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CIM Opportunity Zone Fund to Restate Financial Statements

CIM Opportunity Zone Fund to Restate Financial Statements. CIM, opportunity zone fund, financial statements, accounting, SEC, Securities and Exchange Commission

CIM Opportunity Zone Fund announced that it will restate its previously reported financial statements. This follows a review by the U.S. Securities and Exchange Commission, which raised concerns about the accounting methods used by the fund.

The fund is sponsored by Los Angeles-based CIM, a community-focused real estate and infrastructure owner, operator, lender, and developer.

Based on its interpretation of the criteria prescribed under Accounting Standards Codification 946, Financial Services – Investment Companies (ASC 946), the fund originally used on its annual audited and interim unaudited financial statements a specific accounting method for investment companies, valuing its assets based on their current market value – fair value.

Following the fund’s filing, in May 2023, SEC staff began a review of the fund’s Form 10. The SEC disagreed with this approach, stating it was not in “accordance with accounting principles generally accepted in the United States of America,” and believes the fund should use a different method that reflects the original cost of the assets – historical cost.

As a result, the fund will be amending its past financial statements to comply with the SEC’s guidance. It concluded that its historical annual audited financial statements (and audit report) included within its Form 10, as amended, and interim unaudited financial statements for each of the periods ended June 30, 2023, and Sept. 30, 2023, included in its Forms 10-Q should be restated. The fund will include restated consolidated financial statements for the affected periods in an amended Form 10 and amended Form 10-Qs. This means that the value of the fund’s assets will be reported differently, impacting the reported financial performance.

CIM Opportunity Zone Fund emphasizes that this change in accounting methods is not expected to affect its daily operations or how investors are compensated. The fund will continue to use the “fair value” method internally for calculating important figures like investment value and fees. However, these figures will only be used for internal purposes and not be reflected in the official reports filed with the SEC.

The fund acknowledged that it is currently reviewing its internal controls and aims to complete the restatement process as soon as possible.