extend this deadline for up to 60 days for good cause shown, as determined by the commissioner.
Thus, all schools are required to submit annual financial statements according to the following deadlines:
- Schools with a fiscal year end date of December 31st shall submit their required annual financial statement on or before May 1st (120 days after the fiscal year end date of December 31st).
- Schools with a fiscal year end date on or after January 1 shall submit their required annual financial statement for the school’s most recently completed fiscal year no later than 120 days after their fiscal year end date. For example:
- Schools with a fiscal year end date of March 31, 2022 shall submit their required annual financial statements for the fiscal year ending March 31, 2022 on or before August 1, 2022.
- Schools with a fiscal year end date of June 30, 2022 shall submit their required annual financial statements for the fiscal year ending June 30, 2022 on or before November 1, 2022.
Schools that fail to timely and completely submit the requisite financial statements are subject to disciplinary action under Education Law § 5003. This includes civil penalties (fines) being imposed. This may be done through a formal administrative process which may include a hearing, or an agreement whereby the school agrees to comply with its obligation by submitting the annual financial statement and/or pay outstanding assessments, if any, within a specified time period. Ultimately, failure to submit a financial statement as required could result in the suspension or revocation of a school’s license or certification and could also jeopardize a school’s renewal license under Education Law § 5001(4), which makes submission of an audited financial statement a condition of renewal licensure. Further, a school’s failure to submit a required financial statement or pay assessments and fines owed are triggering events under the new regulations which calls into question a school’s financial viability. See Commissioner’s regulations set forth at § 126.8.
Therefore, in order for a school to have complied with its financial reporting obligations, the school’s financial statement must be provided to BPSS timely, i.e., by the deadline date, and must be submitted, i.e., by uploading them to the BPSS web-based system. Instructions for submitting the annual financial statement are available on the BPSS web-based system:
- Log-in to the BPSS system
- After selecting School Administrator role, click the Help link on the top green tool bar of the BPSS web-based system.
- From the BPSS Help Documents window, select Financial Statement Application. This document will provide step-by-step instructions for financial submissions.
Finally, to comply with the reporting requirements that this guideline has described, the documents timely submitted must be complete. This means that they must be submitted in the correct form and must contain the information they are supposed to contain as outlined in the section below.
Key Financial Statement Requirements
A complete financial statement for LPCS and ESL schools includes:
- Preparation in accordance with Generally Accepted Accounting Principles (GAAP) in the USA. Preparing financial statements in accordance with Generally Accepted Accounting Standards (GAAS) IS NOT ACCEPTABLE.
- An Independent Auditor’s Opinion (either audited or reviewed, depending on the type of statement required to be submitted that year)
- A Balance Sheet
- A Statement of Income and Retained Earnings
- A Statement of Cash Flows
- Notes to the Statements (either audited or reviewed, depending on the type of statement required to be submitted that year)
- Federal Composite Score of the Parent Company
- For Profit: Ratio Methodology for Propriety Institutions https://www.ecfr.gov/current/title-34/subtitle-B/chapter-VI/part-668/subpart-L/appendix-Appendix A to Subpart L of Part 668
- Not for Profit: Ratio Methodology for Private Non-Profit Institutions https://www.ecfr.gov/current/title-34/subtitle-B/chapter-VI/part-668/subpart-L/appendix-Appendix B to Subpart L of Part 668
Annual financial statements shall include the following data disaggregated by each licensed or certified location as per §126.8(e)(3)(iv) of the Commissioner’s regulations:
- gross tuition income for all approved occupational curricula and non-occupational courses; and
- an itemized account of tuition refunds due and owing to past or presently enrolled students, separated out for each licensed or certified location.
If a corporate entity owns more than one LPCS or ESL school and submits a single financial statement, BPSS requires that the tuition income (gross and net) for each licensed location be clearly traceable. A supplementary schedule may be used for this purpose. Our auditor must be able to clearly ascertain the gross tuition income for each location in order to accurately calculate fees and payments.
All financial statements must be prepared by CPAs who are properly licensed and authorized to conduct business in New York State. Verify a licensed CPA here:
OP License Verification
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If a school has technical difficulty uploading documents, it must immediately document that fact in writing in an email to BPSS.
Questions and Concerns
Any questions or concerns regarding financial statements may be directed to: email@example.com
Education Law § 5001(4), § 5003
Commissioner’s Regulations set forth at 8 NYCRR Part 126.8