Financial and Compliance Guidelines

for Volunteer Fire Departments

Department of
Examiners of Public Accounts
401 Adams Avenue, Ste. 280
P.O. Box 302251
Montgomery, Alabama 36104
Website: www.examiners.alabama.gov

Rachel Laurie Riddle, Chief Examiner

 CONTENTS

PAGE

Minimum Record Keeping and Accounting Requirements for

Volunteer Fire Departments 1

Restricted Funds 3

Example: Restricted Fund – Cashbook 4

Example: Restricted Fund – Bank Reconcilement 5

Legislation Applicable to Volunteer Fire Departments 6

Applicable Attorney General Opinions 7

 Minimum Record Keeping and Accounting Requirements
for Volunteer Fire Departments
The following list is intended to serve as a guide of minimum requirements related to
record keeping and accounting for VFDs. This list is not intended to be inclusive for all
VFDs as local legislation may require additional record keeping and/or accounting
procedures. VFDs should maintain a working knowledge of all applicable local laws which
may affect their operation.

1. Each VFD's Board of Directors should keep minutes of all meetings.

2. Official bank accounts are to be authorized by the VFD's Board of Directors, and such
authorization documented in the minutes of meetings. Official bank accounts should be
covered under the SAFE program in accordance with Ala. Code § 41-14A-3.

3. The treasurer and/or bookkeeper of the VFD should be bonded.

4. Prenumbered receipts should be written for all funds received. Copies of receipts
should be retained.

5. All funds received should be deposited in an official bank account.

6. The disbursement of VFD funds is to be supported by proper documentation, including

an original invoice and authorization from the Board of Directors.

7. To provide control over cash disbursements, checks should be prenumbered. It is

recommended that checks have dual signatures. Blank checks should not be signed in
advance.

8. Public records should be retained until approval for destruction is obtained from the
Alabama Department of Archives and History
(https://archives.alabama.gov/officials/localrda.html).

9. Disbursements of VFD funds should comply with applicable provisions of the Alabama
Competitive Bid Law and Public Works Law. Bid files are to be maintained.

10. The disbursement of VFD funds should be limited to authorized purposes as set forth by
state and/or local laws and the restrictive provisions of donations. Disbursements of
federal or state grants should be limited to authorized purposes as set forth by grant
agreements and/or federal compliance requirements.

11. A separate fund should be established for restricted monies for accounting purposes.

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12. Interest earned in a particular fund should be expended in that fund.

13. An inventory of all equipment owned by the VFD should be maintained.

14. A cashbook reflecting the receipts, disbursements, and balances on hand should be
maintained on a monthly basis.

15. A monthly bank reconcilement should be performed for each bank account.

16. The Board of Directors may employ a public accounting firm registered with the Alabama
Board of Public Accountancy to perform audits of the VFD in accordance with generally
accepted government auditing standards.

17. Public funds should not be commingled (mixed) with funds from private sources (such as
fundraising activities, etc.). Commingled monies are all treated as public funds subject
to state and local laws. If an accounting system is in place, either manual or
computerized, that clearly segregates revenues by source and identifies expenditures by
nature of expense so that the expenditure of restricted and unrestricted monies can be
easily identified, then it is permissible to operate with one bank account.

18. Fundraising activities should not be financed with restricted funds.

19. VFDs should ensure compliance with applicable payroll related regulations to include
completion and submission of forms as required by the IRS and the State of Alabama.
Examples of these regulations and forms include, but are not limited to the following:
• IRS Form W-2
• IRS Form 1099
• IRS Form I-9
• IRS Form 941
• IRS Form 990
• Selective Service Registration
• Alabama Department of Labor New Hire Reporting Form
• Compliance with Ala. Code § 17-17-5 which provides that a governmental entity
may not arrange by salary deduction or otherwise for payments to a political action
committee or a membership organization which performs political activity as
defined by Ala. Code § 17-17-5(b)(1).
• E-Verify of all employees
VFDs should also ensure compliance with entity specific payroll regulations such as
Board approved salary schedules/pay rates, bylaws, and policies.

20. VFDs should ensure all construction projects are in compliance with all regulations of the
Alabama Department of Finance’s Division of Construction Management.

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Restricted Funds
Restricted funds are funds received from any of the following sources:
State Grants
County Appropriations
Ad Valorem and Sales Taxes
Fire Fees and Dues Authorized by Legislation
Donations with Restrictive Provisions
Interest Earned on Deposits of Restricted Funds

Eligible Expenditures from Restricted Funds:

The following list is intended as a general guide to the types of expenditures that can be made
from restricted funds. However, it is not intended to be all inclusive. Each Fire Department
should review any applicable local legislation which dictates how tax dollars are to be
expended.

Acquisitions of fire trucks and fire stations

Purchases of fire-fighting equipment
Communications equipment and the installation of such equipment in personal vehicles
Fire training expenses
Fire vehicles and station insurance
Oil, gas, and vehicle repairs for department owned vehicles
Utilities
Station repairs
Lawn mower and related supplies incidental to maintaining grassy areas around fire station
Water hoses and related supplies needed to keep vehicles clean

The purchase of new or used equipment which exceeds $15,000.00 is subject to the provisions
of the State’s Competitive Bid Law. If purchases are made from a state bid list, a copy of that
bid from the State Purchasing Department should be obtained for documentation.

Ineligible Expenditures from Restricted Funds:

The following items are considered to be ineligible expenditures from restricted funds.
However, each Fire Department should review any applicable local legislation which dictates
how tax dollars may be expended.
Salaries
Purchases of food and drink
Expenses relating to holding fund raising activities
Purchases of microwave ovens, coffee pots, refrigerators, and other similar type kitchen
appliances (Refrigerators may be eligible if required to keep medical supplies stored in cool
place for rescue operations.)
Payment of magazine subscriptions unrelated to fire department and/or rescue squad
operations.
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Community VFD
Blank County CASHBOOK-RESTRICTED FUND

Date Receipt State County Ad Valorem Sales Fire Fire Donations- Interest On
RECEIPTS Receive Number Total Grants Appropriation Tax Tax Assessment Dues Restricted Deposits
State Forestry Commission d
10-10-08 501 $2,800.00 $2,800.00 s
J.H. Smith 10-11-08 502 100.00 100.00
Joe Blow 10-15-08 503 100.00 100.00
John Black Grocery 10-15-08 504 500.00 500.00
Blank County Tax Collector 10-17-08 505 2,200.00 2,200.00
Jim Jones 10-21-08 506 100.00 100.00
Blank County Commission 10-30-08 507 500.00 500.00
First National Bank 10-31-08 508 52.67 52.67
Total Receipts $6,352.67 $2,800.00 $500.00 $2,200.00 $0.00 $0.00 $300.00 $500.00 $52.67
(A) (A)

DISBURSEMENTS Station Equipment

Date Check & Vehicle Telephone Postage & Station Fire Trucks And Fire Gas, Oil Miscellaneous
Payee Paid Number Total Insurance & Utilities Supplies & Repairs & Vehicles Communications Training & Repairs Expenses
USF&B Insurance Co. 10-01-08 2101 $3,000.00 $3,000.00
Municipal Utilities Board 10-05-08 2102 70.00 70.00
Regional Telephone Co. 10-08-08 2103 45.00 45.00
Joe's Garage 10-10-08 2104 35.00 35.00
John's Service Station 10-15-08 2105 90.00 90.00
Fire Equipment Co. 10-16-08 2106 120.00 120.00
State Fire College 10-31-08 2107 125.00 125.00
U.S. Post Office 10-31-08 2108 32.00 32.00
First National Bank 10-31-08 2109 500.00 500.00
Ford Motor Credit Corp. 10-31-08 2110 750.00 750.00
Total Disbursements $4,767.00 $3,000.00 $115.00 $32.00 $500.00 $750.00 $120.00 $125.00 $125.00 $0.00
(B) (C)
Cash Balance 10-01-08 $12,800.00
Total Receipts 6,352.67 (A) Fire Assessments/Fire Dues - mandatory assessments or dues authorized by local legislation.
Total Balance & Receipts $19,152.67 (B) Postage & Supplies - supplies incidental to operation and maintenance of station and equipment
Total Disbursements (4,767.00) as allowed by law.
Cash Balance 10-31-08 $14,385.67 (C) MISCELLANEOUS EXPENSES - any other expenses allowable under local laws which establish
funding sources that are not categorized above.
Community VFD Bank Reconcilement - Restricted Fund
Blank County October 31, 2008

Bank Balance 10-31-08 $15,135.67

Add: Deposit In Transit (a) 500.00

Sub-total $15,635.67

Less: Outstanding Checks (b)

Date Check No. Payee Amount

10-31-08 2109 First National Bank (500.00
10-31-08 2110 Ford Motor Credit (750.00
)
)
Total O/S Checks (1,250.00)

Book Balance 10-31-08 $14,385.67

(a)Deposits In Transit are any deposits recorded on the ledger which have not been posted to the
bank statement at the statement ending date (preferably the last day of the month). Note that
interest earned on deposits is recorded after your last deposit which has not cleared, this is
because the interest will have been added to your account by the bank as of the statement date.

(b) Outstanding checks are any checks which have been recorded on the ledgers and sent to the
payee but the check has not cleared the bank statement as of the ending date of the statement.

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State Legislation Applicable to Volunteer Fire Departments

Ala. Code § 9-3-17 provides for the certification of volunteer fire departments.

Ala. Code § 9-3-18 authorizes the state and any department, office, or agency of the state, and any
county, any municipality, any fire, water, sewer, garbage, or school district, or any other public
governmental entity or political subdivision to donate money, property, equipment, etc. to
volunteer fire departments or volunteer rescue squads. This statute further provides that
unless the donating agency or entity specifies otherwise, the volunteer fire department
receiving donations may dispose of the property pursuant to Ala. Code § 41-16-120 through
41-16-125, inclusive.

Ala. Code § 10A-3-1.01 through 10A-3-8.02 contains provisions related to nonprofit

corporations.

Ala. Code § 10A-3-2.32 provides that nonprofit corporations must maintain complete books
and records of accounts, and minutes of the proceedings of its members, board of directors,
and committees having any of the authority of the board of directors.

Ala. Code § 40-9-13 provides that volunteer fire departments are exempt from all state, county
and municipal taxes, licenses, fees and charges, including any privilege or excise tax levied by
the State of Alabama or any county or municipality.

Ala. Code § 41-16-50 through 41-16-79 contain provisions of the Alabama Competitive Bid
Law applicable to volunteer fire departments.

Ala Code § 39-1-1 through 39-1-5 contain provisions of the Public Works Law applicable to
volunteer fire departments.

Ala. Code § 40-12-250 relates to license plates for state, county and municipal owned motor
vehicles.

Note: This list is not all inclusive. Volunteer fire departments should maintain a
working knowledge of changes in legislation and of local laws applicable in their specific
cities or counties.

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 Attorney General Opinions Applicable to Volunteer Fire
Departments

Opinion Number 1979-394

Fire Districts organized pursuant to Ala. Code § 11-89-1 are entitled to a county tag under the
provisions of Ala. Code § 40-12-250.

Opinion Number 1989-297

A Judge of Probate may not charge a volunteer fire department any fees for filing articles of
incorporation. Ala. Code § 40-9-13(a) exempts volunteer fire departments from payment of any
state, county and municipal taxes, licenses, fees and charges of any nature whatsoever.

Opinion Number 1994-083

Tax funded revenues received by volunteer fire departments sanctioned by municipalities are
subject to audit as are other municipal funds.

Opinion Number 1993-224

Ala. Code § 40-9-13(a) exempts a volunteer fire department from the payment of a special events
retail liquor license fee.

Opinion Number 1997-039

Ala. Code § 40-9-13(a) exempts a volunteer fire department from payment of permit and
entertainment fees.

Opinion Number 1999-085

Ala. Code § 40-9-13(a) exempts a volunteer fire department from paying utility taxes.

Opinion Number 2002-261

Ala. Code § 40-9-13(a) does not require that property or services offered by a county or municipal
government for sale or rent to the public be provided free to volunteer fire departments.

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Opinion Number 2004-044

Ala. Code § 40-9-13(a) exempts a volunteer fire department from building inspection fees levied
by the county.

Opinion Number 2005-190

Hospital funds can be disbursed to volunteer fire departments and municipal fire departments if
used strictly for health care purposes.

Opinion Number 2007-111

A town council may require its municipally sanctioned volunteer fire department to provide the
town with unredacted copies of fire and emergency medical services reports to keep on file for use
in determining the reimbursement of expenses of department personnel making fire and medical
calls.

Opinion Number 2009-063

Volunteer firemen at the scene of a vehicle accident do not have arrest powers other than those of
private citizen. A volunteer firefighter’s privately-owned vehicle is not an authorized emergency
vehicle unless designated as such by the chief of police or the Director of Public Safety. No
vehicle other than an authorized emergency vehicle may use red lights visible from the front of
such vehicle or flashing white lights other than signal lights and emergency flashers authorized by
Ala. Code § 32-5-241(d)(3).

Opinion Number 2010-037

Volunteer fire department may be used as a polling place if the members of the board of directors
choose to allow the county commission to use the station as a polling place.

Opinion Number 2011-054

Ala. Code § 40-9-13(a) exempts volunteer fire department from solid waste disposal fees.

Opinion Number 2012-016

A volunteer fire department is subject to the Competitive Bid and Public Works Laws. The
business records of a volunteer fire department are subject to disclosure under the Open Records
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 Law except when specific records or portions thereof can be demonstrated by the department to fall
within a recognized exception.

Opinion Number 2012-034

Volunteer fire department may respond to calls in a county adjacent to its home county if
authorized by its bylaws and no funds from county taxes are used on such calls for equipment,
materials, personnel compensation, or otherwise.

Opinion Number 2012-066

County E-911 Board may provide matching funds to a volunteer fire department to improve the
emergency communications system. Board must comply with Competitive Bid Law in the
purchase of equipment for volunteer fire department.

Opinion Number 2013-033

County Commission may improve a private road providing access to a site housing volunteer fire
department communications equipment if the Commission determines that a public purpose is
served. The Commission or volunteer fire department association should obtain an easement
from the private property owner before making the improvement.

Opinion Number 2015-058

If a town has the authority to make expenditures to provide for a volunteer fire department, said
town may expend funds to raise money for the fire department if the town council determines the
expenditure serves a public purpose.

Opinion Number 2020-016

Volunteer fire departments are exempt from the payment of fees for applications for certificates
of titles so long as the property in question is used in accordance with the requirements of Ala.
Code § 40-9-12 (in and about the conducting, maintaining, operating, and carrying out of the
program, work, principles, objectives, and policies of such nonprofit).

Note: This list is not all inclusive. Opinions of the Attorney General may be researched or
read on the Attorney General’s official website http://www.ago.state.al.us