# HALL & ROMKEMA FINANCIAL SERVICES, LLC X-17A-5 (2020-02-03) — Broker-dealer annual report - Company: HALL & ROMKEMA FINANCIAL SERVICES, LLC - Form: X-17A-5 - Filed: 2020-02-03 - Period: 2019-12-31 - Accession: 0001218185-20-000001 - CIK: 1218185 - File #: 8-65800 - Material weakness: No - Auditor: Phillip V. George, PLLC - Auditor location: Celeste, TX - Contact: Joe A. Romkema - Phone: 517-337-8900 - Signed by: Joe A. Romkema (Member) Original filing: https://www.sec.gov/Archives/edgar/data/1218185/000121818520000001/2019auditreporthallromkema-.pdf --- {0}------------------------------------------------ | UNITEDSTATES | | OMB APPROVAL | |-------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | | OMB Number:
3235-0123
August 31,
Expires: | | | | 2020
Estimated average burden | | | | hours per response
12.00 | | | | | | | | SEC FILE NUMBER | | | | s-65800 | | FACING
PAGE
of
Brokers
Dealers
Required
and
Exchange
Act
of
1934
and | Section
to
17a-5
Thereunder | of
the
17 | | 01/01/2019 | | 12/31/2019 | | MM/DD/YY | | MM/DD/YY | | REGISTRANT
A. | | | | | | | | | | LL
USE ONLY
OFFICIAL | | (Do | | FIRM I.D.
NO. | | | | | | (No. and Street) | | | | | | 48823 | | (State) | | (Zip Code) | | | | 517-337-8900 | | | | (Area Code -
Telephone Number) | | ACCOUNTANT
B. | | | | | | | | | | | | (Name -if | | | | Celeste | TX | 75423 | | (City) | (State) | (Zip Code) | | | | | | | | | | | | | | | | | | not resident in | | | | | ONLY | | | OFFICIAL
FOR
USE | | | | | | | | | Washington, D.C.
ANNUAL
AUDITED
FORM
III
PART
PERIOD BEGINNING
Romkema
NAME OF BROKER-DEALER:Hall
&
ADDRESS OF PRINCIPAL PLACE OF BUSINESS:
not use P.O.
Ml
INDEPENDENT PUBLIC ACCOUNTANT whose opinion
Public Accountant
United States | SECURITlESANDEXCHANGECOMMISSION
20S49
REPORT
X-17A-5
Pursuant
Rule
AND ENDING
IDENTIFICATION
Services,
Financial
Box No.)
NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
IDENTIFICATION
is contained in this
Report*
individual, stale last, first, middle name)
or any of its possessions. | I *\*Claims for exemption from the requirement that the annua! report be covered by the opinion of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis for the exemption***.** *See Section 240.17a-5(e)(2)* Potential persons who are to respond to the collection of informationcontained in this form are notrequired to respond SEC 1410 (06-02) unless the formdisplays a currently validOMBcontrolnumber. {1}------------------------------------------------ #### **OATH OR AFFIRMATION** | ? Joe A. Romkema
1
* | ,
swear
(or
affirm) that,
to the best of | |-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | my knowledge and
belief the accompanying
Hall & Romkema Financial Services, LLC | financial statement
and supporting schedules
pertaining to the firm
of
,
as | | 0f
December 31 | l
9
,
correct.
are true and
20
1 further swear
(or
affirm) that | | nor any partner,
neither the company
proprietor,
that of a customer,
except as follows:
classified
solely as | principal
officer
or director
has any proprietary interest
in any account | | PAMELAITTSIUENCHEN
NOTARY PUBLIC - STATE OF
MICHIGAN
ll
COUNTY OF INGHAItf
AolygC,XiSCrnfyrijS | y
—
^
JjJgnature
- | | ^
m
i it
V
ary
Public | Member
Title | | (check
**
contains
This report
all applicable
0
(a)
Facing Page.
0
Financial Condition.
(b) Statement
of
0
(Loss).
(c) Statement
of
Income
0
(d)
of
Changes
Statement
in Financial
0
Changes in Stockholders'
(e) Statement
of
(f)
Statement
of
Changes
in Liabilities
0
of Net Capital.
(g) Computation
0
(h) Computation
for Determination
of
0
(i) Information
Relating to
the Possession or Control
0
A Reconciliation,
including
appropriate
(j)
Computation
for Determination
of
(k) A Reconciliation
between the audited and unaudited
consolidation.
0
(I ) An Oath or
Affirmation.
(m) A copy of
the
SIPC Supplemental
Report.
(n) A
report describing
any material
inadequacies | boxes):
Condition.
Equity or Partners'
or Sole
Proprietors'
Capital.
Creditors.
Subordinated
to Claims of
15c3-3.
Reserve Requirements
Pursuant to Rule
15c3-3.
Requirements Under Rule
explanation
Under Rule 15c3-1
of the Computation of
Net Capital
and the
Rule 15c3-3.
the Reserve
Requirements Under Exhibit
A of
Statements
of Financial
Condition
with respect
to methods of
audit.
found to exist
orfound
to have
existed
since
the date
of
the
previous | | of
confidential
**For
conditions
treatment of | portions
240.
J 7a-5(e)(3).
certain
of
this
filing, see
section | X {2}------------------------------------------------ #### **HALL & ROMKEMA FINANCIAL SERVICES, LLC** #### **TABLE OF CONTENTS** | Report
Public
Independent
Registered
Accounting
Firm
Page
of | 1 | |-----------------------------------------------------------------------------------|-----| | Statements
Financial | | | of
Statement
Financial
Condition | 2 | | of
Statement
Income | 3 | | of
Statement
Changes
in
Members'
Equity | 4 | | of
Cash
Flows
Statement | 5 | | Notes
to
Financial
Statements | 6-8 | | Supplementary
Information | | | 15c3-1
Computation
of
Net
Capital
under
Rule
of | | | the
Securities
and
Exchange
Commission | 9 | | Report
Independent
Public
Accounting
of
Registered
Firm | 10 | | Exemption
Report | 11 | {3}------------------------------------------------ # PHILLSP V. GEORGE, PLLC CERTIFIED PUBLIC ACCOUNTANT #### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Members Hall & Romkema Financial Sendees, LLC #### **Opinion on the Financial Statements** We have audited the accompanying statement of financial condition of Hall & Romkema Financial Sendees. LLC as of December 31, 2019, the related statements of income, changes in members' equity, and cash flows for the year then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of Hall & Romkema Financial Services, LLC as of December 31, 2019, and the results of its operations and its cash flows for the year then ended in conformity/ with accounting principles generally accepted in the United States of America. #### **Basis for Opinion** These financial statements are the responsibility of Hall & Romkema Financial Services, LLC's management. Our responsibility is to express an opinion on Hall & Romkema Financial Services, LLC's financial statements 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 with respect to Hall & Romkema Financial Services, LLC in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and perfonning procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding 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. #### **Auditor's Report on Supplemental Information** The supplemental information contained in Schedule I has been subjected to audit procedures performed in conjunction with the audit of Hall & Romkema Financial Services, LLC's financial statements. The supplemental information is the responsibility of Hall & Romkema Financial Services, LLC's management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In fonning our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity/ with 17 C.F.R. §240.17a-5. In our opinion, the supplemental information contained in Schedule I is fairly stated, in all material respects, in relation to the financial statements as a whole. *A \$1X1/* PHILLIP V. GEORGE, PLLC We have served as Hall & Romkema Financial Sendees, LLC's auditor since 2017. Celeste, Texas January' 20, 2020 {4}------------------------------------------------ ## **HALL & ROMKEMA FINANCIAL SERVICES, LLC Statement of Financial Condition December 31, 2019** #### **Assets** | Cash | \$
96,262 | |-----------------------------------------------------|---------------| | Cash
deposit
with
clearing
organization | 15,043 | | fees
Advisory
receivable | 191,918 | | Prepaid
expenses | 18,913 | | Property
and
equipment,
net | 253 | | | | | Total
Assets | \$
322,389 | | | | | Liabilities
Members'
Equity
and | | | Accounts
payable | \$
6,263 | | | | | Total
Liabilities | 6,263 | | | | | Members'
Equity | 316,126 | | | | | Members'
Total
and
Equity
Liabilities | \$
322,389 | The accompanying notes are an integral part of these financial statements. 2 {5}------------------------------------------------ ## **HALL & ROMKEMA FINANCIAL SERVICES, LLC Statement of Income For the Year Ended December 31, 2019** | \$
747,817
fees
Advisory
30,036
Other
777,853
Revenues
Total
Expenses
126,025
services
Contracted
23,136
Clearing
charges
11,534
Communications
61,578
Professional
and
services
fees
6,624
Occupancy
and
equipment
6,589
fees
Regulatory
10,246
Other
expenses
245,732
Total
Expenses
532,121
Net
\$
Income | Revenues | | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|--| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | The accompanying notes are an integral part of these financial statements. {6}------------------------------------------------ ## **HALL & ROMKEMA FINANCIAL SERVICES, LLC Statement of Changes in Members' Equity For the Year Ended December 31, 2019** | Balance at December 31, 2018 | \$
309,005 | |------------------------------|---------------| | Net income | 532,121 | | ' distributions
Members | (525,000) | | Balance at December 31, 2019 | \$
316,126 | The accompanying notes are an integral part of these financial statements. {7}------------------------------------------------ ## **HALL & ROMKEMA FINANCIAL SERVICES, LLC Statement of Cash Flows For the Year Ended December 31, 2019** | Cash
Flows
Operating
from
Activities | | |-----------------------------------------------------------------------|---------------| | Net
income | \$
532,121 | | Adjustments
to
reconcile
income
to
cash
net
net | | | provided
by
operating
activities: | | | Depreciation | 69 | | Changes
in
assets
and
liabilities | | | cash
Increase
deposit
with
clearing
organization
in | (33) | | Increase
receivable
in
advisory
fees | (14,138) | | Increase
in
prepaid
expenses | (916) | | in
Increase
accounts
payable | 294 | | cash
Net
operating
provided
by
activities | 517,397 | | Cash
Flows
from
Financing
Activities | | | Members'
distributions | (525,000) | | cash
used
in
financing
Net
activities | (525,000) | | Net
Decrease
in
Cash | (7,603) | | Cash,
of
Beginning
Year | 103,865 | | End
Cash,
of
Year | \$
96,262 | ## **Supplemental Disclosures of Cash Flow Information:** There was no cash paid during the year for interest or income taxes. The accompanying notes are an integral part of these financial statements. {8}------------------------------------------------ ## **HALL & ROMKEMA FINANCIAL SERVICES, LLC Notes to Financial Statements December 31, 2019** ### **Note A - Nature of Operations and Summary of Significant Accounting Policies:** #### **Nature of Operations** Hall & Romkema Financial Services, LLC (the Company), was organized in August 2002 as a Michigan limited liability company. The Company is a broker/dealer in securities registered with the Securities and Exchange Commission (SEC) and is a member of the Financial Industry Regulatory Authority (FINRA) and Securities Investor Protection Corporation (SIPC). The Company is also a registered investment advisor with the state of Michigan. The Company operates pursuant to section (k)(2)(ii) exemptive provisions of Rule 15c3-3 of the Securities Exchange Act of 1934, and accordingly, is exempt from the remaining provisions of that Rule. The Company, does not hold customer funds or securities, but as an introducing broker or dealer, will clear transactions on behalf of customers on a fully disclosed basis through a clearing broker/dealer. The clearing broker/dealer carries accounts of the customers and maintains and preserves all related books and records as are customarily kept by a clearing broker/dealer. The Company's operations consist primarily of providing investment advisory services to individuals located in Michigan. #### **Revenue Recognition** *Advisory fees.* The Company provides investment advisory services on a daily basis. The Company believes the performance obligation for providing advisory services is satisfied over time because the customer is receiving and consuming the benefits as they are provided by the Company. Fee arrangements are based on a percentage applied to the customer's assets under management. Fees are received quarterly in arrears. Fees are recognized as revenue monthly as they relate specifically to the services provided in that period, which are distinct from the services provided in other periods. #### **Fair Value of Financial Instruments** Substantially all the Company's financial asset and liability amounts reported in the Statement of Financial Condition are short term in nature and approximate fair value. #### **Use of Estimates** The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. #### **Property, Equipment and Depreciation** Property and equipment consists of office equipment, is carried at cost and includes expenditures for new additions and those that substantially increase the useful lives of existing assets. Depreciation is computed using the straight-line method over the estimated useful lives of 5 years. Depreciation expense totaled \$69 for the year ended December 31, 2019. {9}------------------------------------------------ ## **HALL & ROMKEMA FINANCIAL SERVICES, LLC Notes to Financial Statements December 31, 2019** #### **Note A - Nature of Operations and Summary of Significant Accounting Policies (Continued):** #### **Income Taxes** The Company is treated as a partnership for federal income tax purposes. Consequently, federal income taxes are not payable by, or provided for, the Company. Members are taxed individually on their share of the Company's earnings. The Company's net income or loss is allocated among the members in accordance with their ownership interest in the Company. The Company is subject to state income taxes. The Company's federal and state income tax returns for 2016 through 2018 are subject to examination by the applicable tax authorities, generally for three years after the later of the original or extended due date. #### **Note B - Transactions with Clearing Broker/Dealer:** The Company has a clearing agreement with a national clearing broker/dealer to provide clearing, execution and other related services for its advisory service clients and accounts. The clearing agreement requires minimum monthly charges of \$1,000. The clearing agreement requires the Company to maintain a minimum of \$15,000 in an account with the clearing broker/dealer. ## **Note C - Related Party Transactions / Economic Dependency/ Concentration of Services:** The three members of the Company, who are also registered securities representatives and officers of the Company, generated substantially all of the Company's revenue for the year ended December 31, 2019. In lieu of compensation, the members received distributions totaling \$525,000 during the year. The Company is economically dependent upon the members due to the concentration of services provided by them. Two of the Company's members are also owners of Coolidge Road Leasing, Inc., an employee leasing company (the leasing company). The Company leases administrative staff from the leasing company. A total of \$126,025 was incurred and paid by the Company to the leasing company for the year ended December 31, 2019, which is recorded as contracted services in the accompanying Statement of Income. Two of the Company's members are also owners of Hall & Romkema PLC, a certified public accounting firm (the accounting firm). The accounting firm shares its office space with the Company. A total of \$6,624 was incurred and paid by the Company to the accounting firm for office usage and occupancy expenses for the year ended December 31, 2019. The Company incurred expenses for professional advisory, accounting, insurance and postage totaling \$28,273 provided by the accounting firm during the year ended December 31, 2019. These expenses are recorded as professional fees and services in the accompanying Statement of Income. In addition, the Company has a prepaid asset of \$4,264 related to insurance costs paid to the accounting firm at December 31, 2019. {10}------------------------------------------------ ## **HALL & ROMKEMA FINANCIAL SERVICES, LLC Notes to Financial Statements December 31, 2019** #### **Note D - Concentration of Credit Risk:** The Company has cash, commissions receivable, and a clearing deposit held by and due from its clearing broker-dealer totaling \$109,873, or approximately 34% of total assets, at December 31, 2019. The Company routinely assesses the financial strength of its customers and, as a consequence, believes that its advisory fees receivable credit risk exposure is limited. #### **Note E - Net Capital Requirements:** The Company is subject to the SEC Uniform Net Capital Rule (SEC Rule 15c3-1), 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 15 to 1. Rule 15c3-1 also provides that equity capital may not be withdrawn or cash dividends paid if the resulting net capital ratio would exceed 10 to 1. At December 31, 2019, the Company had net capital of \$105,513, which was \$100,513 in excess of its net capital requirement of \$5,000. The Company's net capital ratio was 0.06 to 1. # **Note F-Off-Balance-Sheet Risk:** As discussed in Note A, the Company's customers' securities transactions are introduced on a fully disclosed basis with its clearing broker/dealer. The clearing broker/dealer carries the accounts of the customers of the Company and is responsible for execution, collection and payment of funds, and receipt and delivery of securities relative to customer transactions. Off-balance-sheet risk exists with respect to these transactions due to the possibility that customers may be unable to fulfill their contractual commitments wherein the clearing broker/dealer may charge any losses it incurs to the Company. The Company seeks to minimize this risk through procedures designed to monitor the credit worthiness of its customers and that customer transactions are executed properly by the clearing broker/dealer. #### **Note G - Statements of Changes in Liabilities Subordinated to Claims of General Creditors:** For the year ended December 31, 2019, the Company did not have any subordinated liabilities subject to claims of general creditors. Therefore, no statement is required. #### **Note H - Subsequent Events:** The Company has evaluated subsequent events through January 20, 2020 the date on which the financial statements were available to be issued. The Company made distributions to members totaling \$130,000 during January 2020. {11}------------------------------------------------ ## **HALL & ROMKEMA FINANCIAL SERVICES, LLC Computation of Net Capital under Rule 15c3-1 of the Securities and Exchange Commission As of December 31, 2019** #### **Net Capital** | Total members' equity qualified for net capital | \$ | 316,126 | |----------------------------------------------------|-----------|---------| | Deductions and/or charges | | | | Non-allowable assets: | | | | Advisory fees receivable | | 191,447 | | Prepaid expenses | | 18,913 | | Property and equipment,
net | | 253 | | Total deductions and/or charges | | 210,613 | | Net Capital | \$ | 105,513 | | Aggregate Indebtedness | | | | Items Included in Statement of Financial Condition | | | | Accounts Payable | \$ | 6,263 | | Total Aggregate Indebtedness | \$ | 6,263 | | Computation of Basic Net Capital
Requirement | | | | Minimum Net Capital Required | \$ | 5,000 | | Excess Net Capital | \$ | 100,513 | | Excess Net Capital at 1000% | \$ | 99,513 | | Ratio: Aggregate Indebtedness to
Net Capital | 0.06 to 1 | | #### **Reconciliation of Computation of Net Capital** The above computation does not differ from the computation of net capital under Rule 15c3-1 as of December 31, 2019 as filed by Hall & Romkema Financial Services, LLC on Form X-17A-5. Accordingly, no reconciliation is deemed necessary . #### **Statement Regarding the Reserve Requirements and Possession or Control Requirements** The Company operates pursuant to section (k)(2)(ii) exemptive provisions of Rule 15c3-3 of the Securities Exchange Act of 1934. Under these exemptive provisions, the Computation for Determination of Reservs Requirements and Information Relating to the Possession and Control Requirements are not required. See accompanying report of independent registered public accounting firm. {12}------------------------------------------------ ## PHILLIP V. GEORGE, PLLC CERTIFIED PUBLIC ACCOUNTANT ## REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Members Hall & Romkema Financial Services, LLC We have reviewed management's statements, included in the accompanying Exemption Report, in which (1 ) Hall & Romkema Financial Services, LLC identified the following provisions of 17 C.F.R. §15c3-3(k) under which Hall & Romkema Financial Services, LLC claimed an exemption from 17 C.F.R. §240.15c3-3:(2)(ii) (exemption provisions) and (2) Hall & Romkema Financial Services, LLC stated that Hall & Romkema Financial Services, LLC met the identified exemption provisions throughout the most recent fiscal year without exception. Hall & Romkema Financial Services, LLC's management is responsible for compliance with the exemption provisions and its statements. Our review was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included inquiries and other required procedures to obtain evidence about Hall & Romkema Financial Sendees, LLC's compliance with the exemption provisions. A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on management's statements. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to management's statements referred to above for them to be fairly stated, in all material respects, based on the provisions set forth in paragraph (k)(2)(ii) of Rule 15c3-3 under the Securities Exchange Act of 1934. PHILLIP V. GEORGE, PLLC Celeste, Texas January 20, 2020 10 {13}------------------------------------------------ ## **Hall & Romkema Financial Services, LLC.** **3495 Coolidge / East Lansing, Ml 48823 517-337-8900** #### **Hall & Romkema Financial Serv ices, LLC. Assertions** **Hall & Romkema Financial Services, LLC.** (the "Company") is a registered broker-dealer subject to Rule 17a-5 promulgated by the Securities and Exchange Commission (17 C.F.R. §240.17a-5, "Reports to be made by certain brokers and dealers"). This Exemption Report was prepared as required by 17 C.F.R. § 240.17a-5(d)(l) and (4). To the best of its knowledge and belief, the Company states the following: - (1 ) The Company claimed an exemption from 17 C.F.R. § 240.15c3-3 under the following provisions of 17 C.F.R. § 240.15c3-3(k)(2)(ii). - (2) The Company met the identified exemption provision in 17 C.F.R. § 240.15c3-3(k)(2)(ii) throughout the most recent fiscal year without exception. ## **Hall & Romkema Financial Services, LLC.** I,Joe A.Romkema,swear (or affirm) that, to my best knowledge and belief, this Exemption Report is true and correct. Joe A. Romke-m ^ Member January 4, 2020 Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.