(a) A school shall submit annual financial statements as set forth in this section that shall be:
  (1) audited;
  (2) reviewed (except for the first renewal, which must be audited or compiled); or
  (3) compiled, containing at least one note disclosing the current and long-term liabilities. This note shall be similar to that required by GAAP for reviewed and audited statements. Compiled statements are acceptable under the following conditions:
    (A) the gross annual revenue from student tuition and fees, less refunds, is less than or equal to $100,000; or
    (B) the programs are less than 30 consecutive calendar days in length.
(b) Each school shall furnish true and correct financial statements annually and not later than 180 days from the close of the school's fiscal year. These statements shall include the following:
  (1) balance sheet;
  (2) statement of results of operation, which includes a statement of income and retained earnings;
  (3) statement of cash flows; and
  (4) the gross amount minus refunds of annual student tuition and fees for each school, separated from other revenues unrelated to training.
(c) A school with a gross annual revenue from student tuition and fees, less refunds, less than or equal to $100,000 may submit all of the following in lieu of the financial statements required in this section:
  (1) an unearned tuition affidavit;
  (2) a copy of the annual federal income tax form(s) filed specifically for the business; and
  (3) an owner's sworn statement certifying that the unearned tuition affidavit and the copy of the annual federal income tax form(s) are true and correct.
(d) A school that is a subsidiary of a corporation may submit, in lieu of the statements required in this section, the annual audited financial statements of the parent corporation provided that:
  (1) said statements are accompanied by an audited list of any student tuition refunds payable by the subsidiary school at the close of its fiscal year. The statements shall also be accompanied by an owner's sworn statement reflecting the gross amount minus refunds of student tuition and fees earned during the fiscal year on all programs approved under the Act; and
  (2) the parent corporation ensures that each student enrolled in the subsidiary school receives either the training agreed upon or a refund as provided in the Act and submits either a certified resolution of its board of directors to this effect or any other evidence as deemed appropriate by the Agency to establish financial responsibility by the parent corporation.
(e) A school or college that fails to provide financial statements that comply with the requirements in this section and the standards identified in §807.32 of this subchapter, within 60 days of the date that they receive notice of any deficiencies, may have their certificate of approval revoked.

Source Note: The provisions of this §807.35 adopted to be effective August 16, 1998, 23 TexReg 8479; amended to be effective February 24, 2003, 28 TexReg 1651; amended to be effective April 26, 2004, 29 TexReg 3970; amended to be effective November 28, 2022, 47 TexReg 7914