Local Government and School Accountability
Fire District Information - Frequently Asked Questions
Audits for Fire Districts
Which fire districts are required to obtain independent audits?
Fire districts with annual revenues of $200,000 or more are required to obtain an independent annual audit. The audit must include, but is not limited to, the district’s financial conditions and resources, and such other things as the State Comptroller may designate. A copy of the audit must be given to the fire commissioners, the town board(s) of municipalities served by the fire district and the Office of the State Comptroller (OSC) within 180 days of the end of the fiscal year audited.
Those districts with less than $200,000 in annual revenues are not required to obtain an independent audit but will need to report on the district’s financial condition and resources and such other things as designated by OSC.
When does this new requirement take effect?
The new law phases in the audit requirements for fire districts over a three-year period. For fire districts with annual revenues of $1 million or more, the audit requirements begin in 2007 for fiscal year ended 2006. Districts with annual revenues over $500,000 but less than $1 million are required to obtain an audit beginning in 2008 for fiscal year ended 2007. Districts with revenues between $200,000 and $500,000 must obtain an audit beginning in 2009 for fiscal year ended 2008.
How should the district go about hiring an auditor?
Effective January 1, 2007 districts are required to use a request for proposals (RFP) for soliciting proposals to provide the annual audit. The RFP must be used at least every five years beginning with the first audit or, for those with multiyear contracts in place, the first year after the conclusion of the current contract. OSC provided districts with a model RFP [pdf]. The cost of the independent annual audit is excluded from a fire district’s spending limit.
Are smaller fire districts also required to have independent audits?
No. Fire districts with annual revenues of less than $200,000 are authorized to obtain independent audits, but are not required to do so. However, the new law requires these smaller fire districts to report to OSC the district’s financial condition and resources within 180 days after the end of the fiscal year, unless OSC determines that the report is not required. Because all fire districts with annual revenues less than $200,000 already provide OSC with information on their financial condition and resources through the filing of the Annual Update Document (AUD), OSC has determined that the filing of the AUD satisfies this requirement.
For a discussion on additional information required of fire districts and fire companies, please see the question, “What additional information will be required by OSC?"
What kind of audit is required of fire districts?
All fire district audits must be conducted in accordance with standards applicable to financial audits prescribed in the Government Auditing Standards (GAS) issued by the Comptroller General of the United States. OSC does not require that local governments fulfill their statutory filing requirements in accordance with Generally Accepted Accounting Principles (GAAP) and will continue to accept the annual financial reports with fund level statements in accordance with the Uniform System of Accounts (USA).
To minimize costs associated with compliance with these new audit requirements, districts that prepare their financial statements in conformity with the USA, an Other Comprehensive Basis of Accounting (OCBOA) prescribed by OSC may be audited in accordance with the Statement on Auditing Standards No. 62 (SAS 62). Those districts that have adopted GAAP reporting should continue to have their statements audited in accordance with GAAP.
What reports must be submitted with the audit?
Audits of Financial Statements Prepared in Accordance with GAAP
Following completion of the audit of the fiscal year’s financial statements, the auditor shall issue:
- Independent Auditor’s Report
- Management Discussion and Analysis
- Basic Financial Statements
- Fund Financial Statements
- Required Supplemental Information
- Supplemental Information
- Report on Compliance and on Internal Control Over Financial Reporting and Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with GAS
- Such other things as designated by OSC, including district responses to the Fire District Questionnaire to be filed as part of the AUD
Audits Done in Accordance with Other Comprehensive Basis of Accounting (SAS 62)
Following completion of the audit of the fiscal year’s financial statements, where applicable, the auditor shall issue:
- Annual Financial Report (Annual Update Document or AUD)
- Report on Compliance and on Internal Control Over Financial Reporting and Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with GAS
- Such other things as designated by OSC, including district responses to the Fire District Questionnaire to be filed as part of the AUD
What additional information will be required by OSC?
As part of the Annual Update Document (AUD) completed by every fire district, a supplemental form must be completed answering the following questions:
- Has your district adopted a written procurement policy and is it complied with?
- Has your district contracted to have an independent audit of its financial statements? If not, has the Board of Fire Commissioners performed an internal audit of the treasurer's records and reports?
- Does your district have a written travel policy and is it complied with?
- Are monthly bank reconciliation's performed?
- What is your district's FYE 2007 statutory spending limitation margin (amount)?
- Does your district have a Length of Service Award Program (LOSAP) for volunteer firefighters? If so, how are the funds invested?
Marketable Securities _________________________
Life Insurance _________________________
Other (describe) _________________________
Officials of fire districts with annual revenues of less than $200,000 should read, “Are smaller fire districts also required to have independent audits?”
Audits for Fire Companies
Are fire companies required to be audited?
Starting with fiscal years ending on and after August 1, 2007, “entities” such as volunteer fire companies, which contract with municipalities or fire districts to provide fire protection services and which have revenues of more than $200,000, must obtain an annual audit of revenues and expenditures in connection with such contract or contracts. Although statute provides that OSC may designate a lesser revenue amount as an audit threshold for fire companies, OSC has not designated such an amount at this time.
The audit must indicate whether the entity has filed IRS form 990 and any report required pursuant to Section 30-a of the General Municipal Law (receipts and disbursements of foreign fire insurance tax money). If such filings are required, but not made, the audit must examine all revenues, expenditures and resources from any source. Upon completion of the audit, a certified copy must be provided to the fire company and the contracting municipality within 180 days of the end of the fiscal year.
Fire companies with annual revenues of less than $200,000 are not required to obtain an independent audit of revenues and expenditures. This threshold does not exempt them from any requirement to file IRS form 990 or the report required by Section 30-a of the General Municipal Law.
What should the audit of fire companies include?
The audit must be an examination of the revenues and expenditures in connection with such contract or contracts. The audit must indicate whether the entity has filed IRS form 990 and any report required pursuant to Section 30-a of the General Municipal Law. If such filings are required, but not made, the audit must examine all revenues, expenditures and resources from all sources.
Are fire companies required to file additional financial information with OSC?
Other than any report required by Section 30-a of the General Municipal Law (receipts and disbursements of foreign fire insurance tax money), fire companies are not required to file additional information with OSC. However, a copy of the audit report in the form prescribed by OSC and certified by the accountant must be furnished to the fire company, and each municipal corporation with which the fire company contracts, within 180 days following the end of the fiscal year audited.
Capital Reserve Funds
What are capital reserve funds?
Capital reserve funds are established by fire districts (and other local governments) to accumulate money for large purchases in the future. The board of fire district commissioners may establish two different kinds of capital reserve funds:
- “Specific” Fund: The construction, reconstruction or acquisition of a specific capital improvement or the acquisition of a specific item or specific items of equipment. For example, a specific fund might be established for the future purchase of a certain fire truck.
- “Type” Fund: The construction, reconstruction or acquisition of a type of capital improvement or the acquisition of a type of equipment. For example, a type fund might be established for future acquisitions of firefighting equipment and apparatus.
What is required to establish a new “specific” capital reserve fund?
Effective January 1, 2007, the board of fire commissioners must adopt a resolution establishing a specific fund, subject to mandatory voter referendum.
What is required to establish a new “type” capital reserve fund?
Effective January 1, 2007, the board of fire commissioners must adopt a resolution establishing a type fund, subject to mandatory voter referendum.
When do these requirements take effect?
The requirements pertaining to establishing new capital reserve funds take effect January 1, 2007.
What is required to spend money from a “specific” or “type” capital reserve fund?
Expenditures from specific capital reserve funds – old or new – can only be made following the adoption of a resolution by the board of fire commissioners. These resolutions are not subject to referendum.
Expenditures from type capital reserve funds – old or new – can only be made following the adoption of a resolution, subject to permissive referendum.
What is a permissive referendum?
When a resolution is subject to permissive referendum, a fire district must comply with certain public notice requirements. Voter approval is not required, however, unless a fire district receives from resident taxpayers a timely petition, meeting statutory requirements, protesting the resolution and requesting that it be submitted to the voters for their approval or disapproval. If the district does not receive a timely and valid petition, the resolution takes effect without actually being submitted to the voters.
Do these restrictions apply to capital reserve funds that were established prior to January 1, 2007?
The only change that the new law makes is with respect to the procedure for establishing capital reserve funds, by requiring a mandatory referendum. The new procedure does not apply to reserve funds established prior to January 1, 2007.
Code of Ethics
Are fire districts required to have a code of ethics?
Yes. Effective June 1, 2007, the board of fire commissioners of every fire district, by resolution, must adopt a code of ethics setting forth guidance and standards of conduct reasonably expected of the district’s officers, employees and volunteer members of the fire district. A code of ethics must contain standards with respect to disclosure of interest in legislation before the local governing body, holding of investments in conflict with official duties, future employment and such other standards of conduct that may be deemed advisable.
Where can a fire district get a model code of ethics?
Prior to June 1, 2007, the State Comptroller is required to create and make available a model code of ethics. However, districts should tailor this model for their own circumstances before adopting it.
Are fire companies required to have a code of ethics also?
Yes. Effective June 1, 2007, every fire company that either is under the control of a municipality or fire district, or contracts with a municipality or fire district to provide fire protection or other emergency service, must adopt a code of ethics. A fire company code of ethics must set forth reasonable standards of conduct.
What is required of fire company officers?
With limited exceptions, beginning June 1, 2007, whenever any elected and/or appointed officer of a volunteer fire company responsible for governance, including but not limited to line officers and corporate officers, or the spouse of such a fire company officer, has, will have, or later acquires an “interest” in any actual or proposed contract, purchase agreement, lease agreement or other agreement (including oral agreements) with the fire company of which he or she is a member, the fire company officer must publicly disclose the nature and extent of the interest. The disclosure must be in writing and made as soon as the fire company officer has knowledge of the actual or prospective interest. The disclosure must be made to the fire company officer’s immediate supervisor and to the governing body of the fire company which must include the disclosure in the official record of its proceedings. Disclosure is not required, however, in the case of a contract with a corporation in which an individual directly or indirectly owns or controls less than 5 percent of the corporation’s outstanding stock, or in the case of a contract in a single fiscal year having aggregate consideration of $750 or less.
Effective Dates of New Legislation
What are the effective dates of the various provisions?
Tuesday, October 24, 2006
- Chapter 236 – Travel expenses of volunteer firefighters
Monday, January 1, 2007
- Chapter 234 – Establishment of capital reserve funds
- Chapter 237 – Independent audits for fire districts with annual revenues of $1 million or more
- Chapter 240 – Establishment of statewide public budget hearing day
- Chapter 241 – Posting of notice of hearings and elections
Monday, January 22, 2007
- Chapter 233 – State Comptroller has authority to audit fire companies
- Chapter 242 – Fire district commissioners mandatory training
Friday, June 1, 2007
- Chapter 238 – Fire district adoption of a code of ethics
- Chapter 243 – Fire company adoption of a code of ethics
Wednesday, August 1, 2007
- Chapter 237 – Independent audits for entities with annual revenues of $200,000 or more that contract with a city, town, village or fire district to provide fire service
Tuesday, January 1, 2008
- Chapter 237 – Independent audits for fire districts with annual revenues of $500,000 or more
Thursday, January 1, 2009
- Chapter 237 – Independent audits for fire districts with annual revenues of $200,000 or more
Elections and Hearings
How do the new laws affect special elections and hearings in fire districts?
All special elections must be held on a Tuesday that is not a public holiday, and must be conducted and scheduled in a manner that maximizes voter participation. Also, effective January 1, 2007, notices of fire district elections and hearings must be posted on fire district websites and the websites of the municipality or municipalities that the fire district serves, if such website exists. In addition, the notices must be posted on town clerk bulletin boards.
What are the new public hearing requirements for fire district budgets?
Beginning with budgets prepared in 2007 for the 2008 fiscal year, fire districts must prepare a proposed budget and hold a public hearing to discuss the contents of the proposed budget. The law specifies the public hearing must be held on the third Tuesday in October. The hearing must be conducted and scheduled in a manner that maximizes public participation.
At least five days prior to the date of the hearing, notice of the hearing must be published at least once in the fire district’s official newspaper or, if a fire district does not have an official newspaper, in a newspaper having general circulation within the district. Similarly, at least five days prior to the date of the hearing, a copy of the notice must be posted on the signboard maintained by the town clerk of each of the towns served by the fire district. The notice must also be posted on the municipal and/or fire district websites, if such websites exist. The hearing notice must state the time and place where the hearing will be held, the purpose of the hearing, and that a copy of the proposed budget is available for inspection during office hours in the offices of the fire district secretary and the town clerk in each town served by the district.
At the hearing, any person may be heard in favor of or against the proposed budget or one or more items in the proposed budget. On or before November 7 (changed from November 20) each year, the board of fire commissioners must submit a final budget to the budget officer of each town served by the fire district.
What are the new training requirements for fire district commissioners?
All fire district commissioners are required to complete training within 270 days of taking office. The training must cover legal, fiduciary, financial, procurement and ethical responsibilities, and such other topics as may be prescribed by the State Comptroller. OSC is responsible for developing rules and regulations necessary to implement this new training requirement.
When do these new requirements take effect?
Because the new legislation takes effect on January 22, 2007, 180 days after the bill was signed into law, the training requirements will not affect commissioners elected in the fall of 2006. Commissioners elected or appointed on or after January 22, 2007 will be required to take the training.
How often do fire district commissioners need to attend training?
Fire district commissioners must complete the required training each time they are elected, re-elected, appointed or reappointed to office.
How often will training sessions be offered for new commissioners, and where can commissioners find more information pertaining to training?
Training is given by approved providers. Information about the training providers is posted on the OSC website at www.osc.state.ny.us/localgov/training/fdtprovider.htm.
OSC is responsible for developing the curriculum for the new training program. Training course providers may use a variety of methods to make the training available, including, but not limited to, any of the following: regional and statewide conferences, online training and teleconferences. Providers will deliver the actual approved training course.
What subject material will be covered in the training sessions?
Training sessions will cover fire commissioners’ legal, fiduciary, financial, procurement and ethical responsibilities, and such other topics as may be prescribed by the State Comptroller. OSC has issued regulations covering the training curriculum [pdf] and how potential providers can apply [pdf].
How will the new laws affect travel by fire district commissioners and volunteer firefighters?
Fire district commissioners, other fire district officers, fire district employees, and the chief and assistant chief of a fire district can continue to attend conferences at fire district expense, but a recent amendment requires that conference travel must be for official business, using a “cost-effective and reasonable method of travel.” Conference travel still requires the prior approval of the board of fire commissioners.
The new laws also limit the mileage allowance that a fire district may provide to its officers and employees, paid employees, and all paid and volunteer officers of the fire district, for the use of a personal automobile in the performance of official duties. In determining the amount of the mileage allowance, the board of fire commissioners may consider the cost of gasoline, but in no event may the mileage allowance exceed the standard mileage allowance for business-related travel adopted or prescribed for federal income tax purposes.
Volunteer firefighters of a fire district may continue to attend training schools and courses of instruction, with the fire district paying most of the expenses incurred by attendance at the school or course. Attendance continues to require authorization by the chief of the department and, if the school or course is located or given outside the county in which the fire district is located, the authorization to attend continues to be subject to the prior approval of the board of fire commissioners.
Effective October 24, 2006, if a training school or course of instruction is located or given outside New York State, the authorization to attend must be granted by the board of fire commissioners if they find that the school or course is necessary and in the public interest, and is not available within a reasonable distance and time period in the State. If a volunteer travels to a training school or course of instruction using his or her personal automobile, the mileage allowance that the district may provide must not exceed the standard travel allowance for mileage adopted or prescribed for federal income tax purposes. In addition, the chief of the fire district must provide to the State Office of Fire Prevention and Control notice and proof of attendance at any out-of-state training school.