Which option demonstrates fiscal responsibility to licensing?

• A. An annual review of your financial records conducted by an independent CPA in accordance with GAAP
• B. Proof of reserve funds equal to at least three months of operating expenses
• C. Both A and B
• D. Neither A nor B

Answer: (C)

Fiscal responsibility to licensing requires both external oversight and prudent liquidity. An annual independent CPA review conducted under GAAP provides third-party verification of financial statements, ensuring accuracy, consistency, and compliance with standard accounting practices. This external check promotes transparency and accountability to the licensing authority. Having reserve funds equal to at least three months of operating expenses demonstrates liquidity and risk management, showing the agency can cover ongoing obligations and unexpected costs during downturns.

Together, these two measures address both governance/oversight and financial resilience, which licensing bodies typically expect. Relying on only one of them leaves a gap—there might be good reporting, but not enough cash reserves, or strong reserves without external verification. Therefore, adopting both practices most clearly demonstrates fiscal responsibility to licensing.