1. Emergency Communications Districts Presented by: James Hall Director, County Audit Division Examiners of Public Accounts August 20, 2015

2. Disclaimer  This information was presented to the ACCA Summer Conference Workshop on August 20, 2015.  This presentation represents the audit position of the Department of Examiners of Public Accounts as of that date.

3. Overview  Bond Requirements  Reporting Requirements  Accounting/Bookkeeping Problems  Legal Compliance Problems  Noncompliance with By-Laws  Employees with E911 Vehicles

4. Legal Authority  Act No. 2012-293, Acts of Alabama  Amends Sections 11-98-1 through 11-98-2 and Sections 11-98-4 through 11-98-7 and Section 11-98-9, Code of Alabama 1975  In addition, several sections were added  Repeals Sections 11-98-5.1, 11-98-7.1 and 11-98-8, Code of Alabama 1975  Effective October 1, 2013  Act No. 2015-53, Acts of Alabama amends Section 11-98-4, Code of Alabama 1975 regarding bonding requirements for emergency communication district employees.

5. Bonds…what is enough???

6. Bond requirements  Required Bond – Code of Alabama 1975, Section 11-98- 4(i) prior to the amendment of Act Number 2015-53 “… Each employee or official of the district who receives funds in any manner shall be bonded in an amount not less than the amount of total funds received by the district in the prior fiscal year.”

7. Bond requirements (cont.)  Required Bond – Code of Alabama 1975, Section 11-98-4(i) as amended by Act Number 2015-53 “… each member of the board of commissioners and each director of an emergency communications district shall be bonded in an amount equal to one-half of one percent of the total funds received by the district in the prior fiscal year except the amount of the bond for any persons required to be bonded, the bond shall not be less than $10,000 nor exceed $50,000.”

8. Bond Requirements  Total Funds Received - $357,000.00 Bond requirement ½% 0.005 Calculated Bond Required $1,785.00 Actual Bond Required $10,000.00

9. Bond Requirements  Total Funds Received - $1,357,000.00 Bond requirement ½% 0.005 Calculated Bond Required $6,785.00 Actual Bond Required $10,000.00

10. Bond Requirements  Total Funds Received - $2,357,000.00 Bond requirement ½% 0.005 Calculated Bond Required $11,785.00 Actual Bond Required $11,785.00

11. Bond requirements (cont.)  The Board of Commissioners may require other employees to be bonded in an amount set by the board and made payable to the district.  The bonds shall be paid for by the district.  A copy must be kept on file at the offices of the district and at the office of the Judge of Probate of the county in which the district is incorporated.

12. Bond requirements (cont.)  If the governing body of the creating authority serves as the board of commissioners of the district, the bond required for the district may be combined with the bond required for the service of the creating authority provided both the creating authority and the ECD are adequately protected in the event of forfeiture and the portion of the bond payment required pursuant to this section is paid by the district.

13. Problems noted with the bond requirements  No Bonds obtained  Bonds not obtained for all required parties  Inadequate Bond  Bond not recorded in the Probate Office

14. Reporting requirements  Code of Alabama 1975, Section 11-98-13.1(j) requires the Department of Examiners of Public Accounts to establish rules and provide a common financial reporting format to establish annual reporting requirements applicable to all communication districts.  The annual reporting requirements and the spreadsheet to be used to compile the information can be obtained from the website for the Department of Examiners of Public Accounts: www.examiners.Alabama.gov. www.examiners.Alabama.gov  The annual reports must be submitted by November 30 following the end of each fiscal year.  This information is compiled and reported to the Permanent Oversight Commission to evaluate 911 emergency communications funding across the State of Alabama on an ongoing basis.

15. Reporting Requirements (Cont.)  Annual reporting requirements include: 1) 911 rates in effect for residence telephone service and for business telephone service in the communications district for each fiscal year. 2) 911 revenues collected by month for each fiscal year. 3) Funding provided by a county or municipality by month for each fiscal year. 4) Revenues received from the Commercial Mobile Radio Service Emergency Telephone Services Board by month for each fiscal year. 5) Any direct grants from federal or state government and any state match for federal, state, local or private grants for each fiscal year. 6) Gifts or amounts not otherwise provided. 7) Amounts held in savings or investment accounts by fiscal year. 8) Provide detail of how the amounts received were spent in each fiscal year. 9) Monthly charges paid to each telecommunications service provider for both data base and network charges.

16. Problems noted with reporting requirements  Required information was not provided or was not submitted by November 30.  Receipt and disbursement information submitted was inaccurate.

17. Accounting/bookkeeping issues noted The following problems were noted regarding accounting records for ECD’s:  Receipts were not deposited timely and intact.  No supporting documentation or inadequate documentation for disbursements.  Monthly bank statements not reconciled in a timely manner.  Inaccurate cashbooks.  Voided receipts and checks were not maintained for review.  Unallowable expenses (examples: sales tax, IRS penalties, late fees, etc.)

18. Accounting/bookkeeping issues noted (cont.)  Payroll Issues a) ECD Leave Policies were not followed. b) I-9 forms not filled out and maintained in personnel files. c) New Hire Forms not maintained in personnel files. d) Merit and cost of living raises for employees should to be approved by the Board and recorded in the Board’s minutes. e) Payroll taxes were not paid timely. f) Supporting documentation not maintained for payments of quarterly taxes and withholdings for retirement. g) Timesheets not maintained for employees to support hours worked and supervisory approval.

19. Accounting/bookkeeping issues noted (cont.)  Necessary policies should be adopted by each ECD. (For example: Travel Policy, Leave Policy, Capital Asset Capitalization Policy, etc.)  Capital Assets Listings a) Capitalization threshold should be established b) Listing should include purchase price, date of purchase, and other important information about purchase (Ex. Serial numbers, model number, etc.) c) Inventory should be performed annually and be updated with new items purchased and disposed items noted with a disposition date. All deleted items should be properly documented and documentation retained for examination.

20. Legal Compliance problems  ECD’s are required to comply with the Alabama Competitive Bid Law pursuant to the Code of Alabama 1975, Title 41, Chapter 16. This law applies to the purchase or lease of materials, equipment, supplies or other personal property exceeding $15,000 and to the expenditure of funds for labor and services. Exceptions to the bid law are found in the Code of Alabama 1975, Section 41-16-51.  Common problems noted in our examinations include:  Failure to bid or failure to properly apply all aspects of the law.  Failure to maintain documentation on file for the bid process for examination purposes.

21. Legal Compliance problems (Cont.)  The Code of Alabama 1975, Title 39, provides requirements regarding contracts for public works. Public Works is defined as “the construction, installation, repair, renovation, or maintenance of public buildings, structures, sewers, waterworks, roads, curbs, gutters, sidewalls, bridges, docks, underpasses, and viaducts as well as any other improvement to be constructed, installed, repaired, renovated, or maintained on public property and to be paid, in whole or in part, with public funds or with financing to be retired with public funds in the form of lease payments or otherwise.”  The Public Works Law includes requirements for advertising for sealed bids, execution of performance, payment and bid bonds by the contractor, and advertisement of notice of completion by the contractor.

22. Legal compliance problems (Cont.)  The requirements under the Public Works Law differ from the Competitive Bid Law. This generally causes problems in the examination due to a misunderstanding of the two laws. It is essential to distinguish whether the project falls within the definition of Public Works before starting the bid process.  Additionally, problems arise due to lack of documentation on hand for the various types of bonds and the advertisements required.

23. Legal compliance problems (Cont.)  The Code of Alabama 1975, Section 36-25A-4, requires a governmental body to maintain accurate records of its meetings, excluding executive sessions, setting forth the date, time, place, members present or absent, and the action taken at each meeting. Except as otherwise provided by law, the records of each meeting shall become a public record and be made available to the public as soon as practicable after approval.  Minutes are important because they’re the only surviving record of actions taken at the meetings. They need to be informative and easy to navigate for future use. Minutes need to be precise in the information given.

24. Legal Compliance problems (Cont.)  The following issues were noted relating to minutes:  Minutes were not maintained in chronological order.  An index was not included to provide a way to easily locate information in the minute book.  Documents mentioned in the minutes were not included as an attachment and were not maintained separately for review.  Approval for all actions taken including expenditures, debt, budgets, etc. was not documented in the minutes.

25. Noncompliance with By-laws  By-Laws are established by the individual districts to establish rules and procedures for the organization. Instances were noted where ECDs did not follow their By-Laws. Problems noted were as follows: a) Board meetings were not held as required in the By-Laws. (Some ECDs did not hold any meetings during the audit period or only met 3 - 4 times when the by-laws required monthly meetings.) b) Budgets were not approved each year. c) Board members were not appointed to the ECD Board as required by the By-Laws. Board member terms expired without a new appointment being made. c) Board members terms of office did not abide by the By-Laws. d) Minutes were not prepared as required by the By-Laws to properly reflect all actions taken.  In general, the ECD Boards should be in compliance with the rules and regulations included within their By-Laws.

26. Employee with e911 vehicle  Several ECD’s provide vehicles to some of their employees. These employees should be assessed the $3.00 a day fringe benefit for commuting use of vehicles owned by the ECD.  Reference – IRS Publication 15b (see www.irs.gov)www.irs.gov  Bottom Line-ECD/911 employees do not meet the IRS definition of a public safety officer and; therefore, they do not qualify for exemption from the assessment of fringe benefits to their wages.

27. Contacting us  Location: Gordon Persons Building, 50 N. Ripley St., Room 3201, Montgomery, AL 36104-3833  Phone: (334) 242-9200  Website: www.examiners.alabama.gov.www.examiners.alabama.gov  Mailing Address: P. O. Box 302251, Montgomery, AL 36130-2251  County Audit Director: James Hall

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