Due to unfiled audit reports, the fate of Lake Chinook Fire District could be in Jefferson County’s hands

(Update: Adding video)

CULVER, Ore. (KTVZ) -- What would Central Oregon do if a fire district dissolves? While unlikely, the fate of the Lake Chinook Fire & Rescue Protection District could be in question, due to an issue over failing to file required annual audits with the state.

Located above Lake Billy Chinook, the Lake Chinook Fire & Rescue Protection District protects a population of about 250 year-round residents. A popular year-round destination for hunting, fishing, camping and water sports, this protection district swells to over 4,000 visitors on any given weekend during the summer. LCF&R provides fire, rescue and EMS services across a 105-square-mile area.

To hold entities accountable for their finances, the state of Oregon requires all local governments to file annual audit reports. If an entity has a budget of less than $150,000, it does not need to hire a CPA or accounting firm to complete the report -- it can submit the report itself.

In 2015, the Lake Chinook Fire & Rescue Protection District's budget grew, and it surpassed the $150,000 cap for self-reporting, requiring it to then prepare and file audits through a a "licensed municipal auditor," a CPA with a special designation from the Oregon Board of Accountancy that allows them to perform audit and reviews for local governments, according to the Oregon Audits Division.

If a district fails to do so, the state sends letters of notification each year, and if the district doesn't submit audit reports for three consecutive years -- the state notifies the corresponding county.

Amy John, municipal audit manager for the state Audits Division, tells NewsChannel 21 the Lake Chinook Fire & Rescue Protection District has not submitted an audit since 2018. She says the district has been sent several late notices over the years.

As a result, the Jefferson County Board of Commissioners was notified of the fire district's failure to submit audits. During Wednesday's county commission meeting, Fire Chief Don Colfels updated the county on the audits' status. He said the matter will be resolved in 45 days, as the district has found a new municipal auditor to complete the reports.

Chief Colfels said between 2015 and 2018, the fire district had hired someone who was completing the audits. He said unbeknownst to the district, they lost their auditing license. After that, challenges created by the pandemic, staffing shortages, and difficulty finding a municipal auditor that would work for a small district all contributed to the reports not being filed.

John said if the district spends more than $150,000 but not more than $500,000 they could be eligible to have the licensed municipal auditor perform a review, rather than an audit. It’s less detailed in scope and often less expensive, but involves an independent CPA and meets the requirements of state law, she said.

However, if the reports don't get submitted, it's then up to the county to decide what happens. John said it’s rare to dissolve any district, as the statute is intended as an incentive to help districts comply. John said her expectations, and likely the county's, are that "that the district is providing an important service, and we’re best served by helping them come into compliance, rather than shutting them down."