(a) A funeral establishment’s license may be assigned upon payment of the fee fixed by this chapter, the filing of a completed application, and upon submission of an audit report prepared and signed by an independent certified public accountant or public accountant currently licensed in this state. The audit report shall include an unqualified opinion on the accuracy of the trust fund balances and a report of compliance with the provisions of this article and Article 9 (commencing with Section 7735). Any shortages in the trust funds shall be funded.

(b) (1) If the applicant cannot submit the audit report required in subdivision (a) due to estate matters or litigation for which the director or his or her designee is a party, the applicant may request approval from the bureau to secure a bond by an admitted surety insurer guaranteeing the payment to each account of any shortages in the trust funds. Along with the fee and the application to assign the license and transfer ownership, any applicant requesting an exception to subdivision (a) shall submit to the bureau a report, signed by an authorized representative, setting forth the reasons requested for the exception to the audit requirement and a list of all trust accounts for the funeral establishment showing the corpus of the trust, accumulated income, and current account balances for each account. If the bureau approves the request to secure a bond, the bureau shall notify the applicant of the approval and of the requirements of this section.

(2) Any applicant who knowingly provides false or misleading information pursuant to the requirements of this subdivision shall be subject to an administrative citation, which may include an order of abatement and a fine in an amount not to exceed five thousand dollars ($5,000) per violation, in addition to any other remedies that may be available to the bureau for violations of this chapter.

(3) Within 30 days from the date of the approval by the bureau, the applicant shall file satisfactory proof of the posting of a bond meeting the requirements of this section with the bureau. Once satisfactory proof of the bond is filed with the bureau and any other requirements for assignment have been met, the funeral establishment’s license may be assigned.

(c) Any applicant that obtains approval from the bureau to post a bond shall obtain a bond that is in an amount equal to 50 percent greater than the corpus of the trust and otherwise meet the requirements of this chapter. Within one year from the date of acceptance of the surety bond by the bureau and prior to the expiration of the current bond, the funeral establishment shall file a new request with the bureau to post another bond and receive approval by the bureau consistent with the requirements set forth in subdivision (b). This requirement shall be met for each year in which the assignee fails to submit an audit report and fund any shortages as required in subdivision (a).

(d) The assignee shall comply with all provisions previously placed on the assignor. The assignee shall maintain the bond referred to in this section after assignment of the funeral establishment’s license by the bureau.

(Amended by Stats. 2012, Ch. 364, Sec. 1. (AB 374) Effective January 1, 2013.)