Report No. 2010-49
April 2010
Complete Audit Report

Findings in the audit of the Review of Independent Audits of Fire Protection Districts in St. Louis County

Executive Summary
State law requires all fire protection districts in St. Louis County with revenues in excess of $50,000 annually to obtain an audit to be performed on a biennial basis. The State Auditor accepted all 21 reports received for the year ended December 31, 2008, all 21 reports received for the year ended December 31, 2007, and 1 report for the 18 months ended June 30, 2007.

The Kinloch Fire Protection District failed to comply with state law and did not file annual reports documenting that annual revenues were less than $50,000. Based on bank records obtained from the district, approximately $42,000 was received for the year ended December 31, 2008. No information was provided for the year ended December 31, 2007.

The Northeast Ambulance and Fire Protection District failed to comply with state law and did not submit an audit report to the State Auditor's Office for the years ended June 30, 2009 and 2008. The report for the 18 months ended June 30, 2007, was not submitted timely.

In 2008, 17 districts had fund balance to expenditures ratios greater than one, which indicates the total fund balance was greater than a year's cost of operations (in 2007, 19 districts had ratios greater than one). In addition, although a large number of districts have reserved or designated a portion of the 2008 fund balances for new firehouses, additional equipment, future years' operations, and other uses, two still have unreserved, undesignated fund balances greater than a year's cost of operations (in 2007, six districts had ratios greater than one). During the year ended December 31, 2008, the ratio of unreserved, undesignated fund balance to expenditures increased for 10 of 21 fire districts. In addition, two fire districts have had unreserved/undesignated ratios greater than one for the last several years.

Eleven of 17 districts had increases in Ambulance Fund balances in 2008, resulting in an aggregate increase of approximately 7.3 percent. One district had a voter approved increase in the Ambulance Fund levy. While most Ambulance Fund balances appear reasonable, nine districts have fund balances greater than a year's expenditures.

Additions to the Pension Funds decreased 255 percent in 2008 compared to 2007. The decrease was largely due to losses on investments. Based on the pension plan notes in the audit reports, nine of ten districts with defined benefit plans do not have enough estimated actuarial assets to cover the estimated actuarial liability (pension benefits) in their Pension Fund, resulting in an unfunded liability.

There are 15 districts that have Capital Projects Funds which are funded with proceeds from bonds, certificates of participation, and/or transfers from other district funds. Each district's Capital Projects Fund is used to account for these financial resources used for the acquisition, construction, and/or renovation of major capital assets. Several districts currently have commitments to purchase or have already purchased fire trucks, ambulances, and other equipment. In addition, several districts have begun to or have plans to renovate old fire houses or construct new or additional fire houses. The balances in these funds should be considered when analyzing the fund status of the district. Seven districts that have total General Fund balance to expenditures ratios greater than one also have Capital Projects Funds with balances of over $1 million for the year ended December 31, 2008.

Fourteen districts have outstanding bond debt at December 31, 2008. Five districts issued general obligation bonds totaling $13 million in 2008 and 2007.

Independent auditors made specific recommendations to improve the overall management of the fire districts. In total, 36 recommendations were made to the various districts in 2008. Recommendations included concerns regarding expenditures, accounting records and procedures, revenues, investments, capital assets, budgetary procedures, payroll and employee benefits, pledged securities, and pensions. Of the 97 recommendations made during the 2007 audits, 18 were repeated in the 2008 audits. However, a 2008 audit was not received for the Northeast Ambulance and Fire Protection District to determine how many of the 27 recommendations from the audit for the 18 months ended June 30, 2007, had been implemented. The State Auditor's office issued an audit of Northeast Ambulance and Fire Protection District in November 2009 (see Report No. 2009-131).

Complete Audit Report
Missouri State Auditor's Office
moaudit@auditor.mo.gov