The State Auditor’s Office finds Marydel Volunteer Fire Company officials abused their managerial authority and improperly managed finances.
The investigatory report found the fire company develops no annual budget and the treasurer doesn’t keep detailed expenditure data, which is against its bylaws.
The Auditor’s Office Director of Policy and Communications Sam Barry said the Auditor Lydia York supports giving an agency oversight powers to better oversee fire companies.
“I think that the best way to prevent this is to require those policies and do this at the front end rather than have us try to chase all of the bad behavior down after it's already occurred, which of course, we're always going to try and do that if we need to,” Barry said. “We need to respond to allegations of financial misconduct and the use of state resources.”
The company is not a state agency but a 501(c)(3) nonprofit despite being almost entirely funded by Delaware and Maryland state funds.
Funds from Maryland have to follow their state’s laws. The fire company holds those funds in a separate bank account segregated from the rest of their funds.
“They're required to do a lot of reporting on that money,” Barry said. “They don't have to do any of that for Delaware or county money.”
Because fire companies in Delaware are nonprofits and not state entities, they do not have to follow state budgeting bylaws.
This is not the first time Delaware fire companies have had financial issues, Barry added. Part of the issue at Marydel lies in poor internal controls and financial reporting.
“They don't develop an annual budget with their board and approve it,” Barry said. “They don't have detailed financial reporting from their treasurer showing what their expenditures are every month. They have a lot of expenditures made that are done without any kind of approval… Every dollar should be accounted for before you even get it, especially when you're dealing with state money.”
Barry said the Auditor’s Office doesn’t deal with policy but does advise a change to stop preventable problems from happening. That could look like stronger controls and laws in place.
As it stands, fire companies perform their own oversight, and the Auditor’s Office can only respond after mistakes are made. The Fire Commission has spent years pushing for more oversight for fire companies but met resistance from company leadership wanting to maintain autonomy.
