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September 25, 2000
To County Treasurers, Primary and Secondary Public Safety Answering Points
From: Richard L. Baldermann, CPA, CGFM
Administrator, Local Audit and Finance Division
Bureau of Local Government Services
RE: Accounting for Enhanced 911-Emergency Services for Wireless Telephone Systems Pursuant to Public Act 81 of 1999 Which Amended Public Act 32 of 1986.
The legislature enacted PA 78, 79, 80 and 81 of 1999 to provide E-911 capability for wireless phones and to finance the new facilities and equipment that might be needed for such improvements through a user fee. It also re-established the Emergency Telephone Service Committee (through the State Police) to provide technical assistance in formulating and implementing a 911 service plan. These amendments to PA 32 of 1986 were adopted in 1999 to supplement Michigan's E-911 program to provide commercial mobile radio service (CMRS) users (cell phone or wireless) emergency service access comparable to wire-line callers.
Section 401 of Act 81 of 1999 makes it easier for local governments to borrow funds to make capital improvements for their 9-1-1 service districts. It allows an emergency telephone district board, a 9-1-1 service district, or a county on behalf of a 9-1-1 service area to enter into an agreement with a public agency to pledge revenues for the repayment of qualified obligations. The qualified obligations may be bonds, notes, installment purchase contracts, or lease purchase agreements issued by the public agency, whose proceeds benefit the 9-1-1 district. It prohibits a public service agency from withdrawing its jurisdiction from a 9-1-1 service district until the outstanding obligations are paid. Proceeds are to be used for capital expenditures, costs of a reserve fund securing the obligations, and costs of issuance. The proceeds can not be used for operational expenses.
Provisions Related to the Accounting and Audit
Section 407 of the act, establishes the CMRS emergency telephone fund within the Department of Treasury. This fund is to receive monies derived from revenue provisions (section 408) of this act. From the fund, disbursements are made in accordance with Section 409 as follows:
Section 409 of the act, addresses distributions to the counties and PSAPS. (PSAPS are either units within government, such as police departments, or sometimes, separate affiliates created through the cooperative agreement of multiple governmental units). Part (1)(b) of Section 409 of the act requires that the county have a final 911 plan in place that includes implementing the wireless emergency service order and this act. Money received by the county can only be used to implement the wireless emergency service order and the Emergency Telephone Service Enabling Act. Money expended for a purpose considered unnecessary or unreasonable by the committee or the auditor general to implement the wireless emergency service order and this act shall be repaid to the fund. The act should be consulted for allowable expenditures as well as the Emergency Telephone Service Committee. (Note Attachment)
Section 406 of the act provides that "each 'PSAP' shall assure that fund accounting, auditing, monitoring, and evaluation procedures are provided" and that, "an annual audit be conducted by an independent auditor and copies of the annual audit shall be made available for public inspection."
Accounting
In 1996, Treasury issued numbered letter 6-96 which provides guidance as to the accounting and auditing requirements for establishing the E-911 Service Fund for calls from a wired telephone user. The numbered letter calls for the county (or PSAP) to use fund 261 to account for all operational funds collected by the county from the service supplier to be deposited into this special revenue fund. PA 81 of 1999, section 406 states, "Except as provided in sections 407 to 412, the emergency telephone charge funds collected and expended pursuant to this act shall be used exclusively for the operation of the 9-1-1 system." Both the regular E-911 System and the Enhanced 911-Emergency Services for Wireless Telephone Systems pursuant to Public Act 81 of 1999 should be accounted for in the same fund (261) using separate activity numbers to account for the different systems.
The county (or PSAP) should use an open activity number between 346 to 350 to break out the activity between the regular E-911 System and the Enhanced 911 Emergency Services for Wireless Telephone Systems per PA 81 of 1999. A revenue account between the range 543 to 545 should be used to record the state aid received for the implementation of the Enhanced 911 Emergency Service for Wireless Telephone Systems. Revenues and expenditures should be broken out by activity using the Uniform Chart of Accounts.
The County should establish a capital projects fund (461) for the proceeds from borrowing for the purpose of making improvements to the system. Expenditures for capital improvements should be recorded in the fund as the project progresses using the Uniform Chart of Accounts for account numbers. A debt service fund (361) should be established to pay off the debt using revenue pledged for the repayment of the qualified debt obligation. (Note: Municipal Finance should be consulted for prior approval before entering into debt.)
Audits
An annual audit is required. The audit is the be performed in accordance with generally accepted auditing standards and the financial statements are to be in accordance with generally accepted accounting principles. The audit of the 911 Fund may be in conjunction with the all funds audit of the county or local unit and compliance with provisions of PA 2 of 1968, as amended, is required.
If the audit is performed in conjunction with the all funds audit, the normal filing of the audit with Local Audit and Finance Division of the Department of Treasury will meet the Section 406 requirement for public inspection. For all other separate audits of E-911 Systems, a copy of the report is to be submitted to the Emergency Telephone Service Committee as well as must be filed with Local Audit and Finance Division.
If you have any questions, please call Ernest Hodgers at (517) 373-3227 or write:
Michigan Department of Treasury
Local Audit and Finance Division
P.O. Box 30728
Lansing, Michigan 48909-8228