Annual Financial Reporting

Legal Requirements

Rhode Island General Law Section 44-5.2-2 requires:

• All fire districts located within the Town of Coventry shall be required to provide for an independent annual audit. 

Rhode Island General Law Section 45-10-4 and 44-5-69 requires: 

• The Auditor General shall prescribe requirements for audits of fire districts.
• Every fire district authorized to assess and collect taxes shall be required to have annual financial statements audited by an independent auditing firm approved by the Auditor General. 
• The Auditor General may waive or modify form and content of financial statements and scope of the audit, based upon the size of the fire districts.

Decision Tree

The Office of the Auditor General has developed the below decision tree to assist fire districts in implementing the annual financial reporting requirements pursuant to enacted legislation, House Bill 7944Aaa and Senate Bill 2778aa.  The decision tree should be used to determine the fire district’s applicable tier for annual financial reporting.

Tier I Requirements:

Tier I fire districts must have an annual audit of the district’s financial statements.  

In accordance with Rhode Island General Law Section 45-10-4 and 44-5-69, the Auditor General requires: 

• Tier I fire districts to engage an independent certified public accountant to perform an annual audit of their financial records based on a competitive bidding process: 
  • The draft request for proposals for audit services and selection of auditors shall be subject to final written approval by the State Auditor General. Fire districts shall not engage auditors nor contract for their services until such written authorization is received from the Auditor General.
  • The audit contract may cover one, two or three fiscal years. Each year must be treated as a separate audit and the contract period shall not exceed three years. At the end of the contract period, the fire district must go out to bid for audit services.
• Financial statements shall be prepared in accordance with requirements prescribed by the Governmental Accounting Standards Board; and 
• Annual audits of fire districts shall be conducted in accordance with generally accepted auditing standards and Government Auditing Standards.
• The annual audits shall be submitted to the Office of the Auditor General and the Division of Municipal Finance no later than six months after fiscal year end.

Procedures for Requesting Approval of Tier I Fire District’s Request for Proposals (RFP) for Audit Services and Auditor Selection:

The Auditor General has issued Guidelines for Audit Bids and Specifications for Tier I fire districts in order to provide for consistency in the bidding and approval process and encourages use of the template (Form FD-8) for the fire district’s bid specifications for audit services. Fire district officials should also consult their legal counsel to ensure compliance with state and local laws regarding procurement of services and the issuance of bid specifications.

Tier I fire districts are required to submit to the Auditor General a copy of the draft bid specifications prior to the solicitation of bids for audit services and a completed Form FD-5 – “Request for Approval of Fire District Audit Bid Specifications”.

Once the fire district has completed the bid process, it must complete and submit to the Auditor General Form FD-6 - "Request for Approval of the Fire District Auditor Selection” and a copy of the complete response package from the professional firm for which approval is requested. In addition, the fire district shall submit the evaluation grid analyses (Form FD-7 and each Form FD-7.1) completed on all the audit firms that responded to the request for proposals (RFP), as well as any other pertinent information considered by the fire district in making its selection.

Please refer to the Guidelines for Audit Bids and Specifications for further details on the approval process for bid specifications and auditor selection.

By approving the fire district’s selection of an audit firm, the Auditor General is not ensuring that the audit firm will (1) meet all contractual terms including the deadline for completion of the audit or (2) comply with professional standards in the conduct of the audit. Approval of a firm to conduct the audit does not limit our authority to review, make further inquiries, and/or reject the audit report. 

Tier II Requirements:

Tier II fire districts must complete the Annual Self-Reporting Financial Template (Form FD-4) and engage a certified public accountant (CPA) to perform Agreed-Upon Procedures.  The Auditor General has issued Guidelines for Agreed-Upon Procedures Engagements for Tier II fire districts in order to provide for consistency in the testing of specific reported financial information.  

Prior to engaging a CPA to perform the agreed-upon procedures, the fire district is required to submit Form FD-9 to notify the Auditor General and request approval of the CPA selected to perform the services.  The fire district will have the option of engaging a CPA for up to three years.  Fire district officials should also consult their legal counsel to ensure compliance with state and local laws regarding procurement of services and the issuance of bid specifications for CPA services.

Please refer to the Guidelines for Agreed-Upon Procedures Engagements for further details on the specific agreed-upon procedures requirements and on the process for engaging a CPA.

The Annual Self-Reporting Financial Template (Form FD-4) with the Agreed-Upon Procedures Report shall be submitted to the Office of the Auditor General and the Division of Municipal Finance no later than six months after fiscal year end. 

Tier III Requirements:

Tier III fire districts must complete the Annual Self-Reporting Financial Template and submit a copy to the Office of the Auditor General and the Division of Municipal Finance no later than 60 days after fiscal year end.  

• Form FD-4: RI Fire District Annual Self-Reporting Financial Template