AB230: Bill Text

AB230,16,3 127.06 (title) Financial statement statements; warehouse keepers and grain dealers.

AB230, s. 46 Section 46. 127.06 (1) of the statutes is repealed and recreated to read:

AB230,16,7 127.06 (1) Warehouse keepers; financial statements required. (a) A warehouse keeper required to be licensed under s. 127.02 (1) shall do all of the following:

AB230,16,9 1. File a financial statement with the warehouse keeper's initial application for a license.

AB230,16,12 2. Except as provided in par. (e), file an annual financial statement with the department on or before the 15th day of the 4th month beginning after the close of the warehouse keeper's fiscal year.

AB230,16,15 (b) A financial statement filed under par. (a) shall be either a reviewed financial statement or an audited financial statement, except that the financial statement shall be an audited financial statement if any of the following apply:

AB230,16,17 1. The warehouse keeper's warehouses have a combined storage capacity of at least 500,000 bushels.

AB230,16,19 2. The warehouse keeper is a sole proprietor and the financial statement is not prepared according to the historical cost basis method of accounting.

AB230,16,22 (c) The department may require an exempt warehouse keeper to file an annual audited financial statement or reviewed financial statement if the department determines that such filing is necessary to protect depositors.

AB230,17,3 (d) The department may require a warehouse keeper, including an exempt warehouse keeper, to file a supplementary financial statement or an interim statement whenever the department determines that such filing is necessary to protect depositors. The department may require a financial statement filed under this paragraph to be an audited financial statement or a reviewed financial statement.

AB230,17,10 (e) The department may extend the filing deadline under par. (a) 2. by up to 30 days in response to a written request from a warehouse keeper or an independent certified public accountant, or an independent public accountant holding a certificate of authority under ch. 442, that is auditing or reviewing the financial statement for a warehouse keeper if the department receives the request on or before the 5th day of the 4th month beginning after the close of the warehouse keeper's fiscal year and if the request states the reason for the extension.

AB230, s. 47 Section 47. 127.06 (1m) of the statutes is created to read:

AB230,17,13 127.06 (1m) Grain dealers; financial statements required. (a) The following grain dealers shall file financial statements under par. (b):

AB230,17,14 1. A Class A grain dealer.

AB230,17,16 2. A Class B grain dealer that uses any deferred price contract or deferred payment contract.

AB230,17,18 3. A grain dealer that claims to be bonded or claims to have filed security with the department for the benefit of producers.

AB230,17,19 (b) A grain dealer specified in par. (a) shall do all of the following:

AB230,17,21 1. File a financial statement with the grain dealer's initial application for a license under s. 127.03 (2).

AB230,17,24 2. Except as provided in par. (e), file an annual financial statement with the department on or before the 15th day of the 4th month beginning after the close of the grain dealer's fiscal year.

AB230,18,3 (c) A financial statement filed under par. (b) shall be either a reviewed financial statement or an audited financial statement, except that the financial statement shall be an audited financial statement if any of the following apply:

AB230,18,5 1. The grain dealer is a Class A grain dealer that buys or sells at least $2,000,000 worth of grain from producers during the grain dealer's fiscal year.

AB230,18,7 2. The grain dealer is a sole proprietor and the financial statement is not prepared according to the historical cost basis method of accounting.

AB230,18,13 (d) The department may require a Class A grain dealer or a Class B grain dealer that uses any deferred price contract or deferred payment contract to file a supplementary financial statement or an interim statement whenever the department determines that such filing is necessary to protect producers. The department may require a financial statement filed under this paragraph to be an audited financial statement or a reviewed financial statement.

AB230,18,20 (e) The department may extend the filing deadline under par. (b) 2. by up to 30 days in response to a written request from a grain dealer or an independent certified public accountant, or an independent public accountant who holds a certificate of authority under ch. 442, that is auditing or reviewing the financial statement for a grain dealer, if the department receives the written request on or before the 5th day of the 4th month beginning after the close of the grain dealer's fiscal year and if the request states the reason for the extension.

AB230, s. 48 Section 48. 127.06 (2) (title) and (a) of the statutes are amended to read:

AB230,19,2 127.06 (2) (title) Contents; general. (a) Except as provided in par. (b) sub. (3) or (4), a financial statement under sub. (1) or (1m) shall consist of a balance sheet, income statement, equity statement, statement of cash flows, notes to financial statements and other information required by the department, and shall be prepared in conformity with according to generally accepted accounting principles.

AB230,19,6 (b) Except as provided in par. (b) sub. (4), a warehouse keeper's financial statement shall disclose, separately and clearly, the warehouse keeper's obligations to depositors in the form of negotiable and nonnegotiable warehouse receipts, scale tickets and, collateral warehouse receipts and other grain storage receipts.

AB230,19,11 (c) Except as provided in par. (b) sub. (4), a grain dealer's financial statement shall disclose, separately and clearly, the grain dealer's obligations to producers in the form of scale tickets, receipts, settlement sheets and contracts for grain purchased from producers. All reviewed financial statements shall be sworn to by the warehouse keeper or grain dealer filing the statement.

AB230, s. 49 Section 49. 127.06 (2) (b) of the statutes is renumbered 127.06 (4) and amended to read:

AB230,19,20 127.06 (4) (title) Initial financial statement. A If a warehouse keeper or a Class A grain dealer that has not previously engaged in those businesses may file an initial financial statement, consisting operated as a warehouse keeper or grain dealer, the financial statement included with that warehouse keeper's or grain dealer's initial license application may consist of an opening balance sheet and notes to that balance sheet, prepared in conformity with according to generally accepted accounting principles.

AB230, s. 50 Section 50. 127.06 (3) of the statutes is renumbered 127.06 (7) and amended to read:

AB230,20,5 127.06 (7) (title) Access to Financial statement closed to public inspection. A Neither a financial statement nor a disclosure of grain purchases under sub. (5) is not subject to open to public inspection under s. 19.35 and the. The department may keep a financial statement closed to the public, although the department may utilize and release introduce a financial statement as evidence in an enforcement action, brought by or on behalf of the department or in an administrative hearing or court proceeding in which the department is a named party, subject to any protective orders made by the court or administrative tribunal.

AB230, s. 51 Section 51. 127.06 (3) of the statutes is created to read:

AB230,20,12 127.06 (3) Financial statement of sole proprietor. If a warehouse keeper or grain dealer is a sole proprietor, the financial statement for that sole proprietor shall consist of a statement of financial condition, statement of changes in net worth, notes to the financial statements and other information required by the department, except that the financial statement for the sole proprietor's grain operations shall comply with sub. (2) (a).

AB230, s. 52 Section 52. 127.06 (5) and (6) of the statutes are created to read:

AB230,20,18 127.06 (5) Grain dealer; disclosure of amount of grain purchased. With every financial statement filed under sub. (1m), a grain dealer shall file a statement, on a form furnished by the department, showing the total dollar value of grain that the grain dealer purchased from producers during the grain dealer's last completed fiscal year and during each month of that fiscal year.

AB230,21,2 (6) Liability adjustments. (a) For purposes of s. 127.065 (1) (c) or 127.067 (1) (c), a warehouse keeper or grain dealer may deduct, from the amount of a liability reported in the warehouse keeper's or grain dealer's financial statement, any of the liability adjustments allowed for the warehouse keeper or grain dealer under pars. (b) to (f) if the amount of the liability adjustments and of the offsetting assets are disclosed in the notes to the financial statement. The total amount of the liability adjustments under pars. (b) to (f) may not exceed the total amount of the corresponding assets, identified in the notes to the financial statement, that justify the adjustments.

AB230,21,8 (b) A grain dealer may deduct amounts that the grain dealer has borrowed from a lending institution and deposited with a commodities broker to maintain an account to hedge grain transactions. The amount of the deduction shall be the lesser of the amount deposited with the commodities broker or the amount owed to the lending institution for funds borrowed from the lending institution and deposited with the commodities broker.

AB230,21,14 (c) A grain dealer may deduct amounts that the grain dealer has borrowed from a lending institution to buy grain that has been shipped and is in transit if the grain dealer has a collectible account receivable for that grain on the date of the balance sheet. The amount of the deduction shall be the lesser of the amount receivable by the grain dealer for the grain that has been shipped and is in transit or the amount that the grain dealer owes to the lending institution for funds used to buy that grain.

AB230,21,19 (d) A grain dealer may deduct amounts that the grain dealer has borrowed from a lending institution and that are secured by grain owned by the grain dealer and held in the grain dealer's inventory. The amount of the deduction shall be the lesser of the value of the grain pledged as security or the amount owed to the lending institution.

AB230,21,25 (e) A grain dealer may deduct amounts that the grain dealer has borrowed from a lending institution and used to buy grain that the grain dealer holds in inventory on the date of the balance sheet if the grain dealer has entered into a written contract to sell the grain. The amount of the deduction shall be the lesser of the amount owed to the lending institution or the value of the grain purchased with the borrowed funds and held in inventory to fill the sales contract.

AB230,22,6 (f) A warehouse keeper or a grain dealer may deduct amounts that the warehouse keeper or grain dealer has borrowed from a lending institution and used to pay for fertilizer, pesticides, herbicides or seed that the warehouse keeper or grain dealer holds in inventory on the date of the balance sheet. The amount of the deduction shall be the lesser of the amount owed to the lending institution or the cost of the fertilizer, pesticides, herbicides or seed purchased with the borrowed funds.

AB230, s. 53 Section 53. 127.065 of the statutes is created to read:

AB230,22,10 127.065 Minimum financial standards; warehouse keepers. (1) Requirement. Except as provided in sub. (2), a warehouse keeper other than an exempt warehouse keeper shall meet all of the following financial standards:

AB230,22,13 (a) On the date of the warehouse keeper's initial financial statement under s. 127.06 (1) (a) 1. and at the end of each fiscal year, the ratio of the warehouse keeper's current assets to current liabilities shall be at least 1.25 to 1.

AB230,22,15 (b) At all times other than the times under par. (a), the ratio of the warehouse keeper's current assets to current liabilities shall be at least 1 to 1.

AB230,22,19 (c) The warehouse keeper's total assets shall at all times exceed total liabilities, adjusted as provided in s. 127.06 (6), by at least $50,000 or the product obtained by multiplying the capacity of the warehouse keeper's warehouses by 10 cents, whichever is greater.

AB230,22,21 (2) Exemptions. A warehouse keeper is not required to comply with sub. (1) if the warehouse keeper does all of the following:

AB230,22,23 (a) Files with the department a bond or other security that complies with s. 127.07.

AB230,22,24 (b) Files monthly reports with the department under s. 127.069.

AB230,23,4 (3) Notice of changes. A warehouse keeper that is required to comply with sub. (1) shall notify the department whenever the warehouse keeper knows or has reason to believe that the warehouse keeper no longer meets a financial standard under sub. (1).

AB230, s. 54 Section 54. 127.067 of the statutes is created to read:

AB230,23,9 127.067 Minimum financial standards; grain dealers. (1) Requirement. Except as provided in sub. (2), each Class B grain dealer that uses any deferred payment contract or deferred price contract to buy grain from a producer and each Class A grain dealer shall meet all of the following financial standards:

AB230,23,12 (a) On the date of the grain dealer's initial financial statement under s. 127.06 (1m) (b) 1. and at the end of each fiscal year, the ratio of the grain dealer's current assets to current liabilities shall be at least 1.25 to 1.

AB230,23,14 (b) At all times other than the times under par. (a), the ratio of the grain dealer's current assets to current liabilities shall be at least 1 to 1.

AB230,23,17 (c) The grain dealer's total assets shall at all times exceed total liabilities, adjusted as provided in s. 127.06 (6), by $15,000 or the amount required to achieve a ratio of total liabilities to equity of not more than 5 to 1, whichever is greater.

AB230,23,19 (2) Exemptions. A grain dealer is not required to comply with sub. (1) if the grain dealer does all of the following:

AB230,23,21 (a) Files with the department a bond or other security that complies with s. 127.07.

AB230,23,22 (b) Files monthly reports with the department under s. 127.069.

AB230,23,25 (3) Notice of changes. A grain dealer that is required to comply with sub. (1) shall notify the department whenever the grain dealer knows or has reason to believe that the grain dealer no longer meets a financial standard under sub. (1).

AB230, s. 55 Section 55. 127.069 of the statutes is created to read:

AB230,24,8 127.069 Monthly reports; warehouse keepers and grain dealers. (1) Warehouse keeper. A warehouse keeper, other than an exempt warehouse keeper, that does not meet the financial standards under s. 127.065 (1) shall file monthly reports with the department. The warehouse keeper shall file each monthly report no later than the 10th day of each month. Each monthly report shall state the inventory of each type of grain in storage in each of the warehouse keeper's warehouses on the last day of the previous month.

AB230,24,10 (2) Grain dealers. (a) All of the following shall file monthly reports with the department:

AB230,24,12 1. A Class A grain dealer that does not meet the financial standards under s. 127.067 (1).

AB230,24,15 2. A Class B grain dealer that uses any deferred payment contract or deferred price contract to buy grain from producers and that does not meet the financial standards under s. 127.067 (1).

AB230,24,17 3. A grain dealer that claims to be bonded or that claims to have filed security with the department for the benefit of producers.

AB230,24,20 (b) A grain dealer shall file the monthly report under par. (a) with the department no later than the 10th day of each month. The report shall include all of the following:

AB230,24,23 1. The total number of bushels of each type of grain, and the total cost of each type of grain, that the grain dealer purchased from producers during the previous month.

AB230,25,3 2. The total number of bushels of each type of grain purchased from producers under a deferred payment contract or deferred price contract for which the grain dealer had not paid as of the last day of the previous month.

AB230,25,8 3. The amount that the grain dealer owed producers for each type of grain identified under subd. 2. as of the last day of the previous month. The grain dealer shall estimate the amount owed for grain purchased under deferred price contracts based on the pricing formulas in the contracts and the market prices for grain as of the last day of the previous month.

AB230, s. 56 Section 56. 127.07 of the statutes is repealed and recreated to read:

AB230,25,14 127.07 Security requirements; warehouse keepers and grain dealers. (1) Warehouse keepers. A warehouse keeper that claims to be bonded or claims to have filed security for the benefit of depositors or that does not meet the financial standards under s. 127.065 (1) and that is not an exempt warehouse keeper shall file with the department, and maintain, security under this section.

AB230,25,16 (2) Grain dealers. All of the following grain dealers shall file with the department, and maintain, security under this section:

AB230,25,18 (a) Class A grain dealer that does not meet the financial standards under s. 127.067 (1).

AB230,25,21 (b) A Class B grain dealer that uses any deferred payment contract or deferred price contract to buy grain from producers and that does not meet the financial standards under s. 127.067 (1).

AB230,25,23 (c) A grain dealer that claims to be bonded or that claims to have filed security for the benefit of producers.

AB230,26,3 (3) Form of security. Security filed and maintained under sub. (1) or (2) shall comply with the standards promulgated by the department by rule and shall be in one of the following forms:

AB230,26,7 (a) A continuous surety bond that is subject to cancellation by the surety company only upon 90 days' written notice to the department. Notice of cancellation may not affect any liability incurred on the bond within 90 days after notice is served on the department.

AB230,26,8 (b) Cash or negotiable securities.

AB230,26,9 (c) Stocks, bonds or other marketable securities at current market value.

AB230,26,13 (d) An irrevocable bank letter of credit that is issued for an initial period of one year and is automatically renewed at the end of each period unless, at least 90 days before the scheduled renewal date, the issuing bank gives the department written notice that the letter of credit will not be renewed.

AB230,26,15 (e) Personal surety bonds or other 3rd party guarantees that are fully backed by security under par. (b) or (c).

AB230,26,19 (4) Amount of security; warehouse keepers. A warehouse keeper that is required to file and maintain security under sub. (1) shall file and maintain security in an amount that is at least 20% of the current market value of all grain that the warehouse keeper has in storage for depositors or $25,000, whichever is greater.

AB230,26,23 (5) Amount of security; grain dealers. (a) Except as provided under par. (b), a grain dealer that is required to file and maintain security under sub. (2) shall file and maintain security in an amount that is at least equal to the sum of the following, increased to the next highest $1,000:

AB230,27,3 1. The total amount that the grain dealer owed to producers under deferred payment contracts as of the last day of the previous month or as of another date specified by the department.

AB230,27,8 2. The estimated total amount that the grain dealer owed to producers under deferred price contracts as of the last day of the previous month or as of another date specified by the department. The grain dealer shall estimate the amount owed based on the pricing formulas in the contracts and the market prices for grain as of the last day of the previous month or as of the date specified by the department.

AB230,27,9 3. One of the following:

AB230,27,13 a. Before September 1, 1996, an amount equal to 20% of the dollar amount of the grain dealer's average monthly purchases from producers for the 3 months in which the grain dealer made the largest monthly purchases from producers during the preceding 12 months.

AB230,27,17 b. Beginning on September 1, 1996, an amount equal to 35% of the dollar amount of the grain dealer's average monthly purchases from producers for the 3 months in which the grain dealer made the largest monthly purchases from producers during the preceding 12 months.