# JAMES T. BORELLO & CO. X-17A-5/A (2021-12-09) — Broker-dealer annual report
- Company: JAMES T. BORELLO & CO.
- Form: X-17A-5/A
- Filed: 2021-12-09
- Period: 2021-09-30
- Accession: 0000871185-21-000003
- 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
- Signed by: Daniel J. Borello (VP)
Original filing: https://www.sec.gov/Archives/edgar/data/871185/000087118521000003/Short_Report.pdf
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## JAMES ]'. BOITELLO & CO
# FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOLINTING FIRM PURSUANT TO RULE l7a-5
SEPTEMBER 30,2021
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accountantmustbesupportedbyastatementoffactsandcircumstancesreliedonasthebasisoftheexemption. See17 CFR 240.17a-5(eXlXii), if applicable.
Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number,
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#### OATH OR AFFIRMATION
t, Daniel J. Borello swear (or affirm) that, to the best of my knowledge and belief, the financial report pertaining to the firm of James T. Borello & Co. , as of
September 30 2021 , is true and correct. I further 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.
## This filing\*\* contains (check all applicable boxes):
- E t.l Statement of financial condition.
- (b) Notes to consolidated statement of financial condition, (!
- (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 5 210.1-02 of Regulation S-X).
- (d) Statement of cash flows. n
- (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. !
- (f) Statement of changes in liabilities subordinated to claims of creditors, u
- (g) Notes to consolidated financial statements, D
- (h) Computationof netcapital under17CFR240.t5c3-Ior17 CFR 24O,t8a-t,asapplicable. n
- (i) Computation of tangible net worth under L7 CFR 240.18a-2. n
- (j) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. n
- (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 240.18a-4, as applicable. n
- (l) Computation for Determination of PAB Requirements under Exhibit A to 5 240.15c3-3, n
- (m) lnformation relating to possession or control requirements for customers under 17 CFR 240.15c3-3. n
- (n) lnformation relating to possession or control requirements for security-based swap customers under 17CFR 240.15c3-3(pl(21or 17CFR 240,18a-4, as applicable. tr
- (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under L7 CFR 240.15c3-1, 17 CFR 240.t8a-1, or 17 CFR 240.I8a-2, as applicable, and the reserve requirements under 17 CFR240.15c3-3ort7 CFR 240.18a-4,asapplicable,if material differencesexist,orastatementthatnomaterial differences exist. !
- (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. D
- (q) Oath or affirmation in accordance with 17 CFR24Q.I7a-5, 17 CFR 240.77a-t2, or 17 CFR 240.18a-7, as applicable. !
- (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. !
- (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.78a-7, as applicable.
- (t) lndependent public accountant's report based on an examination of the statement of financial condition. fr
- (u) lndependent public accountant's report based on an examination of the financial report or financial statements under 17 CFR24Q.I7a-5, 17 CFR 240.I8a-7, or 17 CFR 240.L7a-12, as applicable. n
- (v) lndependent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240.17a-5 or t7 CFR 240,18a-7, as applicable, tr
- (w) lndependent public accountant's report based on a review of the exemption report under 17CFR 240.17a-5 or L7 CFR 240.18a-7, as applicable. !
- (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.15c3-1e or 17 CFR24O.l7a-t2, as applicable. !
- (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 17 CFR 240.t7a-I2lkl. !
- n (z)Other:
- \*\*To request confidential treatment of certain portions of this filing, see 17 CFR240.17a-5(e)(3) or L7 CFR240.1-8a-7(d)(2), as opplicable.
{3}------------------------------------------------
# JAMES T. BORELLO & CO.
# CONTENTS
# REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FINANCIAL STATEMENTS STATEMENT OF FINANCIAL CONDITION
NOTES TO FINANCIAL STATEMENTS
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4?0 t-cxlngton Avc..s(c. 2lCll. NY. NY 10I?0 T0l 212'571-00641rax2t2'571'Nt74
Jay Lcrner. C.P.Allcrrtcr@lerncrelPkln-corn Joseph G. Slpkln, C.P.A ts! pkln@li:rncmlpklo.c0m
#### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
'fo the Stockholders of James T. Borello & Co.
#### Opinion on thc Financial Statement
We have audited the accompanying statenrent of fiuancial condition of James l'. Borello & Co. as of Septernber 30,2021, and the related notes (collectively refened to as the "financial statement"). In our opinion, the financial statement presents fairly, in allmaterial respects, the financial position of James T. Borello & Co. as of September 30,2021, in confornrity with accounting principles generally accepted in the United States of America.
#### Ilasis for Opinion
This financial statement is the responsibility of James T. Borello & Co.'s management. Our responsibility is to express atr opinion on James T. Borsllo & Co.'s financial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent witlr respect to Jarnes T. Borello & Co. in accordance rvith the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conductcd our audit in accordance with the standards of PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whcther the financial staternent is free of material nrisstatement, whether due to eror or fraud. Our audit included performing procedures to assess the risks of material tnisstatement of the financial statement, whether due to error or fraud, and perfonning procedures that respond to those risks, Such procedures included exanrining, on a tcst basis, evidence regarcling the amounts and disclosures in the financial statements, Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
#### Basis for Qualified Opinion
As more fully described in Note 4 to the financial statements, the Company has not determined the cost of its defined benefit pension plan in accordance with accounting principles generally accepted in thc United States of Atnerica, which require the cost of employees' pensions to be recognized over thc employces' respective service periods and a liability to be recognized when the accumulated benefit obligation exceeds the fair value of plan assets. Quantification of the effects of that departure on the financialstatenrents is not prricticable.
{5}------------------------------------------------
## Qualified Opinion
In our opinion, except for the effeots of flrc matter discussed in the Basis for Qualified Opinion paragraph, the financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of James T Borello & Co. as of September 30, 2021, and the results of its operations and is cash flows for flre year then ended in accordance with accounting principles generally accepted in the United States of America.
4t"^t-\ hl"r e\*v LLf Lerner & Sipkin CPAs, LLP
We have served as James T. Borello & Co.'s auditor since 2019.
New York, NY
November 18,2021
{6}------------------------------------------------
## JAMES T. BORELLO & CO.
### JAMES T BORELLO & CO.
#### STATEMENT OF FINANCTAL CONDITION
#### SEPTEMBER 30 2021
#### ASSETS
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{7}------------------------------------------------
## JAMES T. BORELLO & CO
## NOTES TO FINANCIAL STATEMENTS
### SEPTEMBER 30" 2021
#### NOTE 1 - 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").
### Revenue Recognition:
Effective October 1,2018, the Company adopted ASC Topic 606, Revenue./iom Contracts with Customer.s (" 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 ref'lects 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 contrac(s) with a customer, (b) identifu the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfles 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 earnings 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.
{8}------------------------------------------------
## JAMES T. BORELLO & CO.
## NOTES TO FTNANC IAL STATEMENTS
### SEPTEMBER 30, 2O2I
## NOTE I - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - (continued)
Accounting and Tax Preparation Fees - The Company records revenue for accounting and tax preparation fees when the services are paid.
Advisory Fees - Advisory fees are recognized based on the average daily balance ofthe previous quarter and are paid in arrears.
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 September 30, 2021, there was no allowance for doubtf'ul 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 management 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 unreco gnized income tax benefits as other expense. The Cornpany is no longer subject to examination by tax authorities for federal, state or local income taxes fbr periods before 2018.
{9}------------------------------------------------
## JAMES T. BORELLO & CO
### 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 100% 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 \$ 127 ,166.
#### 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 I 00o/o after three years of eligible service and are based on accumulation account balances, which are maintained fbr each individual. Participants receive an annual pay credit up to 80% of their compensation and a monthly interest credit at a fixed rate of 50lo 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, l5c3-1, 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 \$929,113 and \$25,000, respectively. The ratio of aggregate indebtedness to net capital was l6.l%.
#### NOTE6-RELATEDPARTY
During the year ended September 30,202I, 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 ofthe revenue produced, but receives a salary and distributions.
{10}------------------------------------------------
## NOTE 7 - CASH SEGREGATED UNDER FEDERAL AND OTHER REGULATIONS
The Company has a bank account designated as a Special Bank Account for the Exclusive Benefit of Customers pursuant to Rule l5c3-3 of the SEC. At September 30,2021, this special bank account had a zero balance.
## NOTE 8 - FURNITURE AND EQUIPMENT
Furniture and equipment at September 30,2020 consists of:
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t
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| N
et | \$ | 24
.0
55 |
## 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 IO - COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, the Company is subject to inquiries from certain regulators. There are no pending regulatory inquiries to which the Company is a party for which management believes the ultimate outcome would have a material adverse effect on its financial position.
The Company has no significant contingent liabilities requiring disclosure in the financial statements.
## NOTE 1 1 \_ SUBSEQUENT EVENTS
Management has evaluated subsequent that have occurred as of November 19, 202l,the date the financial statements were available to be issued.
Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.