# JAMES T. BORELLO & CO. X-17A-5 (2021-11-29) — Broker-dealer annual report - Company: JAMES T. BORELLO & CO. - Form: X-17A-5 - Filed: 2021-11-29 - Period: 2021-09-30 - Accession: 0000871185-21-000002 - CIK: 871185 - File #: 8-43398 - Type: Broker-dealer - Material weakness: No - Auditor: Lerner & Sipkin CPAs LLP - Auditor location: New York, NY - Contact: Daniel J. Borello - Phone: 847-426-0200 - Email: daniel@borellos.com - Website: borellos.com - Signed by: Daniel J. Borello (VP) Original filing: https://www.sec.gov/Archives/edgar/data/871185/000087118521000002/20211129082448.pdf --- {0}------------------------------------------------ # STATEMENT OF FINANCIAL CONDITION ### SEPTEMBER 30,2O2I {1}------------------------------------------------ UNITED STATES SECURITIES AND EXCHAN6E COMMISSION Washington, D,C. 20549 > ANNUAT REPORTS FORM X-17A-s # PART III FACING PAGE lnformation Required Pursuant to Rules L7a-5,t7a-!2, and 18a-7 under the Securities Exchange Act of 1934 FtL1NG FOR THE pERtOD BEG;NN1NG 10/01/?020 AND ENDTNG 00/30/20?1 MM/DO/YY MM/DD/YY A. REGISTRANT IDENTIFICATION NAME OF FIRM: James T. Borello & Co. TYPE OF REGISTRANT (check allapplicable boxes): El Broker-dealer E Security-based swap dealer D trlajor security-based swap participant E Check here if respondent is alsoan OTC derivatives dealer ADDRESS OF PRINCIPAL PLACE OF EUSINESS: (Do not use a P.O. box no.) 151 Dundee Avenue East Dundee (No. and Street) IL 601 18 (city) PERSON TO CONTACT WITH REGARD TO THIS FILING DanielJ. Borello 847426-0200 (state) (zip code) daniel@borellos.com lName) (Area Code - Telephone Number) (Email Address) B. ACCOUNTANT IDENTIFICATION INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing\* Lerner & Sipkin CPAs LLP (Name - if individual, state last, first, and middle name) 420Lexington Avenue, Suite 2160 New York NY 10170 {Address} 04t't42oa9 {city) (Statel (Zip Code) 3352 (Oatc of with if stration N if FOR OFFICIAL USE ONTY tClaims for exemption from the requirement that the annual reports be covered by the repons of an independent public accountantmustbesupportedbyastatementoffactsandcircumstancesreliedonasthebasisoftheexemption. See17 cFR 240.17a-5(e)( 1)(ii), if applicable. Persons who are to respond to the collection of information contained in this form are not requhed to respond unless the lorm dlsplays a currently valld OMB control number. OMB APPROVAT OMg Number: 3235.0123 Expires: Oct. 31, 2023 Estimated average burden hours per response: l2 SEC FILE NUMBER | B
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res | | | {2}------------------------------------------------ #### OATH OR AFFIRMATION r, DAN I e L J DO nE UU O , swear (or affirm) that, to the best of my knowledge and belief, the financial report pertaining to the firm of ifAl"lg,S a- |A.o|(.ELto d .a as of }( 3ct 2OLI , is true and correct. lfurther swear (or affirm) that neither the company nor any partner, officer, director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely as that of a customer. f-Notary Public MEHULKUMAR H PATEL Ofllclal Seal Notary Public - State of llllnois ,.ly Commlssion ExPires APr 17,2024 ## Thjs filing\*\* contains (check all applicable boxeslr - X t.l Statement of financial condition. - X tUt Notes to consolidated statement of financial condition. - tr (c) Statement of income (loss) or, if there is other comprehensive income in the period(s) presented, a statement of comprehensive income (as defined in \$ 210.1-02 of Regulation 5-X). - C (d) Statement of cash flows. - tr (e) Statement of changes in stockholders' or partners'or sole proprietor's equity. - fl (f) Statement of changes in liabilities subordinated to claims of creditors. - tr (g) Notes to consolidated financial statements. - D (h) Computation ofnet capital under 17CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable. - n (i) Computation of tangible net worth under 17 CFR 240.18a-2. - ! U) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. - tr (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.15c3-3 or Exhibit A to 17 CFR 240.78a-4, as applicable. - ! (l) Computation for Determination of PAB Requirements under Exhibit A to \$ 240.15c3-3. - tl (m) lnformation relating to possession or control requirements for customers under 17 CFR 240.15c3-3. - D (n) lnformation relating to possession or control requirements for security-based swap customers under 17CFR 240,15c3-3(p)(21 or 17 CFR 240.18a-4, as applicable. - tl (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.15c3-1, 17 CFR 240.18a-1, or 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17 CFR 240,15c3-3 or 17 CFR 240.78a-4, as applicable, if material differences exist, or a statement that no material differences exist. - D (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. - n (q) Oath or affirmation in accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 24O.t8a-7, as applicable. - tl (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.78a-7, as applicable. - D (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - fi 1t; tnOependent public accountant's report based on an examination of the statement of financial condition. - n (u) lndependent public accountant's report based on an examination ofthe financial report or financial statements under 17 CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-t2, as applicable. - D (v) lndependent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240.17a-5 or 17 CFR 240.78a-7, as applicable. - tr (w) lndependent public accountant's report based on a review of the exemption report under 17CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - n (x) Supplemental reports on a pplying agreed-upon procedu res, in accordance with 17 CF R 240.15c3- le or 77 CF R240.17a-12, as applicable. - tr (y) Report describing any material inadequacies found to exist or found to have existed since the date of the previous audit, or astatement that no material inadequacies exist, under t7 CFR240.Lla-12(k). - fl (z)Other: - \*tTo request confidentiol treotment of certoin portions of this filing, see 77 CFR240.17a-5(e)(3) or 17 CFR240.18o-7(d)(2), os applicoble. {3}------------------------------------------------ # CONTENTS REPORT OF TNDEPENDENT REGISTERED PUBLIC ACCOUNTTNG FIRM I.INANCIAL S'TATEMEN"I'S STATEMENT OF FINANCIAL CONDITION NOTES TO FINANCIAL STATEMENTS {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) 420 Lexington Ave., Ste. 2160, NY, NY 10170 Tel 212.571 .0064 / Fax 212.571.0074 Jay Lerner. C.P.A. fierner@iernersipkin.com Joseph G. Sipkin, C.P.A. Islpkin@icrnersipkia.com ### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders of James T. Borello & Co. We have audited the accompanying statement of financial condition of James T. Borello & Co. (the "Company"), as of September 30, 2021, and the related notes to the financial statements. #### Management's Responsibility for the Financial Statements Management is responsible for the presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation of internal control relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error. #### Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and to obtain reasonable assurance about whether the financial statements are from material misstatement. An audit involves performing procedures to obtain audit the amounts and disclosures in the financial statements. The procedures selected depend on the auding the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order that are appropriate in the circumstances, but not for the purpose of cxpressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion. #### Basis for Qualified Opinion As more fully described in Note 4 to the financial statements, the Company has not deternined the cost of its defined benefit pension plan in accordance with accounting principles generally accepted in the United States of America, which require the cost of employees' pensions to be recognized over the employees' respective service periods and a liability to be recognized when the accumulated benefit obligation exceeds the fair value of plantification of the effects of that departure on the financial statements is not practicable. #### Qualified Opinion In our opinion, except for the effects of the Basis for Qualified Opinion paragraph, the financial statements referred to in the first paragraph present fairly, in all mancial position of James T. Borello & Co. as of September 30, 2021, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Lerner & Sipkin CPAs, LLP We have served as the Company's auditor since 2019. New York, NY November 18, 2021 {5}------------------------------------------------ # STATEMENT OF FINANCIAL CONDITION ## SEPTEMBER 30, 2021 ### ASSETS | cash | \$ 1,078,835 | |------------------------------------------|--------------| | Commissions and concessions receivable | 983,126 | | Prepaid expense | 32,421 | | Furniture and equipment, at cost, net of | | | \$322,396 accumulated depreciation | 24,055 | | Automobile, at cost, net of \$209,724 | | | accumulated depreciation | | | | | TOTAL ASSETS # \$ 2,118,437 # LIABILITIES AND SHAREHOLDER'S EQUITY | T.TARTISTICS | | |--------------------------------------------|--------------| | Accrued expenses | S
60,416 | | Commissions payable | 89,307 | | Total Liabilities | 149,723 | | SHAREHOLDER'S EQUITY | | | Common stock, no par value; | | | authorized 10,000 shares; issued | | | and outstanding 1,000 shares | 1,000 | | Additional paid-in capital | 160,379 | | Retained earnings | 1,807,335 | | Total Shareholder's Equity | 1,968,714 | | TOTAL TIABILITIES AND SHAREHOLDER'S EQUITY | \$ 2,118,437 | The accompanying notes are an integral part of these financial statements. {6}------------------------------------------------ ### NOTES TO FTNANCIAL STATEMENTS #### SEPTEMBER 30" 202I. # NOTE I - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Organization - James T. Borello & Co. (the "Company") was incorporated in the state of Illinois on February 14, 1990. The Company is registered as a broker/dealer with the Securities and Exchange Commission (SEC) and is a member of the Financial Industry Regulatory Authority (FINRA). The Company is also registered with the SEC as an investment advisor. The Company's principal business activities are the sale of securities and providing investment advice. Basis of Presentation - The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). # Revenug \_Recognition: Effective October l, 2018, the Company adopted ASC Topic 606, Revenue fi'om Conlracls v,ilh Custoners ("ASC Topic 606"). The new revenue recognition guidance requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance requires an entity to follow a five step model to (a) identify the contract(s) with a customer, (b) identifo the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the perforrnance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance obligation. In determining the transaction price, an entity may include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. The Company applied the modified retrospective method of adoption which resulted in no adjustment to retained eamings as of October 1,2018. The new revenue recognition guidance does not apply to revenue associated with financial instruments, interest income and expense, leasing and insurance contracts. Securities Transactions - Commission revenue and related expense arising from securities transactions are recorded on the trade date basis, which is the same business day as the transaction date. {7}------------------------------------------------ # NOTES TO b-INANCIAL S]'ATEMEN'|S #### SEPTEMBER 30.2O2I # NOTE I - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES \* (conrinued) Accounting and Tax Preparatiou Fees - The Compauy records revenue fol accounting and tax preparation fees when the services are paid. Advisory Fees - Advisory fees are recognized based on the average daily balance of the previous quarter and are paid in arlears. Allowance for Doubtful Accounts - The allowance for doubtful accounts is determined on a specific identification basis as a result of a case-by-case review of receivables. As of Septenrber 30, 2021, there was uo allowance for dr-rubtful accounts recorded for commissions' receivable as the Company's management believes all amounts are fully collectible. Depreciation - Depreciation of furniture, equipment and automobile is provided for using various accelerated and straight-line methods over five and seven year periods. Concentration of Risk - The Company's cash is on deposit at one financial institution and the balance at times may exceed the federally insured limit. Due to the strong credit rating of this financial institution, the Company believes it is not exposed to any significant credit risk to cash. Estimates - The preparation of financial statements in conformity with GAAP requires managernent to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. #### NOTE2-INCOMETAXES The Company has elected S Corporation status for income tax purposes. Income taxes are therefore the responsibility of the Company's sole shareholder. The Company is subject to certain Illinois income taxes. The Company accounts for any potential interest or penalties related to possible future liabilities for unrecognized incomc tax bencfits as other expense. The Company is no longer subject to examination by tax authorities for federal, state or local income taxes for periods before 2018. {8}------------------------------------------------ # JAMES T. BOREr-LO & C-9. ### NOTES TO FINANCIAL STATEMENTS #### SEPTEMBER 30.2O2I #### NOTE3-RETIREMENTPLAN The Company sponsors a 401(k) profit sharing plan for all employees that have attained the age of 21 and completed 1,000 hours of service during a l2-month period. The Company will make an annual Safe Harbor Non-elective 3Yo contribution that is l00oZ vested immediately. All other discretionary profit sharing contributions made by the Company vest over a six-year period based on years of eligible service. Contributions to the plan for the year ended September 30, 2021 were \$ 1 27, 1 66. #### NOTE 4 . CASH BALANCE PENSION PLAN The Company sponsors a cash balance pension plan. The Plan is a noncontributory defined benefit plan and a tax-qualified retirement plan subject to the Employee Retirement Income Security Act of 1974, as amended (ERISA). The Company funds retirement costs through a trust and complies with the applicable minimum funding requirements specified by ERISA. Participants' accrued benefits vest 100% after three years of eligible service and are based on accumulation account balances, which are maintained for each individual. Participants receive an annual pay credit up to 80% of their compensation and a monthly interest credit at a fixed rate of 57o compounded annually. The Company expensed\$254,132 of contributions to the plan for the year ended September 30,2021. As of September 30,2021, the Company does not know what the plan liabilities, if any, are. #### NOTE 5 - NET CAPITAL REQUIREMENTS As a registered broker/dealer and member of FINRA, the Company is subject to the Uniform Net Capital Rule, which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 1500%. At September 30,2021, the Company's net capital and required net capital were \$929,1l3 and \$25,000 respectively. The ratio of aggregate indebtedness to net capital was l6.l%. #### NOTE6.RT.,LATEDPARTY During the year ended September 30,2021, the Company paid \$78,000 in rent for occupancy of its premises to an entity owned by the Company's sole shareholder and other related parties. No written lease agreement exists between the Company and this entity. In addition, this shareholder is a registered representative of the Company and is responsible for a significant portion of the Company's revenue. The shareholder is not compensated based on a percentage of the revenue produced, but receives a salary and distributions. {9}------------------------------------------------ #### NOTE 7 - CASH SEGREGATED UNDER FEDERAL AND OTHER REGULATIONS The Company has a bank account designated as aSpecial Bank Account for the Exclusive Benefit of Custorners pursuant to Rule l5c3-3 of the SEC, At September 30,202l,this special bank account had azero balance. ### NOTE 8 . FURNITURIi AND EQUIPMENT Furniture and equipment at September 30, 2020 consists of: | F
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_ | #### NOTE 9 \_ RISK TO OPERATIONS The United States is presently in the midst of a national health emergency related to a virus, commonly known as Novel Coronavirus (COVID-I9). The overall consequences of COVID -19 on a national, regional and local level are unknown, but it has the potential to result in a significant economic impact. The impact of this situation on the company and its future results and financial position are not presently determinable. ### NOTE l0 - SUBSEQUEN'I'EVEN'I'S Management has evaluated subsequent that have occuned as of November xx,2021, the date the financial statements were available to be issued. The United States is presently in the midst of a national health emergency related to a virus, commonly known as Novel Coronavirus (COVID-I9). The overall consequences of COVID -19 on a national, regional and local level are unknown, but it has the potential to result in a significant economic impact. The impact of this situation on the company and its future results and financial position are not presently determinable. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.