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Note 21: Correction of Errors | 12 Months Ended
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Dec. 31, 2016
Notes |
Note 21: Correction of Errors | 21) Correction of Errors The accompanying Consolidated Financial Statements include the restatement of the Company’s previously filed consolidated balance sheets and the related consolidated statements of operations, shareholders’ equity and cash flows for the fiscal years ended December 31, 2014, December 31, 2015, and December 31, 2016. For the revised quarterly results of operations for the fiscal years ended December 31, 2014, 2015 and 2016, see “Impact of Restatement Adjustments on Quarterly Financial Statements (Unaudited)” in Note 22 of the accompanying Consolidated Financial Statements. Immaterial Error in Accounting for Loan Commitments: Subsequent to the issuance of the company’s 2015 consolidated financial statements, the Company identified an error in the accounting for its loan commitments (“Adjustment A”). The Company corrected the presentation of the changes in fair value of its loan commitments to present them as a component of current earnings instead of as a component of other comprehensive income, as previously reported. The Company’s management has concluded that the effect of the correction is not material to any previously issued Consolidated Financial Statements. Subsequent to the issuance of the company’s 2016 Consolidated Financial Statements, the Company identified the following errors, (“Adjustments B”): Material Error in Accounting for Repurchase Agreements: The Company has concluded it should account for its Repurchase Agreements with unaffiliated banks as "On-Balance-Sheet" transactions, rather than as "Off-Balance-Sheet" as previously reported. Accordingly, the Company will reflect any outstanding loans as Loans Held for Sale and the corresponding debt as a Bank Loan Payable. The Company has corrected its sale accounting practice to defer revenue and costs on loans that remain as Held for Sale. The Company will recognize these deferred items at the time the loan is purchased by the ultimate investor. Material Error in Accounting for Tax Valuation Allowance: The Company determined that it should have reversed its valuation allowance in its entirety in 2012 when the Company no longer qualified for the small life insurance company deduction, rather than in other periods as previously reported. Other Immaterial Corrections and Reclassifications: In addition, the Company has recorded the following additional corrections in the accompanying Consolidated Financial Statements: Reclassification of Receivables to Loans Held for Sale Reclassification of the Provision for Loan Loss Reserve to net against Mortgage Fee Income Correction to Future Life, Annuity and Other Benefits to reverse a deferred profit liability The tables below present the impact of the restatement on the Company’s Consolidated Balance Sheets for the periods presented:
| As of December 31, 2016 |
| As Originally Reported |  | Adjustment (A) |  | As Previously Reported |  | Adjustments (B) |  | As Restated
Loans held for sale (formerly called Mortgage loans sold to investors) | $ 82,491,091 |  | $ - |  | $ 82,491,091 |  | $ 106,648,741 |  | $ 189,139,832
Receivables, net | 18,870,119 |  | - |  | 18,870,119 |  | (12,496,755) |  | 6,373,364
Other assets | 6,891,468 |  | - |  | 6,891,468 |  | 3,521,926 |  | 10,413,394
Total Assets | 854,004,671 |  | - |  | 854,004,671 |  | 97,673,912 |  | 951,678,583
Future life, annuity, and other benefits | 585,610,063 |  | - |  | 585,610,063 |  | (1,542,371) |  | 584,067,692
Bank and other loans payable | 53,718,548 |  | - |  | 53,718,548 |  | 98,422,131 |  | 152,140,679
Income taxes | 27,904,294 |  | - |  | 27,904,294 |  | (3,585,425) |  | 24,318,869
Total liabilities | 725,825,117 |  | - |  | 725,825,117 |  | 93,294,335 |  | 819,119,452
Accumulated other comprehensive income, net of taxes | 264,822 |  | - |  | 264,822 |  | - |  | 264,822
Retained earnings | 63,029,627 |  | - |  | 63,029,627 |  | 4,379,577 |  | 67,409,204
Total stockholders' equity | 128,179,554 |  | - |  | 128,179,554 |  | 4,379,577 |  | 132,559,131
Total Liabilities and Stockholders' Equity | 854,004,671 |  | - |  | 854,004,671 |  | 97,673,912 |  | 951,678,583
| As of December 31, 2015 |
| As Originally Reported |  | Adjustment (A) |  | As Previously Reported |  | Adjustments (B) |  | As Restated
Loans held for sale (formerly called Mortgage loans sold to investors) | $ 115,286,455 |  | $ - |  | $ 115,286,455 |  | $ 96,166,551 |  | $ 211,453,006
Receivables, net | 16,026,100 |  | - |  | 16,026,100 |  | (9,965,106) |  | 6,060,994
Other assets | 7,100,869 |  | - |  | 7,100,869 |  | 4,338,404 |  | 11,439,273
Total Assets | 749,933,317 |  | - |  | 749,933,317 |  | 90,539,849 |  | 840,473,166
Future life, annuity, and other benefits | 517,177,388 |  | - |  | 517,177,388 |  | (1,388,134) |  | 515,789,254
Bank and other loans payable | 40,908,915 |  | - |  | 40,908,915 |  | 90,096,699 |  | 131,005,614
Income taxes | 25,052,059 |  | - |  | 25,052,059 |  | (4,639,170) |  | 20,412,889
Total liabilities | 638,687,092 |  | - |  | 638,687,092 |  | 84,069,395 |  | 722,756,487
Accumulated other comprehensive income, net of taxes | 1,533,828 |  | (2,033,186) |  | (499,358) |  | - |  | (499,358)
Retained earnings | 52,021,764 |  | 2,033,186 |  | 54,054,950 |  | 6,470,454 |  | 60,525,404
Total stockholders' equity | 111,246,225 |  | - |  | 111,246,225 |  | 6,470,454 |  | 117,716,679
Total Liabilities and Stockholders' Equity | 749,933,317 |  | - |  | 749,933,317 |  | 90,539,849 |  | 840,473,166
| As of January 1, 2014 |
| As Originally Reported |  | Adjustment (A) |  | As Previously Reported |  | Adjustments (B) |  | As Restated
Accumulated other comprehensive income, net of taxes | $ 1,218,396 |  | $ (907,624) |  | $ 310,772 |  | $ - |  | $ 310,772
Retained earnings | 39,666,587 |  | 907,624 |  | 40,574,211 |  | 6,405,271 |  | 46,979,482
| As of December 31, 2014 |
| As Originally Reported |  | Adjustment (A) |  | As Previously Reported |  | Adjustments (B) |  | As Restated
Accumulated other comprehensive income, net of taxes | 1,438,566 |  | (1,177,209) |  | 261,357 |  | - |  | 261,357
Retained earnings | 44,101,252 |  | 1,177,209 |  | 45,278,461 |  | 6,597,870 |  | 51,876,331
The tables below present the impact of the restatement on the Company’s Consolidated Statements of Earnings for the periods presented:
| Year Ended December 31, 2016
| As Originally Reported |  | Adjustment (A) |  | As Previously Reported |  | Adjustments (B) |  | As Restated
Mortgage fee income | $ 186,416,311 |  | $ - |  | $ 186,416,311 |  | $ (2,873,515) |  | $ 183,542,796
Total revenues | 307,208,416 |  | - |  | 307,208,416 |  | (2,873,515) |  | 304,334,901
Increase in future policy benefits | 21,476,432 |  | - |  | 21,476,432 |  | (154,237) |  | 21,322,195
Commissions | 87,762,583 |  | - |  | 87,762,583 |  | 871,911 |  | 88,634,494
Provision for loan loss reserve | 4,688,754 |  | - |  | 4,688,754 |  | (2,988,754) |  | 1,700,000
Cost related to funding mortgage loans | 8,756,791 |  | - |  | 8,756,791 |  | 434,697 |  | 9,191,488
Total benefits and expenses | 286,468,053 |  | - |  | 286,468,053 |  | (1,836,383) |  | 284,631,670
Earnings before income taxes | 20,740,363 |  | - |  | 20,740,363 |  | (1,037,132) |  | 19,703,231
Income tax expense | (6,460,859) |  | - |  | (6,460,859) |  | (1,053,745) |  | (7,514,604)
Net earnings | 14,279,504 |  | - |  | 14,279,504 |  | (2,090,877) |  | 12,188,627
Net earnings per common share (1) | $0.96 |  | $0.00 |  | $0.96 |  | ($0.14) |  | $0.82
Net earnings per common share assuming dilution (1) | $0.94 |  | $0.00 |  | $0.94 |  | ($0.14) |  | $0.81
| Year Ended December 31, 2015
| As Originally Reported |  | Adjustment (A) |  | As Previously Reported |  | Adjustments (B) |  | As Restated
Mortgage fee income | $ 174,323,452 |  | $ 1,403,240 |  | $ 175,726,692 |  | $ (4,209,408) |  | $ 171,517,284
Total revenues | 283,161,000 |  | 1,403,240 |  | 284,564,240 |  | (4,209,408) |  | 280,354,832
Increase in future policy benefits | 17,212,001 |  | - |  | 17,212,001 |  | (154,237) |  | 17,057,764
Commissions | 81,935,623 |  | - |  | 81,935,623 |  | (1,035,005) |  | 80,900,618
Provision for loan loss reserve | 6,295,043 |  | - |  | 6,295,043 |  | (2,845,940) |  | 3,449,103
Cost related to funding mortgage loans | 8,864,404 |  | - |  | 8,864,404 |  | 37,107 |  | 8,901,511
Total benefits and expenses | 263,339,435 |  | - |  | 263,339,435 |  | (3,998,075) |  | 259,341,360
Earnings before income taxes | 19,821,565 |  | 1,403,240 |  | 21,224,805 |  | (211,333) |  | 21,013,472
Income tax expense | (7,198,685) |  | (547,263) |  | (7,745,948) |  | 83,917 |  | (7,662,031)
Net earnings | 12,622,880 |  | 855,977 |  | 13,478,857 |  | (127,416) |  | 13,351,441
Net earnings per common share (1) | $0.87 |  | $0.06 |  | $0.93 |  | ($0.01) |  | $0.92
Net earnings per common share assuming dilution (1) | $0.84 |  | $0.06 |  | $0.90 |  | ($0.01) |  | $0.89
| Year Ended December 31, 2014
| As Originally Reported |  | Adjustment (A) |  | As Previously Reported |  | Adjustments (B) |  | As Restated
Mortgage fee income | $ 128,696,998 |  | $ 441,943 |  | $ 129,138,941 |  | $ (2,331,468) |  | $ 126,807,473
Total revenues | 226,936,674 |  | 441,943 |  | 227,378,617 |  | (2,331,468) |  | 225,047,149
Increase in future policy benefits | 18,060,151 |  | - |  | 18,060,151 |  | (154,237) |  | 17,905,914
Commissions | 59,876,675 |  | - |  | 59,876,675 |  | (502,133) |  | 59,374,542
Provision for loan loss reserve | 3,053,403 |  | - |  | 3,053,403 |  | (2,053,403) |  | 1,000,000
Cost related to funding mortgage loans | 6,877,069 |  | - |  | 6,877,069 |  | (425,750) |  | 6,451,319
Total benefits and expenses | 214,455,721 |  | - |  | 214,455,721 |  | (3,135,523) |  | 211,320,198
Earnings before income taxes | 12,480,953 |  | 441,943 |  | 12,922,896 |  | 804,055 |  | 13,726,951
Income tax expense | (4,726,305) |  | (172,358) |  | (4,898,663) |  | (611,456) |  | (5,510,119)
Net earnings | 7,754,648 |  | 269,585 |  | 8,024,233 |  | 192,599 |  | 8,216,832
Net earnings per common share (1) | $0.56 |  | $0.02 |  | $0.58 |  | $0.01 |  | $0.59
Net earnings per common share assuming dilution (1) | $0.54 |  | $0.02 |  | $0.56 |  | $0.01 |  | $0.57
(1) Earnings per share amounts have been adjusted retroactively for the effect of annual stock dividends. The tables below present the impact of the restatement on the Company’s Consolidated Statements of Comprehensive Income for the periods presented:
| Year Ended December 31, 2016
| As Originally Reported |  | Adjustment (A) |  | As Previously Reported |  | Adjustments (B) |  | As Restated
Net earnings | $ 14,279,504 |  | $ - |  | $ 14,279,504 |  | $ (2,090,877) |  | $ 12,188,627
Net unrealized gains (losses) on derivative instruments | 6,490 |  | - |  | 6,490 |  | - |  | 6,490
Other comprehensive gain (loss) | 764,180 |  | - |  | 764,180 |  | - |  | 764,180
| Year Ended December 31, 2015
| As Originally Reported |  | Adjustment (A) |  | As Previously Reported |  | Adjustments (B) |  | As Restated
Net earnings | $ 12,622,880 |  | $ 855,977 |  | $ 13,478,857 |  | $ (127,416) |  | $ 13,351,441
Net unrealized gains (losses) on derivative instruments | 866,605 |  | (855,977) |  | 10,628 |  | - |  | 10,628
Other comprehensive gain (loss) | 95,262 |  | (855,977) |  | (760,715) |  | - |  | (760,715)
| Year Ended December 31, 2014
| As Originally Reported |  | Adjustment (A) |  | As Previously Reported |  | Adjustments (B) |  | As Restated
Net earnings | $ 7,754,648 |  | $ 269,585 |  | $ 8,024,233 |  | $ 192,599 |  | $ 8,216,832
Net unrealized gains (losses) on derivative instruments | 286,018 |  | (269,585) |  | 16,433 |  | - |  | 16,433
Other comprehensive gain (loss) | 220,170 |  | (269,585) |  | (49,415) |  | - |  | (49,415)
The tables below present the impact of the restatement on the Company’s Consolidated Statements of Cash Flows for the periods presented:
| Year Ended December 31, 2016 |
| As Originally Reported |  | Adjustment (A) |  | As Previously Reported |  | Adjustments (B) |  | As Restated
Net earnings | $ 14,279,504 |  | $ - |  | $ 14,279,504 |  | $ (2,090,877) |  | $ 12,188,627
Provision for deferred and other income taxes | 5,076,899 |  | - |  | 5,076,899 |  | 1,053,745 |  | 6,130,644
Loans originated for sale | - |  | - |  | - |  | (3,098,710,299) |  | (3,098,710,299)
Proceeds from loans sold | - |  | - |  | - |  | 3,246,127,714 |  | 3,246,127,714
Net gains on loans sold | - |  | - |  | - |  | (137,682,984) |  | (137,682,984)
Future life and other benefits | 18,143,832 |  | - |  | 18,143,832 |  | (154,237) |  | 17,989,595
Receivables for mortgage loans sold | 20,216,621 |  | - |  | 20,216,621 |  | (20,216,621) |  | -
Other operating assets and liabilities | (8,473,503) |  | - |  | (8,473,503) |  | 3,348,127 |  | (5,125,376)
Net cash provided by (used in) operating activities | 43,860,446 |  | - |  | 43,860,446 |  | (8,325,432) |  | 35,535,014
Net change in warehouse line borrowings | - |  |  |  | - |  | 8,325,432 |  | 8,325,432
Net cash provided by financing activities | 10,664,656 |  | - |  | 10,664,656 |  | 8,325,432 |  | 18,990,088
| Year Ended December 31, 2015
| As Originally Reported |  | Adjustment (A) |  | As Previously Reported |  | Adjustments (B) |  | As Restated
Net earnings | $ 12,622,880 |  | $ 855,977 |  | $ 13,478,857 |  | $ (127,416) |  | $ 13,351,441
Provision for deferred and other income taxes | 4,909,927 |  | - |  | 4,909,927 |  | (83,917) |  | 4,826,010
Loans originated for sale | - |  | - |  | - |  | (2,861,404,239) |  | (2,861,404,239)
Proceeds from loans sold | - |  | - |  | - |  | 2,933,300,742 |  | 2,933,300,742
Net gains on loans sold | - |  | - |  | - |  | (131,130,447) |  | (131,130,447)
Future life and other benefits | 15,232,634 |  | - |  | 15,232,634 |  | (154,237) |  | 15,078,397
Receivables for mortgage loans sold | (47,752,055) |  | - |  | (47,752,055) |  | 47,752,055 |  | -
Other operating assets and liabilities | 4,890,770 |  | - |  | 4,890,770 |  | (434,680) |  | 4,456,090
Net cash provided by (used in) operating activities | (15,831,248) |  | - |  | (15,831,248) |  | (12,282,139) |  | (28,113,387)
Net change in warehouse line borrowings | - |  |  |  | - |  | 12,282,139 |  | 12,282,139
Net cash provided by financing activities | 9,656,561 |  | - |  | 9,656,561 |  | 12,282,139 |  | 21,938,700
| Year Ended December 31, 2014
| As Originally Reported |  | Adjustment (A) |  | As Previously Reported |  | Adjustments (B) |  | As Restated
Net earnings | $ 7,754,648 |  | $ 269,585 |  | $ 8,024,233 |  | $ 192,599 |  | $ 8,216,832
Provision for deferred and other income taxes | 3,245,004 |  | - |  | 3,245,004 |  | 611,452 |  | 3,856,456
Loans originated for sale | - |  | - |  | - |  | (2,044,909,613) |  | (2,044,909,613)
Proceeds from loans sold | - |  | - |  | - |  | 2,102,740,825 |  | 2,102,740,825
Net gains on loans sold | - |  | - |  | - |  | (93,144,155) |  | (93,144,155)
Future life and other benefits | 14,084,894 |  | - |  | 14,084,894 |  | (154,237) |  | 13,930,657
Receivables for mortgage loans sold | 7,362,353 |  | - |  | 7,362,353 |  | (7,362,353) |  | -
Other operating assets and liabilities | (135,279) |  | - |  | (135,279) |  | (1,453,885) |  | (1,589,164)
Net cash provided by (used in) operating activities | 31,015,809 |  | - |  | 31,015,809 |  | (43,479,367) |  | (12,463,558)
Net change in warehouse line borrowings | - |  |  |  | - |  | 43,479,367 |  | 43,479,367
Net cash provided by financing activities | 6,364,003 |  | - |  | 6,364,003 |  | 43,479,367 |  | 49,843,370

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- Definition The entire disclosure for reporting accounting changes and error corrections. It includes the conveyance of information necessary for a user of the Company's financial information to understand all aspects and required disclosure information concerning all changes and error corrections reported in the Company's financial statements for the period. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -URI http://asc.fasb.org/topic&trid=2122394 + Details
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