Emergency Communications
Districts
Presented by: James Hall
Director, County Audit Division
Examiners of Public Accounts
August 20, 2015
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.
Overview
 Bond
Requirements
 Reporting Requirements
 Accounting/Bookkeeping Problems
 Legal
Compliance Problems
 Noncompliance with
 Employees
By-Laws
with E911 Vehicles
Legal Authority
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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.
Bonds…what is enough???
Bond requirements
Bond – Code of Alabama 1975, Section 11-984(i) prior to the amendment of Act Number 2015-53
 Required
“… 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.”
Bond requirements (cont.)
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.”
 Required
Bond Requirements
 Total
Funds Received -
Bond requirement ½%
Calculated Bond Required
Actual Bond Required
$357,000.00
0.005
$1,785.00
$10,000.00
Bond Requirements
 Total
Funds Received -
$1,357,000.00
Bond requirement ½%
Calculated Bond Required
Actual Bond Required
0.005
$6,785.00
$10,000.00
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
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.
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.
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
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.

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.
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.
Problems noted with reporting requirements

Required information was not provided or was not submitted by
November 30.

Receipt and disbursement information submitted was inaccurate.
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.)
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.
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.
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
 Failure
to bid or failure to properly apply all aspects of the law.
to maintain documentation on file for the bid process for
examination purposes.
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.
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.
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.
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.
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.
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)

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.
Contacting us

Location: Gordon Persons Building, 50 N. Ripley St., Room 3201,
Montgomery, AL 36104-3833
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Phone: (334) 242-9200
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Website: www.examiners.alabama.gov.

Mailing Address: P. O. Box 302251, Montgomery , AL 36130-2251

County Audit Director: James Hall
The end
Questions