New York Laws
Article 2 - Thoroughbred Racing and Breeding
240 - Yearly Audit.

§ 240. Yearly audit. 1. The franchised corporation shall, at its own
expense, cause its annual financial statements to be audited in
accordance with generally accepted auditing standards by a qualified
independent certified public accountant approved by the franchise
oversight board. The annual financial statements shall be prepared on a
comparative basis for the current and prior fiscal year and shall
present the financial position and results of operations in conformity
with generally accepted accounting principles. Three manually-signed
copies of the audited financial statements, together with the report
thereon of the franchised corporation's independent certified public
accountant shall be filed: one with the franchise oversight board, one
with such franchised corporation and one with the office of the attorney
general, not later than ninety days following the end of the fiscal
year. All such annual financial statements and yearly audits shall be
subject to audit by the state comptroller and shall be public records.

2. The franchised corporation shall require the independent certified
public accountant to render the following additional reports:

a. a report on material weakness in accounting, internal controls, and
business and management practices discovered in the ordinary course of
preparing such audited financial statements. Whenever in the opinion of
the independent certified public accountant there exists no material
weaknesses in accounting, internal controls and business and management
practices, no report shall be required; and

b. a report expressing the opinion of the independent certified public
accountant that based on his or her examination of the financial
statements the franchised corporation has followed, in all material
respects, during the period covered by his or her examination, the
system of accounting and internal control as filed with the franchise
oversight board. Whenever in the opinion of the independent certified
public accountant the franchised corporation has deviated from the
system of accounting and internal controls filed with the franchise
oversight board or the accounts, records, and control procedures
examined are not maintained by the franchised corporation in accordance
with generally accepted accounting standards the report shall enumerate
such deviations. The independent certified public accountant shall also
report on areas of the system no longer considered effective, and shall
make recommendations in writing regarding improvements in the system of
accounting and internal controls.

3. If the independent certified public accountant who was previously
engaged to audit the franchised corporation's financial statements
resigns or is dismissed as the franchised corporation's auditor, or
another independent certified public accountant is engaged as auditor,
the franchised corporation shall file a report with the franchise
oversight board within ten days following the end of the month in which
such event occurs, setting forth the following:

a. the date of such resignation, dismissal, or engagement;

b. whether in connection with the audits of the two most recent years
preceding such resignation, dismissal, or engagement there were any
disagreements with the former accountant on any matter of accounting
principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements if not resolved to the
satisfaction of the former accountant would have caused such accountant
to make reference in connection with such accountant's report to the
subject matter of the disagreement; including a description of each such
disagreement. The disagreements to be reported include those resolved
and those not resolved; and

c. whether the former accountant's report on the financial statements
for any of the past two years contained an adverse opinion or disclaimer

of opinion or was qualified. The nature of such adverse opinion,
disclaimer of opinion, or qualification shall be described.

4. Upon direction of the franchise oversight board, the franchised
corporation shall, at its own expense, cause its business and managerial
practices to be audited.

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