Timely and accurate submission of your Position Report gives RIBO insight into your brokerage’s financial stability and risk factors (such as being able to maintain operations without facing financial distress).
Position Reports allow us to assess your brokerage’s capability to fulfill its financial responsibilities, which are essential for complying with regulatory requirements and ensuring that consumer premiums are protected.
Principal Brokers are required to submit a Form 1 Position Report semi-annually, detailing the trust, general, and equity positions of the brokerage firm.
As part of the registration requirements, firms must file both a semi-annual and year-end financial position using Form 1. Guidance is available to assist with completing the form.
RIBO also conducts random Spot Checks, where an auditor reviews the financial status of a selected brokerage. Please refer to the Spot Check process for details.
We see recurring errors made on Form 1 Position Reports. Read the below tips to help you ensure accuracy when completing your Form 1 Position Report.
There are three recurring errors made on Line 1:
There are two recurring errors made on Line 2:
The most common error is firms who report the net amounts on the premium receivables list. Only over 90-day debits should be reported here since any amounts owed over 90 days are deemed to be ‘non-trust assets.’ Over 90-day credits should not be applied to amounts owing as these balances are trust liabilities and cannot be applied to ‘non-trust assets’ for any reason. Do not include any credit amounts over 90 days.
Another error to note is when items on the over 90-day premium receivables list become current due to flipping (i.e., NSF cheques, policy rewrites, policy issuance on a binder).
Trust investments that are not owned by the brokerage or that are not in the registered name of the brokerage cannot be reported.
Only trust investments that comply with Ontario Regulation 991, Section 16(5) can be reported.
General ledger transactions (sales, purchases, interest payments and/or accruals) are not made. The total of the investments should verify that the corresponding general ledger balance is correct.
U.S. exchange not being applied to and reported for all trust assets and liabilities.
Reported amounts owed to insurers are improperly reduced by the amount of Direct Bill or monthly Payment Plan commissions expected from insurers.
Only the company billings for the two months preceding the reporting date are being reported although there are still amounts owed and outstanding to insurers (any amounts owing are still trust liabilities until they are paid).
Broker insurer payables must be based on broker records rather than insurer/company statements. Insurer statements must be adjusted to match broker records (i.e. trust asset items and trust liability items must match).
Total insurer payables are not fully reported and only amounts paid in the reporting month and/or next month are being included.
Binder billed amounts owing are not being included in insurer payables.
Reporting of old items (credit or debit) in the insurer payable accounts that are no longer relevant.
Reported prepaid premiums are not added to net premium receivable balances reported on Line 2 resulting in the double-counting of trust liabilities (net trust position is understated).
Prepaid premium balances are not reported but are added to net premium receivable balances reported on Line 2 resulting in trust liabilities being understated (net trust position is overstated).
Reported refunds due to insureds are not added to net premium receivable balances reported on Line 2 resulting in the double counting of trust liabilities (net trust position is understated).
Refunds due to insureds balances are not reported but are added to net premium receivable balances reported on Line 2 resulting in trust liabilities being understated (net trust position is overstated).
Only next month’s payments/remittance for retail sales tax are reported as Retail Sales Tax Payable and the actual total amount owing is not reported. The retail sales tax owing is the amount collected in the current month plus retail sales tax amounts not yet collected which are included in premium receivables balances at month end (trust liabilities are understated and net trust position overstated).
Reported balance differs from invoice amount when taxes are being remitted on an invoice basis (invoice balance and not general ledger balance should be reported).
Direct shareholder loans are not being reported on Line 34. You must include all direct shareholder loans on this line item for accurate reporting.
To assist Principal Brokers in completing the Position Report Form 1, the following key documents should be reviewed and made available during the submissions.
Additional documents required for Section C, including the documents listed for Section A:
Have you carefully read the above?
If so, you can proceed to file your Position Report.