Local fire departments, districts prepare to comply with independent audit legislation

Local fire departments, districts prepare
to comply with independent audit legislation

In response to new laws enacted in 2006 to strengthen the oversight of fire districts and fire companies in New York state, local fire officials will need to get their bookkeeping in order in the face of independent audits. The legislation, handed down by former State Comptroller Alan Hevesi, requires fire districts to hold annual budget hearings, adopt a code of ethics, modify travel rules and comply with new requirements for establishing capital reserve funds. The new law requires fire district commissioners who took office after January to get training on legal, financial and ethical responsibilities.

Newly appointed NYS Comptroller Thomas DiNapoli released regulations regarding training requirements for the fire district commissioners that include six hours of training to be completed within 270 days of taking office.

In a press release, DiNapoli wrote, "New York fire districts and companies provide a vital service to New Yorkers. They are also responsible for managing more than $1 billion of taxpayer money, and our auditors have uncovered a number of troubling details over the years regarding unchecked spending and other financial oversight problems at fire districts," DiNapoli said. "These new laws and the training requirement will fundamentally reform how these entities operate and will ensure better management of public funds."

The new rules will impact fire districts with revenues of more than $200,000.

Jim McKinney, treasurer with the Spencerport Fire District, said they will likely have to add an additional $4,000 to its budget to meet the annual audit requirement. "We will have to do this annually starting in 2008," he said. "The only other expense we will have along with this new legislation will be to host a public hearing every year on the budget - there will be minimal costs for advertising the hearing and for producing the copies of the budget."

In a press release, Randall Rider, president of the Association of Fire Districts of the State of New York, said the association is "committed to helping fire districts operate effectively so they can respond to the safety and fire protection needs of their communities ... . The new legislation contains practical ways to improve the fiscal practices of fire districts and ensure the public is engaged in the process."

Under the new auditing requirement, fire districts must hire an independent auditor through a competitive process and limit the contract to five years. The new law on audits will be phased in over a three-year period. Fire districts with annual revenues of $1 million or more must obtain an audit starting in 2007; revenues between $500,000 and $1 million must meet the requirements beginning in 2008; and districts with revenues of at least $200,000 must begin in 2009.

What does this mean for local fire districts?
McKinney said Spencerport will have to make a change from an accounting procedure standpoint as they currently operate on a cash basis and will be changing to a modified accrual basis. "This probably won't mean a lot in the way we operate, other than in the way we report our financial situation at the end of the year. It won't involve changes on a monthly basis, just in the reporting procedure."

McKinney said Spencerport underwent an evaluation of its records as they relate to the departments' tournament teams, travel expenses and various other aspects of record keeping. "They (the state) came out with a draft report and it showed we really don't have to make too many changes. What we need to do is implement more written policies," he said.

Steve Gulvin, president of the Churchville Fire Department, said that even though the laws have been passed, the local departments and districts are still trying to sort out the details. "We know we will need more money in our budget to meet the new mandates, but because we are a department, not a district, we won't have to have public hearings on our budget," he said.

Both McKinney and Gulvin said the mandates filtered down to local departments because of concerns with accounting procedures in upstate departments.

"We have good bookkeeping procedures in place," Gulvin said. "We recently bought new software for our accounting so we won't have to do a lot when it comes to making changes to meet the new auditing procedures."

McKinney said all of the department's operating money comes from the taxpayers. "99.9 percent of our money comes from taxpayers and any costs associated with the new auditing changes will have to be reflected in our 2008 budget and that means the taxpayers will be paying for them," he said.

A live teleconference is planned for March 8 in cooperation with the Association of Fire Districts of the State of New York on understanding the new legislative requirements. The teleconference will be broadcast to more than 50 sites around the state. The training runs from 6:30 to 8:45 p.m. For information on this teleconference or to comment on the training regulations, as well as getting answers to frequently asked questions on the new legislation, visit www.osc.state.ny.us/localgov.