PURPOSE: The state auditor has authority to establish standards and reporting requirements for audits performed on fire protection districts in St. Louis and Greene Counties. This rule sets forth the scope of the audit.

1. (1) Nothing in the rules promulgated for audits of fire protection districts shall be construed as restricting, limiting or relieving the independent auditor of his/her professional judgment or responsibility.
2. (2) The audit shall include those tests of the accounting records and other auditing procedures which the independent auditor considers necessary in the circumstances to conform to the standards for auditing of governmental organizations, programs, activities and functions as established by the comptroller general of the United States.

3. (3) As part of the audit described in section (2), the auditor will obtain an understanding of the internal control structure, assess control risk and report any material weaknesses or reportable conditions. The auditor will also test compliance with applicable laws and regulations and report all material instances of noncompliance. As a part of, or in addition to, audit tests or procedures which may be necessary for the audit, the auditor shall—

   1. (A) Review systems, procedures and management practices, including:

      1. 1. Review cash management practices to

the extent necessary to determine whether significant improvements appear practicable and economically justifiable;

1. 2. Evaluate the purchasing function to

the extent necessary to determine that the district generally receives fair value, for example, bidding of significant purchases; that purchases generally represent items consistent with the function of the district; and that there is not significant likelihood of misuse or misappropriation of the district’s resources through the purchasing process;

1. 3. Review fixed asset records and proce-

dures to the extent necessary to determine that fixed assets are properly recorded, physically controlled and in the possession of the district;

1. 4. Review fidelity bond coverages to

determine that all persons with access to assets of the district appear covered in sufficient amounts;

1. 5. Evaluate the budgeting practices to

the extent necessary to determine whether significant improvements appear practicable and economically justifiable;

1. 6. Review related party transactions;
2. 7. Review evaluate other areas as

required by the district; and

1. 8. Review significant areas or matters

which come to the attention of the auditor;

1. (B) The auditor will note areas of possible improvement in the district’s systems, procedures and management practices. In evaluating district systems, procedures and management practices, the auditor should consider whether improvements appear practicable and economically justifiable.

2. (C) Test compliance with applicable laws and regulations, including:

   1. 1. Design the audit to provide reason-

able assurance of detecting errors, irregularities and illegal acts that could have a direct and material effect on the financial statements;

1. 2. Be aware of the possibility of illegal

acts that could have an indirect and material effect on the financial statements; and

1. 3. Test compliance with other legal pro-

visions as s/he deems necessary or appropriate in the circumstances.

1. (D) Legal provisions which the auditor should consider in his/her audit include, but are not limited to, the following:

   1. 1. Article III, Sections 38(a) and 39(3)

and Article VI, Section 25, Constitution of Missouri limitations on use of funds and credit;

1. 2. Article VI, Section 26, Constitution

of Missouri limitations on indebtedness without popular vote;

1. 3. Article VI, Section 29, Constitution

of Missouri application of funds derived from public debts;

1. 4. Article VII, Section 6, Constitution of

Missouri penalty for nepotism;

1. 5. Chapter 67, RSMo budgetary

requirements;

1. 6. Sections 70.210 to 70.230 and Sec-

tion 432.070, RSMo contracts;

1. 7. Section 105.145, RSMo annual

report;

1. 8. Chapter 105, RSMo conflict of inter-

est;

1. 9. Chapter 108, RSMo bond issues;
2. 10. Chapter 321, RSMo fire protection

districts;

1. 11. Other applicable portions of the

Constitution of Missouri and the Missouri Revised Statutes;

1. 12. Applicable sections of Code of State

Regulations; and

1. 13. Other applicable legal provisions.

1. (4) The auditor shall report on the reviews and examinations required by this rule in a management letter as set forth in 15 CSR 40- 4.030 (2)(E).

AUTHORITY: section 321.690, RSMo Supp. 1993.* Original rule filed May 12, 1978, effective Sept. 11, 1978. Amended: Filed Dec. 2, 1985, effective Feb. 13, 1986. Amended: Filed June 14, 1994, effective Nov. 30, 1994. *Original authority: 321.690, RSMo 1977, amended 1981, 1986, 1991, 1993.