Audit: Fire district paid retirement to injured worker

St. Mary Parish Fire Protection District No. 3 in Amelia paid about $20,000 in retirement payments to an injured employee, which may go against provisions in the state constitution, according to an audit. The district also acquired property that wasn’t appraised prior to the acquisition, another possible violation, auditors said.
The district audit for the fiscal year ended Sept. 30, 2014, was released Monday on the state legislative auditor’s website. Kolder, Champagne, Slaven & Company performed the audit.
Unmodified, or positive, opinions were issued on the financial statements of the district’s governmental activities and its General Fund. A management letter was not issued.
In the report, auditors noted that the district continues to make retirement contributions on behalf of an employee injured in the line of duty but who received no compensation from the district during the year ended Sept. 30, 2014.
During that year, the district paid retirement contributions of about $20,960 on behalf of the injured employee, the report stated.
The state constitution says, in part, except as otherwise provided in the constitution, “the funds, credit, property, or things of value of the state or of any political subdivision shall not be loaned, pledged, or donated to or for any person, association, or corporation, public or private.”
The district may have no legal obligation to continue the retirement contributions and may, therefore, not be in compliance with constitutional prohibitions regarding such payments, the report stated.
Auditors recommended the district, with the assistance of legal counsel and the Firefighters’ Retirement System of Louisiana, evaluate the legalities of continuing the contributions and determine the disposition of contributions already remitted.
District management stated that they were advised by legal counsel to continue the retirement payments until advised otherwise, according to the report. The retirement payments on behalf of the injured employee were discontinued as of Dec. 31, 2014, the report stated.
Management said they will seek the advice of legal counsel and the Firefighters’ Retirement System of Louisiana to determine whether the payments were inappropriately made. If the payments are deemed inappropriate, management will request reimbursement of the contributions from the retirement system.”
Auditors also reported that the district acquired immovable property during the year ended Sept. 30, 2014, but did not obtain an appraisal of the property prior to the property being acquired.
During the year ended Sept 30, 2014, the district reimbursed the fire department $477,508 for the purchase of immovable property, the title to which is held by the fire department, the audit report stated.
State law says no political subdivision shall purchase immovable property with a value more than $3,000, unless prior to such purchase, “the property has been appraised by a qualified appraiser.”
The district may have violated the state law question, auditors said. Auditors recommended the district comply with the provisions of the state statute by obtaining appraisals prior to the purchase of immovable property.
District management stated that they were not aware of the requirement to obtain an appraisal prior to the purchase of immovable property. Management will obtain appraisals prior to any future purchases, they stated in the report.
In the audit report, auditors said the district reimburses the Amelia Volunteer Fire Department for fire protection related expenditures under state law, which provides for districts to enter into such contracts as they consider necessary or desirable to carry out the purposes for which they were created and the terms and conditions of a cooperative endeavor agreement executed in prior years with the fire department.
However, the agreement says nothing in regards to the entity with which title will vest in the acquisition of capital items, auditors stated.
The cooperative endeavor agreement is also silent regarding the voluntary or involuntary disposition of capital items purchased with public funds, the title to which is held by the fire department, or the purposes for which such items may be used, auditors stated.
An article in the state constitution states, that except as otherwise provided in the constitution, the funds, credit, property, or things of value of any political subdivision “shall not be loaned, pledged, or donated to or for any person, association, or corporation, public or private,” according to the audit.
The finding resulted due to a lack of clarity and content of the cooperative endeavor agreement with the fire department, the report stated.
The holding of title for capital items the fire department purchased with public funds “without a clear and binding prohibition on the transfer of such items and the limitations of their use to firefighting-related purposes may be a violation of constitutional provisions.”
Auditors recommend the district, with the assistance of legal counsel update the terms and conditions of the cooperative endeavor agreement with the fire department.
They also recommended the district, with the assistance of legal counsel and the Louisiana Attorney General, determine whether the holding of title for capital items purchased with public funds by the fire department is appropriate.
Management responded by stating that it will consult with legal counsel on an update of the cooperative endeavor agreement. Management will also consult with legal counsel regarding the purchase of capital related items and how those items should be legally held, especially considering the public interest in the item, and execute any transfers of title considered necessary.
Finally, management will make sure the update to the cooperative endeavor agreement restricts the transfers of any capital items purchased with public funds and held by the fire department and limits the use of the items to firefighting-related purposes, according to the report.
Auditors also said the district did not publish the availability of the proposed budget for the year ended Sept. 30, 2014, and did not publish a notice of the time and date of the public hearing to be held on the proposed budget.
Auditors recommended the district comply with the provisions of the Local Government Budget Act by publishing a notice of availability of the proposed budget and publishing a notice containing the time and date of the public hearing of the budget being considered.
District management stated that the failure to publish a notice of availability of the proposed budget and a notice of the time and date of the public hearing was an oversight.
The district will comply with the statutory provisions of the Local Government Budget Act and publish the required notifications, according to the audit report.
Auditors also determined that the district had inadequate segregation of accounting functions and management and staff lacked the expertise or experience to apply generally accepted accounting principles.