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Posted September 3, 2013 | Leave a comment
Warren County mulls cost of new rule
Costs, lack of auditors cited in talks about volunteer fire companies' accountabilityBy Alex Bridges
FRONT ROYAL -- A new rule aimed at financial accountability for Warren County volunteer fire companies could impact their budgets.
Companies must provide a regular audit of their finances to the Department of Fire and Rescue Services under a requirement that took effect July 1. But concerns raised about the cost of such services prompted county officials to revisit the rule and look for less costly ways to retain accountability.
The Board of Supervisors learned at a work session Tuesday that the Front Royal area lacks certified auditors and hiring such an expert to do the work could cost some volunteer groups nearly as much as they fundraise in a year.
Charlie Prince, president of Rivermont Volunteer Fire Company, and Sonny Cheeks, president of South Warren Volunteer Fire Company, attended the work session and gave input to the board.
Vice Chairwoman Linda Glavis brought several matters concerning fire and rescue services to the board, including the idea of creating a uniform accounting system for the county companies.
"The point is the county needs to have accountability for the funds we give to the fire companies and that's what brought up my question about why can't we have a uniform accounting system countywide," Glavis said.
The supervisor pointed out that the county already tracks each expense on individual line items. Glavis suggested that fire companies could submit information to the county chief, who approves spending by the organizations.
County Administrator Douglas Stanley said the local government covers the bills for about half of the fire companies and that process works well.
"Some of these companies don't raise more than $10,000 or $20,000 a year," Stanley said. "I think we felt like it wasn't fair to require a $7,500-audit for a fire company that raised $15,000. It did not make sense."
The county already undergoes audits each year, Stanley pointed out. He suggested that the county take the requirement off those companies whose bills are handled by the local government.
"The flip side is we've had hundreds of thousands of dollars stolen in this community from our local fire departments in the last 15 years," Stanley said. "It's a reality and some of it was by people I knew, I think who the chief knew."
County officials noted that a certified audit does not address issues of fraud or embezzlement. But the audit requirement still seeks to increase accountability among fire companies, some of which have faced trouble in the past.
Prince voiced concern with the idea of the county paying his company's bills and told the board that even that measure may not stop fraud.
"Human nature being what it is, you're going to find some people who can beat every system," "I don't see where it really benefits our company to have [the county] pay our bills and add more and more bureaucracy to the cycle. Any time you want to see our books walk in the door and we'll open them."
The fire chiefs advisory committee in February 2012 revised county policy to require that all companies undergo a certified audit per the standard administrative guideline set in 1997. Mabie at the time of the revision began to research ways to fund the requirement. Mabie told the board that no certified auditors work in Front Royal. The nearest person or firm that can conduct certified audits works in Winchester, Mabie said.
Mabie explained that his department also looked into hiring an auditor who could perform audits on all volunteer companies as a way to save money. Mabie said some companies already receiving audits did not want to participate.
A study recently conducted by the Springsted consulting firm suggested the county should begin audit procedures for all companies on a yearly or bi-annual basis, Stanley said. Supervisors in the 1990s implemented a rule requiring certified audit, but backed off two years later and asked companies to provide a general ledger of their financial activity, Stanley recalled. A ledger would give only limited information, he said.
The previous board put the policy in place in an effort to reduce theft or fraud in the companies, Stanley said. The administrator noted that several companies have experienced "significant theft and fraud" since he began working for the county.
Virginia requires companies that hold bingo undergo certified audits, Stanley said.
The idea has been raised that the county could waive the requirement of a certified audit for the companies whose bills are paid by the Department of Fire and Rescue Services. The county pays the bills for several companies.
Each volunteer company runs as its own entity separate from the others. As Mabie noted, the cost to hire someone to perform an audit would have less of an effect on companies with larger budgets.
Chairman Archie Fox asked about the purpose and impetus behind the county seeking an audit of a company. Finance Director Carolyn Stimmel explained that certified audits give "the financial assurance that everything appears to be OK."
Glavis noted that certified public accountants perform auditing work for some of the fire companies. However, the CPAs are not certified auditors and cannot perform the work required under the new county regulation.
Contact staff writer Alex Bridges at 540-465-5137 ext. 125, or email@example.com
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