Missouri’s pending preneed exam handbook will establish a new record keeping requirement for the state’s preneed sellers: monthly records of consumer payment receipts and the transmission of those funds to the preneed funding agent. Seller record keeping proposals are not new to the Board. (Missouri Seller Records: The State Board Proposal) The Board’s staff proposed a record keeping regulation three years ago, but both Board members and the industry objected. (Missouri Preneed Seller Records: the Third Time did not prove a Charm) The staff proposal attempted to dictate the format of seller records, and would have subjected licensees to discipline for “inadequate seller records”. The proposal did not explain the purpose for most of its requirements, and included provisions to allow the Board to expand the record requirements as it saw fit. Those latter provisions invited abuse by the Board’s staff, a problem that eventually led to the ouster of the Board’s previous Executive Director.
The monthly receipt and transmission records differ from the staff effort in a couple of major ways. First, the handbook does not dictate a format to sellers. A seller may document each month’s consumer payment activity in any format so long as examiners can track a consumer payment from receipt by the funeral home to deposit with the funding agent. But contrary to what one Board member has repeatedly suggested, a copy of the consumer check in the preneed file is a sufficient record. Sellers would be required to create a record of all consumer payments received each month, and a corresponding record of all payments transmitted to each applicable funding agent. The Board member opposing all forms of record keeping requirements has cited his own experiences with the IRS, which did not seek such types of records. Such comments are misleading for several reasons. First, the IRS actually does have record requirements for audits, and those requirements differ by industry (IRS hyperlink to industry audit guidelines). The IRS audits for a different purpose than the State Board preneed audit. And since the Board member’s IRS audit is confidential, no one knows where his representations are accurate.
Monthly deposit and transmission records would allow Board examiners to track consumer payments without having to wade into each preneed contract file. The monthly records would also allow the exam staff to adopt different procedures for testing a seller’s compliance with Chapter 436’s main purpose: protecting consumer funds.
While the receipt and transmission record requirements may appear to impose two types of records, some Missouri funeral homes have been complying for years with a single record. Excel worksheets can document both the receipt of funds and their transmission to the funding agent. (Hyperlink to the sample spreadsheet)