Fire Districts Auditors |  New York State

The Governmental Practice Group of Freed Maxick & Battaglia, CPAs works with Fire Districts in Western New York to help meet the recent legislative auditing requirements mandated by New York State.

Send Request for Proposals to:

Freed Maxick & Battaglia, CPAs    Attn: Eric Majchrzak    Governmental Group    424 Main Street    Liberty Building, Suite 800    Buffalo, NY 14202    or send via email here

The source for the following information is from the New York State Office of the State Comptroller.

The new law phases in the audit requirements for fire districts over a three-year period. For fire districts with revenues of $1 million or more (excluding bond/note proceeds), the audit requirements begin for the fiscal year ending in 2006. Districts with revenues over $500,000 but less than $1 million will be required to obtain an audit for fiscal year ending in 2007. Districts with revenues between $200,000 and $500,000 must obtain an audit for the fiscal year ending in 2008. The cost of obtaining this audit is excluded from the district’s spending limit. Those districts with less than $200,000 in revenues are not required to obtain an independent audit, but they are required to report to OSC the district’s financial condition and resources for the fiscal year ending in 2006 and other such things as designated by the State Comptroller.

All fire district audits must be conducted in accordance with standards applicable to financial audits prescribed in the Government Auditing Standards issued by the Comptroller General of the United States.

Beginning January 1, 2007, all districts must use a request for proposals (RFP) process when contracting for annual audits. OSC strongly encourages districts to begin using an RFP process immediately, and will be providing districts with an RFP template in the near future to assist them. Beginning January 1, 2007, no audit contract may be for a term exceeding five consecutive years.

Districts without an existing multi-year contract must issue an RFP before signing a new audit contract. If a district has an existing multi-year contract for a fixed term, it may continue to obtain audits under that contract for the duration of its term without issuing an RFP, but the district must issue an RFP upon expiration of the contract. A district may permit an auditor that is engaged under an existing contract to submit a proposal and can award the new contract to that auditor. However, boards should consider the appropriateness of changing the audit firm or partner to ensure independence and provide a fresh financial perspective.

OSC does not mandate local governments to fulfill their statutory filing requirement 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 USA. To minimize the costs associated with complying 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 Statement of Auditing Standards No. 62 to meet this new auditing requirement. Districts that have adopted GAAP financial reporting may continue to have their GAAP financial statements audited.

The new law requires all audit reports to be sent to OSC within 180 days following the end of the fiscal year. Districts are also required to prepare a corrective action plan within 90 days in response to any findings contained in the annual external audit report or management letter, or any audit report issued by OSC.

Fire District Audit Frequently Asked Questions (FAQ)

Which fire districts are required to obtain independent audits?

When does this new requirement take effect?

How should the district go about hiring an auditor?

Are smaller fire districts also required to have independent audits?

What kind of audit is required of fire districts?

What reports must be submitted with the audit?

What additional information will be required by OSC?

Are fire companies required to be audited?

What should the audit of fire companies include?

Are fire companies required to file additional financial information with OSC?

Which fire districts are required to obtain independent audits?
Fire districts with annual revenues of $200,000 or more will be 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 in 2007 for fiscal year ended 2006.

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 will be 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 will be 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. 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.

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:

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:

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.

---

How Freed Maxick & Battaglia, CPAs Can Help

As a municipal organization, you face many unique issues. You deal with a sensitive political environment and must comply with many state and federal regulations. As an accounting firm dedicated to servicing municipal organizations, Freed Maxick & Battaglia, CPAs has created a Governmental Services Group.

Our Governmental Services Group is comprised of professionals who understand the unique environment within which municipal organizations operate and the compliance issues they face. All members of our Governmental Services Group are experienced in audits in accordance with Government Auditing Standards, the provisions of the Single Audit Act Amendments of 1996, and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations.

Freed Maxick & Battaglia, CPAs has a very strong reputation for providing quality services to a wide range of municipal organizations including fire districts, cities, BOCES, school districts, cooperative municipal organizations and local governmental organizations.

Some of the services we offer include:

• Audit services
• Single audit and compliance audit services
• Accounting, bookkeeping and reporting assistance
• Internal control evaluations
• Budget planning and management
• Fund balance planning and management
• Cash management
• Evaluation and calculation of incurred but not reported liabilities
• Performance of special agreed-upon procedures
• Development and implementation of profit enhancement strategies
• Consulting services

We specialize in addressing the concerns specific to governmental entities and will customize solutions to meet your individual needs. We firmly believe that we are our clients' most trusted business advisor and take a personal interest in your organization's successes and challenges.

Related Links:

• Counties
• Cities
• Fire Districts
• School Districts
• Towns
• Villages
  

---

Governmental Group Contacts:

Freed Maxick & Battaglia, CPAs is Western and Upstate New York's (NY) largest public accounting firm and a Top 100 firm in the U.S. Freed Maxick provides, audit, tax and consulting services to private and public (SEC) companies, not-for-profits and governmental entities in Buffalo, Rochester, Syracuse and Albany New York. Freed Maxick & Battaglia, CPAs is also affiliated with RSM McGladrey, the 5th largest accounting firm in the U.S. Freed Maxick has vast national and international resources to help your business expand nationally and internationally.

Contact us Via the Web or 585-344-1967

Laura Landers, CPA, MPA	Kathryn Barrett, CPA
Director	Director