# PALMETTO ADVISORY GROUP X-17A-5 (2020-02-28) — Broker-dealer annual report - Company: PALMETTO ADVISORY GROUP - Form: X-17A-5 - Filed: 2020-02-28 - Period: 2019-12-31 - Accession: 0001462329-20-000002 - CIK: 1462329 - File #: 8-68240 - Material weakness: No - Auditor: Glaser and Company - Auditor location: Charleston, SC - Contact: Derrick M Grava - Phone: 843-768-2535 - Signed by: Derrick M Grava (President, CEO) Original filing: https://www.sec.gov/Archives/edgar/data/1462329/000146232920000002/annualauditpublic.pdf --- {0}------------------------------------------------ #### **OATH OR AFFIRMATION** | I, _ | _____
_ D_E_R_R_IC_K_ G_R_A_V_A _________ | | _____
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, swear (or affirm) that, to the best of | |-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | --------------------------------
PALMETTO ADVISORY GROUP | | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of
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F_E_B_R_U_A_R_Y_28 _______ , 20~2~0-~ | | are true and co -ect. I further swear (or affirm) that | | | classified solely as that of a customer, except as follows: | | neither the company nor any partner, proprietor, principal officer or director has any proprietary interest in any account | | | \ "'' ""'.
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Title | | 0 (k) | This report ** contains (check all applicable boxes):
!RI (a) Facing Page.
~ (b) Statement of Financial Condition.
of Comprehensive Income (as defined in ~ 10.1-02 of Regulation S-X).
§ (d) Statement of Changes in Financial Condition.
(e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital.
(f) Statement of Changes in Liabilities Subordinated to Claims of Creditors.
§ (g) Computation of Net Capital.
(h) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3.
(i) Information Relating to the Possession or Control Requirements Under Rule 15c3-3.
Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3 | | D (c) Statement of Income (Loss) or, if there is other comprehensive income in the period(s) presented, a Statement
D G) A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Rule l 5c3-l and the
A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of | | | consolidation.
§ (1) An Oath or Affirmation.
(m) A copy of the SIPC Supplemental Report.
** For conditions of confidential treatment of certain portions of this filing, see section 240.17a-5(e)(3). | | (n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit. | {1}------------------------------------------------ # **PALMETTO ADVISORY GROUP, LLC** KIAWAH ISLAND, SOUTH CAROLINA # **AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019** {2}------------------------------------------------ # **PALMETTO ADVISORY GROUP, LLC STATEMENT OF FINANCIAL CONDITION FOR THE YEAR ENDED DECEMBER 31, 2019** # **TABLE OF CONTENTS** | Report ofJndependent Registered Public Accounting Firm | | |--------------------------------------------------------|-----| | Statement of Financial Condition | 2 | | Notes to the Financial Statements | 3-5 | {3}------------------------------------------------ ![](_page_3_Picture_0.jpeg) American Institute ofCPAs I Public Company Accounting Oversight Board I SC Association ofCPAs #### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Members Palmetto Advisory Group, LLC Kiawah Island, South Carolina #### **Opinion on the Financial Statement** We have audited the accompanying statement offinancial condition of Palmetto Advisory Group, LLC as of December 31, 2019, and the related notes (collectively referred to as the "financial statement"). ln our opinion, the statement of :financial condition presents fairly, in all material respects, the financial position of Palmetto Advisory Group, LLC as of December 31, 2019 in conformity with accounting principles generally accepted in the United States of America. #### **Basis for Opinion** This financial statement is the responsibility of Palmetto Advisory Group, LLC's management. Our responsibility is to express an opinion on Palmetto Advisory Group, LLC'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 with respect to Palmetto Advisory Group, 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 statement is 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 statement, whether due to error or fraud, and performing 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. **~~tC1~1 u..c.** We have served as Palmetto Advisory Group, LLC's auditor since 2018. Glaser and Company, LLC Charleston, South Carolina February 27, 2020 > Glaser and Company, LLC 149 East Bay Street, Suite 200, Charleston, South Carolina 2940 I www.glascrcompuny.com I P 843.849.0179 J I? 843.872.0533 I {4}------------------------------------------------ # **PALMETTO ADVISORY GROUP, LLC STATEMENT OF FINANCIAL CONDITION FOR THE YEAR ENDED DECEMBER 31, 2019** # **ASSETS** | Other assets | 35 | |--------------|--------------| | TOTAL ASSETS | \$
46,941 | # **LIABILITIES AND MEMBERS' EQUITY** | LlABILITfES:
Accrued expenses | \$
5,945 | |---------------------------------------|--------------| | Total Liabilities | 5 945 | | MEMBERS' EQUITY: | | | Membership interest | 40,996 | | Total Liabilities and Members' Equity | \$
46,941 | See accompanying notes to financial statements. {5}------------------------------------------------ # **PALMETTO ADVISORY GROUP, LLC NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2019** ## **1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** This summary of significant accounting policies of Palmetto Advisory Group, LLC (the "Company") is presented to assist in understanding the Company's financial statements. The financial statements and notes are the representation of the Company's management, who is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements. ## **Organization and Nature of Business** Palmetto Advisory Group, LLC (the "Company") is a South Carolina limited liability company and operates as a registered, non-carrying broker-dealer registered with the Securities and Exchange Commission (SEC) and is a member of the Financial Industry Regulatory Authority, lnc. (FTNRA). The Company's primarily solicits the registered representatives of larger broker dealers on behalf of independent mutual fund companies, and is typically compensated through a portion of the mutual fund's management fee and sometimes also on a retainer basis. The Company operates under the provisions of Paragraphs (k)(2)(i) of Rule l 5c3-3 of the Securities and Exchange Commission and, accordingly, is exempt from the remaining provisions of that rule. The Company does not hold customer accounts and promptly transmits all customer fw1ds and securities received in connection with its activities as a broker-dealer. The Company does not hold any funds or securities for or owe money or securities to customers. # **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 certain reported amounts and disclosures. Significant estimates are primarily the collectability of commissions receivable. lt is at least reasonably possible that the estimate of the effect on the financial statements of a condition, situation, or set of circumstances that existed at the date of the financial statements will change in the near term due to one or more future confirming events. The effect of this change could be material to the financial statements. # **Cash and Cash Equivalents** Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to certain limits and may, at times, be in excess of those limits. The Company had no cash balances in excess of FDIC coverage at December 31 , 2019. For purposes of the Statement of Cash Flows, the Company has defined cash equivalents as highly liquid investments, with original maturities of less than three months that are not held for sale in the ordinary course of business. ### **Commissions Receivable** Commjssions receivable are stated at the amount the Company expects to collect. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments as needed. Management considers the following factors when determining the collectability of specific customer accounts: customer credit-worthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. Past due balances over 90 days and other higher risk amounts are reviewed individually for collectability. If the financial condition of the Company's customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. Based on management's assessment, the Company provides for estimated uncollectible amounts through a charge to earnings and a credit to a valuation allowance. Balances that remain outstanding after the Company has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. {6}------------------------------------------------ # **1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED** #### **Revenue Recognition** In May 2014, the Financial Accounting Standards Board ("F ASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606). The ASU and all subsequently issued clarifying ASUs replaced most existing revenue recognition guidance in U.S. GAAP. The ASU also required expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted the new standard effective January 1, 2018. The adoption of this ASU did not have a significant impact on the Company's financial statements. The majority of the Company's revenue arrangements generally consist of a single performance obligation. The Company has contracts under which it receives non-refundable retainers from investment managers. Retainers are typically due and recognized on the first day of each month. The Company receives commission income when referred clients purchase funds of a mutual fund client and on a periodic basis as referred clients maintain balances in the mutual fund. #### **Income Taxes** The Company has elected to be taxed as a subchapter "S" corporation. Under this election the Company's taxable income and tax credits are passed through to its members for inclusion in their individual income tax returns. The Company recognizes and measw-es its unrecognized tax positions in accordance with F ASB ASC 740, Income Taxes. Under that guidance the Company assesses the likelihood, based on their technical merit, that tax positions will be sustained upon examination based on the facts, circumstances and information available at the end of each period. The measurement of unrecognized tax position is adjusted when new information is available, or when an event occw·s that requires a change. Management has considered this guidance and there was no impact to these financial statements associated with this consideration. As of December 31 , 2019, the tax years ended December 31 , 2016 through 2019 were open for potential examination by taxing authorities. No liabilities for unceitain income tax positions were recorded at December 31 , 2019. ### **2. CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES** ### **Industry and Regulatorv Requirements** The Company is subject to complex legal and regulatory requirements that continue to evolve. The Company might be subject to a variety of legal proceedings including FINRA arbitrations, as well as civil lawsuits, class actions and other regulatory examinations, reviews, investigations (both formal and informal), audits and requests for information by various governmental regulatory agencies and selfregulatory organizations in jurisdictions where the Company does business. ### **Concentrations** During the year ended December 31, 2019, the Company generated all of its revenues under marketing agreements with six investment managers. ### **3. NET CAPITAL REQUIREMENTS** The Company is subject to the SEC Uniform Net Capital Rule (SEC Rule 15c3-l), which requires the maintenance of minimum net capital, and limits the ratio of aggregate indebtedness to net capital, as defined, shall not exceed 15 to 1. At December 31, 2019, the Company had net capital of \$32,328, which was \$27,328 in excess of the required net capital balance of \$5,000. As of December 31, 2019, the Company's ratio of aggregate indebtedness to adjusted net capital was .183 9 to 1. {7}------------------------------------------------ # **4. RECENTPRONOUNCEMENTS** On February 25, 2016, the FASB issued Accounting Standards Update No. 2016- 02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. The Company adopted the standard retrospectively, but noted the were no material changes to this retrospective application. The Company bas fully adopted the provisions of this standard in 2019. # **5. OPERA TING AGREEMENT** The Members of Palmetto Advisory Group, LLC are subject to an operating agreement which specifies the rights and obligations of its members. Among other things, the agreement stipulates the allocation of profits, losses and distributions to its members, as well as the terms and conditions under which ownership interest can be sold or transferred. # **6. SUBSEQUENTEVENTS** Management has evaluated the effect subsequent events would have on the financial statements of the Company at December 31, 2019, through February 27, 2020, which is the date the financial statements were available to issue. There were no material subsequent events requiring recognition or additional disclosure in these financial statements. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.