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