This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.
FIRE COMPANY -- Powers and Duties (obtaining an annual audit)
FIRE PROTECTION DISTRICTS -- Contracts (requirement for audit of fire company)
TOWN BOARD -- Powers and Duties (audit of fire company)
TOWN LAW § 184; GENERAL MUNICIPAL LAW §§ 204-a, 209-z: A town may not unilaterally impose an audit requirement on a fire company that provides fire protection by contract to a town fire protection district. A fire protection contract with a fire company may include a provision requiring an outside audit of the books and records of the fire company and, in connection with its authority over the fund raising activities of certain fire companies pursuant to General Municipal Law §204-a, a town board may require, as a condition on the conduct of those fund raising activities, the submission of a financial report on the receipts and expenditures of the proceeds of such activities, and submission of related books and records of the fire company for audit. Also, in accordance with General Municipal Law § 209-z, any fire company that contracts with a city, town, village or fire district to provide fire protection service and that has revenues of at least $200,000 must obtain an annual audit of its records as they pertain to revenues and expenditures in connection with such contract or contracts.
You ask whether a town board, on behalf of a fire protection district, may require a volunteer fire company that provides fire protection to the fire protection district under a contract to obtain an independent audit of the fire company.
Article 11 of the Town Law (§170 et seq .) contains provisions relative to the establishment and operation of fire protection districts in towns. Town Law § 184 authorizes towns on behalf of fire protection districts to enter into contracts with, among other entities, any incorporated fire company maintaining adequate and suitable apparatus and appliances for the furnishing of fire protection within the fire protection district (Town Law § 184). There is no authority in article 11 of the Town Law, or in any other statute, for a town board unilaterally to impose an audit requirement on a fire company providing fire protection to a fire protection district under a contract with the town ( see 1987 Ops St Comp No. 87-28, at 46).
While a town may not unilaterally impose such an audit requirement, it is our opinion that, if the town and fire company agree, a fire protection contract may include a provision requiring an outside audit of the books and records of the fire company ( see Opn No. 87-28, supra ; 1988 Ops St Comp No. 88-55, at 111). In addition, we note that General Municipal Law § 204-a provides that a fire company, before engaging in fund raising activities, must notify the governing board of the political subdivision having general control of that company of the proposed activity. The governing board of the political subdivision may prohibit the fire company from engaging in fund raising activities or in any general or specific type of fund raising activity (General Municipal Law § 204-a [6] [a]). We have expressed the view that, instead of totally prohibiting fund raising activities, the governing board of the political subdivision may place reasonable restrictions on such activities, which may include a requirement for the submission of a financial report on the receipts and expenditures of the proceeds of such activities, and submission of related books and records of the fire company for audit (Opn No. 88-55, supra ).
Further, General Municipal Law §209-z contains an annual audit requirement applicable to certain fire companies that provide fire protection by contract, including a contract pursuant to Town Law § 184. General Municipal Law § 209-z provides that any fire company that contracts with a city, town, village or fire district to provide fire protection service and that has revenues of at least $200,000 must obtain an annual audit of its records as they pertain to revenues and expenditures in connection with the fire protection contract or
contracts.1 The audit must be conducted by an independent certified public accountant or independent public accountant and must indicate whether the fire company has filed IRS Form 9902 and "any report required pursuant to section thirty-three-a" [sic] of the General Municipal Law.3 If such filings are required, but have not been made, the audit must include an examination of all revenues, expenditures and resources from any source. Upon completion of the audit, a certified copy of the audit report in the form prescribed by the State Comptroller must be provided to the fire company and to the contracting municipality within 180 days of the end of the fiscal year audited.
General Municipal Law § 209-z became effective on August 1, 2007, and, therefore, the annual audit requirement applies to covered fire companies starting with fiscal years ending on and after August 1, 2007. Fire companies with annual revenues of less than $200,000 are not required by General Municipal Law § 209-z to obtain an independent audit.
Accordingly, a town may not unilaterally impose an audit requirement on a fire company that provides fire protection by contract to a town fire protection district. A fire protection contract with a fire company may include a provision requiring an outside audit of the books and records of the fire company and, in connection with its authority over the fund raising activities of certain fire companies pursuant to General Municipal Law §204-a, a town board may require, as a condition on the conduct of those fund raising activities, the submission of a financial report on the receipts and expenditures of the proceeds of such activities, and submission of related books and records of the fire company for audit. Also, in accordance with General Municipal Law § 209-z, any fire company that contracts with a city, town, village or fire district to provide fire protection service and that has revenues of at least $200,000 must obtain an annual audit of its records as they pertain to revenues and expenditures in connection with such contract or contracts.
November 20, 2007
Richard G. Boehm, Esq., Deputy Town Attorney
Town of Hamburg
1 General Municipal Law § 209-z authorizes the State Comptroller to designate a lesser amount of revenues as the threshold that would trigger the annual audit requirement. The State Comptroller has not made such a designation to date.
2 IRS Form 990 is a return filed by organizations exempt from income tax under sections 501(c), 527 or 4947(a)(1) of the Internal Revenue Code (see Internal Revenue Code §6033).
3 It is apparent that the reference to the "report required pursuant to" General Municipal Law §33-a is intended to be a reference, instead, to the report required by General Municipal Law § 30-a. General Municipal Law § 30-a requires every entity that receives and disburses foreign fire insurance premium tax funds distributed pursuant to Insurance Law §§ 9104 and 9105 to make an annual verified report to the State Comptroller of receipts, expenditures and balances relating to the use and application of those funds. The report must be made generally by the treasurer of the entity, and must be filed no later than the last day of February of each year for the preceding calendar year. General Municipal Law § 33-a authorizes the State Comptroller to cause the records and accounts of entities that receive and disburse foreign fire insurance premium tax funds to be inspected and examined for such periods as the Comptroller shall deem necessary, and does not relate to any report made by the entity.