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Examination of Check Cashers

The examination focuses on compliance with applicable state and federal laws and regulations and areas deemed likely to affect the safety and soundness of the licensee.

The Department of Financial Services assigns licensed check cashers a FILM rating based on an assessment of financial condition, internal controls and auditing, legal and regulatory compliance, and management.  The ratings range from “1” (Strong) to “5” (Unsatisfactory). 

Licensees with a FILM rating of "4" (Marginal) or “5” (Unsatisfactory) or severe violations/deficiencies may be subject to regulatory actions such as monetary fines, and license suspension and revocation.

Details on the evaluation of the FILM components are as follows:

Financial Condition:  This evaluation considers balance sheet composition including the adequacy of capital to absorb losses or to support growth; adequacy of liquidity; and the level and quality of earnings.

Internal Controls and Auditing:  Internal controls and auditing are evaluated based upon the effectiveness of accounting, financial, operation, and systems controls, and the audit program.  The assessment considers the extent of adherence to established policies and procedures; the independence, frequency, scope, and adequacy of the internal and external audit functions (including risk assessment) relative to the size and business activities of the licensee; the severity of internal control and audit exceptions; the extent to which internal control and audit exceptions are tracked and resolved in a timely manner; the adequacy of management information reports; and whether the system of controls is reviewed to keep pace with changes in the licensee’s business plan.

Legal and Regulatory Compliance:  This evaluation is based upon the level of adherence to applicable state and federal laws and regulations including any supervisory follow-up actions; the effectiveness of the written compliance program including policies and procedures; the ability to submit legal and regulatory reports in a timely and accurate manner; and management’s ability to identify and correct compliance issues in a timely manner.

Management:  The rating is based upon, but not limited to the following:  the overall performance of the licensee; the capability of the governing board and management in carrying out its business plan; management depth and succession; and responsiveness to recommendations from auditors and supervisory authorities.