Audit Objective
Did Henrietta Fire District (District) officials properly distribute foreign fire insurance (FFI) tax proceeds?
Audit Period
January 1, 2023 – February 20, 2025
Understanding the Program
In accordance with New York State Insurance Law (Insurance Law), FFI tax proceeds are generated from a tax, generally at a rate of 2 percent that is imposed on the premiums of fire insurance policies written by certain out-of-state insurers against loss or damage by fire on property located in the State. In general, the out-of-state insurer will collect and remit FFI tax proceeds to the New York State Department of Financial Services, which distributes the proceeds to the proper recipients. Pursuant to Insurance Law and relevant case law, when a fire district’s fire department is comprised of both paid firefighting personnel and multiple volunteer fire companies, the fire district treasurer should distribute FFI tax proceeds among the paid firefighters and fire companies on a pro-rata share basis.
The District Secretary/Treasurer (Treasurer) is the chief fiscal officer and is responsible for the day-to-day financial activities, which includes receiving and disbursing FFI tax proceeds. The Treasurer received and disbursed FFI tax proceeds totaling $332,504 in 2023 and 2024.
Audit Summary
District officials did not properly distribute the 2024 FFI tax proceeds because the Treasurer miscalculated the distribution. The Treasurer used the 2023 pro-rata allocation percentage to distribute a portion of the 2024 FFI tax proceeds instead of using the 2024 pro-rata allocation percentage. Although the Chief and a Board member reviewed the Treasurer’s distribution calculations, prior to the Treasurer making the distributions, the miscalculation was not identified by either individual. As a result, two fire companies received more money than their pro-rata share ($1,322 and $61, respectively) and the paid firefighting personnel and remaining fire company received less than their pro-rata share ($1,134 and $249, respectively).
The report includes three recommendations that, if implemented, could improve the District’s FFI tax proceeds distribution. District officials generally agreed with our recommendations and indicated they will initiate corrective action.
We conducted this audit pursuant to Article V, Section 1 of the State Constitution and the State Comptroller’s (OSC) authority as set forth in Article 3 of the New York State General Municipal Law. Our methodology and standards are included in Appendix C.
The Board has the responsibility to initiate corrective action. Pursuant to Section 181-b of New York State Town Law, a written corrective action plan (CAP) that addresses the findings and recommendations in this report must be prepared and forwarded to our office within 90 days. To the extent practicable, implementation of the CAP must begin by the end of the next fiscal year. For more information on preparing and filing your CAP, please refer to our brochure, Responding to an OSC Audit Report, which you received with the draft audit report. We encourage the Board to make the CAP available for public review.