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Cardiff Lexington Corporation

3753 Howard Hughes Parkway, Suite 200

Las Vegas, NV 89169

September 16, 2024

U.S. Securities and Exchange Commission

100 F Street, N.E.

Washington, DC. 20549

Attn: Tracey Houser

 Re: Cardiff Lexington Corp

    Form 10-K for Fiscal Year Ended December 31, 2023

    Filed March 27, 2024

    Form 10-Q for Fiscal Quarter Ended June 30, 2024

    Filed August 14, 2024

    Response Letter Dated August 7, 2024

    File No. 000-49709

Ladies and Gentlemen:

Attached to this letter is certain correspondence
that we have provided to the staff (the “Staff”) of the U.S. Securities and Exchange Commission (the “Commission”)
supplementally in connection with our correspondence submitted to the Staff on September 13, 2024 related to the above referenced matters.
At the request of the Staff, we are now filing the same with the Commission as correspondence.

If you would like to discuss any matters relating
to the foregoing, please contact the undersigned at 844-628-2100 or Louis A. Bevilacqua of Bevilacqua PLLC at (202) 869-0888 (ext. 100).

Sincerely,

Cardiff Lexington Corporation

By: /s/ Alex Cunningham

Alex Cunningham

Chief Executive Officer

cc: Louis A. Bevilacqua, Esq.

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MEMORANDUM

To: Cardiff Lexington
Corp

From: Corporate Accounting Department

Subject: SEC Comment Letter Response White Paper

Date: September 2024

PURPOSE:

To document the Company’s accounting position
related to its response to SEC Comment Letter 4, dated August 16, 2024

BACKGROUND:

Over the course of 2024, the Company has received
four comment letters from the SEC. Comment letters one through three related to the Company’s 10-K for the year ended December 31,
2023, including its amended 10-Ka filing, and comment letter four related to the Company’s 10-K and 10-Q filed for the six months
ended June 30, 2024 (the “Comment Letters”). As a result of the Comment Letters, the Company completed a comprehensive review
of its accounting under Accounting Standards Codification (“ASC”) 326, ASC 606 and an evaluation of whether the Company had
a change in estimate or a correction of an error in its previous filings.

EXECUTIVE SUMMARY:

The Company reviewed the SEC Comment Letter 4
and made the following determinations based on a review of the accounting guidance:

 · The Company will revise its application of ASC
326 and properly apply the loss rate method of accounting for its current expected credit losses. Under the loss-rate method, the Company’s
allowance for credit losses and credit loss expense will be immaterial to its accounts receivable and revenue balance in the financial
statements. The Company’s allowance for credit losses of $122,190 as of December 31, 2023 appears reasonable based on a review of
historical loss amounts.

 · Changes to the net realizable value of accounts
receivable subsequent to the Company recording revenue and accounts receivable need to be evaluated as variable consideration when recording
revenue. This is because the change in the net realizable value of accounts receivable is due to a change in the transaction price of
the original contract and not a result of a change in the credit risk profile of the customer.

 · The differences in settlement rates between the
49% recorded to revenue at contract signing and ultimate rate realized when collecting accounts receivable should be considered variable
consideration at contract inception. This variable consideration needs to be estimated and constrained, reducing revenue.

 · The Company has two types of variable consideration
as of the second quarter 2024:

 o First is the small change between the 49% recognized as revenue and the lesser amount collected (typically
47-49%). These adjustments to the transaction price have been happening historically and can be estimated. The Company has not accounted
for these changes as variable consideration in the past, but should on a go forward basis. These adjustments have been immaterial in the
past.

 o Secondly, is the large price concessions granted in 2024 to generate settlements and cash inflows. These
price concessions should be viewed as contract modifications with only a change in price. Under the contract modification guidance, a
contract with only a change in price with no future performance obligations will be accounted for using a cumulative catch up method.
As such, the Company will account for the contract as a modification using the cumulative catch up method, recording a reduction to revenue
in the second quarter 2024. As the Company has filed it 10-Q for the first quarter ended March 31, 2024, the Company will also revise
its first quarter 10-Q to reflect the contract modification accounting applicable through the first quarter 2024.

 · The Company completed a robust analysis of its
collection percentages over time and based on that review has a change in estimate of its accounting for variable consideration that will
be reflected in the third quarter 2024.

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ACCOUNTING GUIDANCE:

 · ASC 326, Financial Instruments – Credit
Losses (“ASC 326”)

 · PwC, Loans and investments (“PwC
Guide”)

 · EY, Current Expected Credit Losses (“EY
Guide”)

 · KPMG, Revenue Recognition (“KPMG
Guide”)

ACCOUNTING ISSUES
IDENTIFIED:

Issue 1:  How should the Company account
for its allowance for credit losses and credit loss expense under ASC326?

Issue 2: How should the Company account for
differences between its revenue recognized and its net realizable receivables given its minimal customer credit risk?

Issue 3: Determine if the concessions granted
are variable consideration

Issue 4: How should the Company account for
the price concession granted during the six months ended June 30, 2024.

Issue 5: Are the adjustments to revenue considered
a change in estimate or an error?

Issue 1: How
should the Company account for its allowance for credit losses and credit loss expense under ASC326?

Guidance (emphasis added in underline):

ASC 326-20-30-10 An entity’s
estimate of expected credit losses shall include a measure of the expected risk of credit loss even if that risk is remote, regardless
of the method applied to estimate credit losses. However, an entity is not required to measure expected credit losses on a financial asset
(or group of financial assets) in which historical credit loss information adjusted for current conditions and reasonable and supportable
forecasts results in an expectation that nonpayment of the amortized cost basis is zero. Except for the circumstances described in paragraphs
326-20-35-4 through 35-6, an entity shall not expect nonpayment of the amortized cost basis to be zero solely on the basis of the current
value of collateral securing the financial asset(s) but, instead, also shall consider the nature of the collateral, potential future changes
in collateral values, and historical loss information for financial assets secured with similar collateral.

ASC 326-20-30-2 An entity
shall measure expected credit losses of financial assets on a collective (pool) basis when similar risk characteristic(s) exist (as described
in paragraph 326-20-55-5). If an entity determines that a financial asset does not share risk characteristics with its other financial
assets, the entity shall evaluate the financial asset for expected credit losses on an individual basis. If a financial asset is evaluated
on an individual basis, an entity also should not include it in a collective evaluation. That is, financial assets should not be included
in both collective assessments and individual assessments

ASC 326-20-30-7 When developing
an estimate of expected credit losses on financial asset(s), an entity shall consider available information relevant to assessing the
collectability of cash flows. This information may include internal information, external information, or a combination of both relating
to past events, current conditions, and reasonable and supportable forecasts. An entity shall consider relevant qualitative and quantitative
factors that relate to the environment in which the entity operates and are specific to the borrower(s). When financial assets are
evaluated on a collective or individual basis, an entity is not required to search all possible information that is not reasonably available
without undue cost and effort. Furthermore, an entity is not required to develop a hypothetical pool of financial assets. An entity may
find that using its internal information is sufficient in determining collectability.

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ASC 326-20-30-3 The allowance
for credit losses may be determined using various methods. For example, an entity may use discounted cash flow methods, loss-rate
methods, roll-rate methods, probability-of-default methods, or methods that utilize an aging schedule. An entity is not required
to utilize a discounted cash flow method to estimate expected credit losses. Similarly, an entity is not required to reconcile
the estimation technique it uses with a discounted cash flow method.

PwC Guide Section 7.7.1 - Unit of measurement
for assessing trade receivable in CECL

As discussed in LI 7.3.3, ASC 326-20-30-2
requires a reporting entity to use a pooled approach to estimate expected credit losses for financial assets with similar risk characteristics.
If a financial asset does not share similar risk characteristics with other financial assets held by the reporting entity, the allowance
for credit losses should be determined on an individual basis. Similar risk characteristics for trade receivables may include customer
credit rating, trade receivable aging category (e.g., 30-90 days past due), industry, geographical location of the customer, product
line, and other factors that may influence the likelihood of the customer not being able to pay for the goods or services.

PwC Guide Section Section 7.7.3 Lifetime
expected credit losses on trade receivables

As discussed in LI 7.3.6 (after adoption of
ASU 2022-02) or LI 7.3.6A (before adoption of ASU 2022- 02), once reporting entities adopt the expected credit loss model, determining
what data is relevant in estimating expected credit losses will become a critical part of the allowance assessment. Under the CECL model,
reporting entities can leverage historical loss data, but CECL also requires forward looking information and forecasts to be considered
in determining credit loss estimates.

Most reporting entities have access to historical
loss data that they have been using to estimate an allowance for doubtful accounts under the incurred loss model. This data allows
reporting entities to estimate the percentage of uncollectible accounts or the amount of bad debt expense, typically as a percentage of
accounts receivable, sales, or a combination of these metrics. Reporting entities may aggregate this data and analyze how it trends
over time. Reporting entities can utilize historical data to understand and identify factors that resulted in historical credit losses
and incorporate those factors into their analysis of future expected credit losses.

PwC Guide Question LI 7-7 Is
multiplying an annual historical loss rate by the remaining contractual term of a financial asset and applying this to the amortized cost
basis of an asset (or pool of assets) an acceptable method to estimate allowances for credit losses under CECL?

PwC response Solely using an annual historical
loss rate to estimate an allowance for credit losses may not be appropriate under CECL. The use of an annual historical loss rate may
not appropriately reflect management’s expectation of current economic conditions or its forecasts of economic conditions. Instead,
historical loss data should be used as one of many factors to estimate a CECL allowance

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PwC Guide Question LI 7-8 Is
the WARM method an acceptable method to estimate allowances for credit losses under CECL?

PwC response The WARM method is one of many
methods that may be used to estimate the allowance for credit losses for less complex pools of financial assets under ASC 326-20. This
method is discussed in a FASB staff Q&A document available on the FASB’s website. The WARM method simplifies the quantitative
calculation of estimated expected credit losses by using an average annual charge-off rate that is determined using historical loss information.
In order to calculate estimated expected credit losses at the balance sheet date, the WARM method requires an entity to multiply the annual
charge-off rate by the estimated amortized cost basis of a pool of financial assets over the pool’s remaining contractual term,
adjusted for prepayments. Generally, the WARM method’s quantitative calculation will not, by itself, be sufficient. Qualitative
adjustments will generally be necessary in order to compensate for the method’s simplifying assumptions. For example, the
average charge-off rate may not appropriately reflect management’s expectation of current economic conditions or its forecasts of
economic conditions. In addition, there may be other challenges, such as a lack of historical loss data, losses with no predictive
patterns, current pools that significantly differ from historical pools, a low number of loans in a pool, or changes in the economic environment.
The FASB staff’s Q&A acknowledges that a qualitative adjustment may be needed to reflect these considerations. Additional considerations
may be required when using the WARM method. For products with loss profiles that suggest losses do not occur in the same pattern for each
year of an asset’s life, adjustments to consider seasonality and other such factors may be required. Additional adjustments may
be required if historic loss information is gathered from an “open” pool (and in the case of the FASB staff’s Q&A,
a growing pool) of loans because a credit loss estimate should only consider existing assets as they “run-off.” There may
be other factors or considerations that should be considered depending on the nature and type of the assets. For entities that are considering
using the WARM method, the complexity of estimating and supporting the method’s qualitative adjustments may outweigh the benefits
of using the simplified quantitative approach.

Analysis:

The Company’s evaluation of ASC 326-20 applies
to it accounts receivable trade, net (“accounts receivable”) balance. The Company’s accounts receivable are within the
scope of CECL and, more specifically, ASC 326-20. Accounts receivable consist of amounts due from customers and should be stated at their
net realizable value. However, the timing between recording the accounts receivable and its eventual collection is typically 18 –
24 months. Due to the delay, the Company has a lag in its ability to assess its true collection percentages against it gross billings.
This can and has resulted in settlements of accounts receivable lower than the amount entered into, which the Company further evaluated
in Issue 1-4 below.

In specifically considering the amount of allowance
to record under ASC 326, the Company considered its historical loss percentages. These losses occur when the Company collects $0 for a
certain claim. This happens as a result of a loss at trial, or in other situations, however, these $0 loss situations occur rarely. The
Company does not and cannot maintain an accounts receivable aging due to the nature of its receivable balances, so the Company relies
on data from its third party billing provider.

In reviewing loss data from 2020-2023, the Company
determined that losses on accounts receivable were insignificant and rarely occurred. The Company’s actual losses from 2020-2023
were approximately $110k, over the course of this time period. While consideration of actual loss data is only one consideration under
ASC 326, the Company notes that its customers are subject to similar risk profiles, as the Company’s letters of protection provide
protection over the Company’s settlement of its accounts receivable. A