Minnesota Legal Compliance Audit Guide for Local Government - Section 7
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LEGAL COMPLIANCE MANUALRELIEF ASSOCIATIONSIntroductionFor each of the different types of relief associations, the follow ing checklist cites theprimary statutory provisions applicable to relief associations:Police Relief AssociationsGenerally - Minn. Stat. §§ 423A.01-.22Minneapolis - Minn. Stat. §§ 69.77, .80 and § 423B.01-.21Fairmont - Minn. Stat. §§ 423.41-.62 (2000); see 2002 Minn. Laws,ch. 392, art. 1, § 8.Salaried Firefighters’ Relief AssociationsGenerally - Minn. Stat. §§ 423A.01-.22Minn. Stat. §§ 69.77, .80Minneapolis - Minn. Stat. ch. 423CBloomington - Minn. Stat. ch. 424 (2000) (to the extent applicable); see2002 Minn. Laws, ch. 392, art. 1, § 7.Volunteer Firefighters’ Relief AssociationsMinn. Stat. §§ 69.771-.776; Minn. Stat. § 69.80Minn. Stat. §§ 424A.001-.10Relief associations are also subject to the depository designation and collateralizationrequirements of Chapter 1 (Minn. Stat. §§ 356A.06, subd. 8a, and 118A.02-.03) andthe Conflict of Interest provisions of Chapter 2 herein. Minn. Stat. § 6.495 requiresthe audit of both the special and general funds.Relief associations are subject to their own bylaws and articles of incorporation,subject to statutory provisions. Therefore, a review of the bylaws and articles ofincorporation, as well as applicable special laws, is essential to the legal complianceaudit of the relief association. Special laws are found in Table 1 of Minnesotastatutes.11/03 7-1Minn. Stat. Yes No W ork ...
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LEGAL COMPLIANCE MANUAL RELIEF ASSOCIATIONS
Introduct ion For each of t he dif f erent t ypes of relief associat ions, t he f ollow ing checklist cit es t he primary st atut ory provisions applicable t o relief associat ions: Police Relief Associat ions Generally - Minn. Stat. §§ 423 A.01 -.22 Minneapolis - Minn. Stat. §§ 69.7 7, .80 and § 423 B.01-.21 Fairmont Minn. Stat. §§ 423 .41-.62 (200 0); see 2002 Minn. Law s, -ch. 392, art. 1, § 8. Salaried Firefight ers’ Relief Associat ions Generally - Minn. Stat. §§ 423 A.01 -.22 Minn. Stat. §§ 69.7 7, .80 Minneapolis - Minn. Stat. ch. 423C Bloomingt on - Minn. Stat. ch. 424 (20 00) (to t he ext ent applicable); see 2002 Minn. Law s, ch. 392, art. 1, § 7. Volunt eer Firefight ers’ Relief Associat ions Minn. Stat. §§ 69.7 71-.776; Minn. Stat. § 69.8 0 Minn. Stat. §§ 424 A.00 1-.10 Relief associat ions are also subject t o t he deposit ory designat ion and collat eralizat ion requirements of Chapt er 1 (Minn. Stat. §§ 356A.06, subd. 8a, and 118A.02-.03) and t he Conf lict of Interest provisions of Chapt er 2 herein. Minn. St at . § 6.495 requires t he audit of bot h t he special and general f unds. Relief associations are subject t o t heir ow n bylaw s and art icles of incorporation, subject t o statut ory prov isions. Therefore, a review of t he bylaw s and art icles of incorporation, as w ell as applicable special law s, is essential to the legal compliance audit of t he relief associat ion. Special law s are f ound in Table 1 of Minnesot a st atut es.
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M inn . St at . S ec t i o n §§ 4 2 4 A .0 5 , 4 2 4 . 1 5 (2 0 0 0 ), & 4 2 3 . 50 (2 0 0 0 ) See 4 2 3 C. 0 4 & 4 2 3 B. 0 6 §§ 4 2 4 A .0 6 , 4 2 4 . 1 5 (2 0 0 0 ), & 4 2 3 . 50 (2 0 0 0 ) See 4 2 3 C. 0 4 §§ 3 4 9 . 12 , subd. 25(b)(6 ), & 4 7 1 . 61 5 1 §§ 4 2 4 A .0 5 , 4 2 3 . 5 1 (2 0 0 0 ), & 4 2 3 C. 0 4 See 4 2 3 B. 0 7
§ 6 9 . 8 0
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RELI EF ASSOC IA T ION S Part I. Sp ec ial Fund/ Ge ne ral Fu nd (Fo r A ll Relie f A ssociat ions) A . W e re am o u n t s p ai d t o t h e r el ie f a ss o c ia t i o n f r o m t h e c i t y a n d s t a t e (a n d f o r v o lu n t e e r f i r ef i g h t e r s’ r el ie f a ss o c ia t i o n s d o n a t i o n s spec if ied f or su pp ort of t he sp ecial f un d) set aside and dep osit ed i n t h e sp e c ia l f u n d ?
B. W e re al l o t h e r f u n d s d ep o s it e d i n t h e as so c i at i o n ’ s g en e ra l f u n d , i f e st a b l is h ed ?
C. W ere gam blin g p roc eeds n o t p l ac e d in t h e s p ec i al f u n d ?
D . W ere ben ef it s paid f rom t he special f und only f or: 1 . t he relief of sick , in jured , an d d isabled m em bers o f t he relief a ss o c ia t i o n , t h e ir su r v i v in g s p o us es an d o r p h an s (o r in t h e c a se o f v o l u n t e er s f i r ef i g h t e r s’ r el ie f a ss o c ia t i o n s, t h e m em ber’ s surv iv ing spo use an d su rv iv ing ch ildren , o r if no ne, t o d esign at ed b enef iciaries as allo w ed b y M inn . St at . § 4 2 4 A , 0 5 , s u b d . 3 ) ; an d 2 . t he pay m ent of disability and servic e pensions t o m emb ers o f t h e rel ief a ss oc i at i o n ; 3 . f o r v o l u n t e e r f i r ef i g h t e r s’ r el ie f a ss o c ia t i o n s, f e e s, d u e s, a n d assessm ent s allow ed b y M inn . St at . § 4 2 4 A .0 5 , su bd . 3 (5 ); 4 . W ere disb ursem ent s aut ho rized b y t he b y law s? E. W ere adm inist rat iv e ex pen ses f rom t he sp ecial f un d p aid o nly as f ollo w s: 1 . of f ice ex pen ses, in clu din g (b ut no t lim it ed t o) ren t , u t ilit ies, equ ipm ent , su pp lies, p ost age, perio dic al sub scr ipt ion s, f urn it ure, and f ix t ures; 2 . salaries and it emized exp enses of t he president , secret ary a n d t r ea su r er , o r t h e i r d e si g n ee s, a n d an y o t h e r o f f i c ia l o f t he relief assoc iat ion t o w ho m a salary is p ay able u nd er b y law s o r art i cles o f in c orp orat i on in ef f e c t o n J an uary 1 , 1 9 8 6 ; 3 . t uit ion , reg ist rat ion f ees, o rgan izat ion al du es, an d o t her a u t h o r iz ed e x p en s es o f o f f i c er s o r m e m b e rs o f t h e b o a rd o f t rust ees inc urred at t end ing edu cat ion al co nf erenc es, s em i n a rs , o r c l as se s t h a t r e la t e t o t h e a d m i n is t r at i o n o f t h e r el ie f a ss o c ia t i o n ; 4 . a u d it , a c t u a ri al , m e d ic a l, l eg a l, i n v es t m e n t e x p e n se s, a n d perf orm anc e ev aluat ion ex pen ses;
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M inn . St at . S ec t i o n
§ 4 2 4 A . 0 6 § 6 9 . 8 0
§ 3 5 6 A . 0 6 § 3 5 6 A . 0 6 , s ub d . 6
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Yes N o W ork pap er Ref e ren c e
Part I. Sp ec ial Fund/ Ge ne ral Fu nd (Fo r A ll Relie f A ssociat ions) (Continued) 5 . reason able an d n ec essary ex p e n se s o f o f f i c e rs , b o ar d o f t r u s t e es o r t h e i r d e si g n ee s, a c t u a ll y p ai d an d i n c u rr ed ; 6 . p r em i u m s o n f i du c iary liab ilit y i ns ur an c e a n d o f f i c ia l b o n d s f o r of f icer s, m e m b e r s o f t h e b o a rd o f t r u st e e s, a n d em p l o y e es o f t h e r el ie f a ss o c ia t i o n ; 7 . s al ar ie s o f a d m i n i st r a t i v e p er so n n e l; a n d 8 . f o r t h e M i n neap o li s Po li c e Rel ief A s so c iat i o n , d i sb u r se m e n t s au t h o ri zed b y M i n n . S t at . § 4 2 3 B . 0 7 ? F. W e re al l o t h e r ex p e n se s p a id f r o m t h e g en e ra l f u n d ? 1 . In t he case of a volu nt eer firef ight er’ s relief associat ion, w ere d i sb u r se m e n t s f r o m t h e g en e ra l f u n d m a d e f o r a p urp ose aut ho rized by t he associat ion’ s arti cles o f i n c o r p o ra t i o n o r by law s? G. If an ex pen se is relat ed t o p urp oses o f b o t h f u n d s , w e re t h e ex p e nses pro perly alloc at ed t o eac h f un d b ased o n t he b enef it s d e ri v ed b y s u c h f u n d ?
Part II. Invest men t s (S hort List) T h e f o l lo w i n g se c u ri t i es ar e p r o p er in v e st m e n t s f o r re li ef a s so c i at i o n s w i t h a ss et s w i t h a b o ok v a l u e o f $ 1 , 0 0 0 , 0 0 0 o r l es s a n d w h i c h d o no t use: - a regist ered o r licen sed in v est m ent adv isor t o in v est at least 6 0 perc ent of it s asset s (bo ok v alue); - t h e S t a t e Bo a rd o f I n v e st m e n t ( SBI) t o i n v es t a t l ea st 6 0 p e r c en t o f i t s a ss et s ( b o o k v al u e) ; o r - a c o m b i n at i o n o f a r eg i st e r ed o r li c en s ed i n v es t m e n t a d v i s or an d t h e S BI f o r a t l ea st 7 5 p e r c en t o f i t s as se t s (b o o k v a lu e ). Fo r r el ie f a ss o c ia t i o n s t h a t m e et t h e ab o v e c r it e r ia , t h e f o l lo w i n g i n v es t m e n t s a re p er m i t t e d . Fo r re li ef a s so c i at i o n s t h a t d o n o t m e et t h e ab o v e c r it e ri a, g o t o Par t III, inf ra. A . Cert if icat es of Dep osit If t h e f u n d in v e st e d i n c er t i f i c a t e s o f d e p o s it , w e re t h e y is su e d b y f i n an c ial i ns t it u t i o n s in su red b y t h e Fed er al D ep o si t In su ran c e C o rp o r at i o n ( FD IC ), o r t h e N at i o n a l C re d it U n i o n A d m i n is t r at i o n (NCU A ), o r are f ully co llat eralized by pled ged m ark et able s ec u ri t ies p u rs uan t t o M i nn . St a t . § 1 1 8 A . 0 3 ?
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Part II. Investm ents (Short List) (Cont inued) B. S av i n g s A c c o u n t s 1 . If t h e f u n d p la c ed m o n e y i n a s av i n g s a c c o u n t w i t h a f i n ancial in s t itut i o n , w a s it f u l ly i nsure d by FD I C/ N CUA? C. G o v er n m e n t O b li g at i o n s 1 . If t he f un d is in v est ed in f ederal g ov ernm ent al ob ligat ion s, w ere t he o blig at ion s issued by t he U nit ed St at es, it s a g en c i es o r i n st r u m e n t a li t i es , o r b y a n o rg a n iz at i o n est ablish ed an d reg ulat ed b y an ac t of Con gress? 2 . If t he f un d is in v est ed in st at e or lo cal o blig at ion s: a. W e re t h e o b li g at i o n s is su e d b y t h e st a t e , i t s ag e n c ie s o r inst rum ent alit ies, m un icip alit ies, o r ot her g ov ernm ent al o r p o li t i c al su b d i v is io n ? 3 . St at e or Federal Ob ligat ion Requ irem ent s. a. Do es t he o blig at ion ’ s inv est m ent y ield eq ual o r ex ceed t h e s t a t e d in v e st m e n t y i el d o f d e bt s e c u ri t i es n o t ex em pt f rom f ederal in co m e t ax at ion and of co m parab le q ualit y ? b . If t h e o b li g at i o n w a s a re v en u e b on d , w a s t h e go v ernm ent al or p olit ical en t it y issuin g it co m plet ely s el f - su p p o r t i n g f o r t h e la st f i v e y e ar s? o r c . If t h e o b li g at i o n w a s n o t a r ev e n u e b o n d : (1 ) w a s i t b a c k ed b y t h e f u l l f a i t h a n d c re d it o f t h e a p p li c ab l e t a x i n g ju r is d ic t i o n ; an d (2 ) w a s t h e i ss u in g e n t i t y n o t i n de f a u lt o n t h e pay m ent of int erest or p rinc ipal o n t his o r any ot her no nrev enu e bo nd ob ligat ion issued in t he p ast t en y ears? D . C o rp o r at e O b li g at i o n s 1 . If t h e f u n d in v est e d in c orp orat e ob lig at i on s, w ere t h ey : a. i ss u ed b y a U n it e d S t a t e s c o r p o ra t i o n ; b . w it h an av erage an nu al net pre-t ax earnin gs in t he p ast f iv e y ears t hat ex ceed ed an nu al int erest and prin cip al p a y m e n t s o n t h e t o t a l i ss u ed d e b t o f t h e c o rp o r at i o n b y 5 0 p e rc e n t ; a n d c . t h e o b l ig a t i o n in q u e st i o n w a s r at e d i n o ne o f t h e t o p
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W ork pap er Ref e ren c e
M inn . St at . S ec t i o n
§§ 6 9 . 7 7 , s u b d . 2 g , 6 9 . 7 7 5 , & 3 5 6 A . 0 6 § 3 5 6 A . 0 6 , s ub d . 7
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Yes N o W ork pap er Ref e ren c e
Part II. Investm ents (Short List) (Cont inued) t h ree q u al it y c a t e g or ies b y M o o d y ’ s In v es t o rs S er v ic e, In c . , o r S t a n d ar d an d Po o r ’ s C or p o ra t i o n ? E. Inv est m ent Com pan ies 1 . If t h e f u n d in v est e d in an op en -en d in v est m e nt c o m p an y : a. w a s i t r eg i st e r ed u n d er t h e Fe d er al In v e st m e n t C o m p a n y A c t o f 1 9 4 0 ; a n d b . d i d it o n l y i n v e st i n t h o s e in v e st m e n t s d ef i n e d in A t hro ug h D abo v e? F. W e re al l o f t h e as so c i at i o n ’ s in v e st m e n t s p er m i t t e d in A t h r o u g h E abo v e?
Part III. Invest men t s (Long List)
The f ollow ing secu rities are proper inv estm ent s f or: - A l l r el ie f a ss o c ia t i o n s w i t h a ss et s w i t h a b o ok v a l u e i n ex c e s s o f $ 1 , 0 0 0 , 0 0 0 ; a n d - T h o s e r el ie f a ss o c ia t i o n s w i t h a ss et s w i t h a b o ok v a l u e o f $ 1 , 0 0 0 , 0 0 0 o r le ss , p ro v i d ed t h a t t h e as so c i at i o n : - u s es t h e se rv i c e s o f a r eg i st e r ed o r li c en s ed i n v es t m e n t adv isor f or t he in v est m ent of at least 6 0 perc ent of it s as set s (b o o k v al ue); - u s es t h e se rv i c e s o f t h e St a t e B oa rd o f I n v e st m e n t ( SBI) f o r t h e i n v es t m e n t o f a t l ea st 6 0 p e r c en t o f i t s as se t s (b o o k v a lu e ); o r - u s es a c o m b i n a t i o n o f s er v i c es o f a n in v e st m e n t a d v is o r a n d t he SBI f or t he in v est m ent of at least 7 5 perc ent of it s asset s. A . G o v er n m e n t O b li g at i o n s 1 . If t h e f u n d in v est e d in go v ern m en t o blig at i on s, w ere t h ey : b o n d s , n o t e s, b i ll s, m o r t g a g es , o r o t h e r ev i d en c e s o f ind ebt edn ess bac ked by t he f ull f ait h an d c redit of t he issu er o r rat e d am o n g t h e t o p f o ur q ualit y r at i ng c at e go ries b y a n at i o n al ly r ec o g n ized rat i n g ag en c y ? 2 . W ere t he g ov ernm ent ob ligat ion s gu arant eed o r insu red i ss u es o f :
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Part III. Investm ents (Long List) ( Cont inued) a. t h e U n i t e d S t a t e s, i t s ag e n c ie s o r in s t r u m e n t a li t i es , o r o r g an i za t i o n s c r ea t e d an d r eg u l at e d b y a n ac t o f Con gress; b . Canad a or it s pro v inc es; (No t e: In t erest m ust be p ay able in Un it ed St at es d o ll ar s. ) c . t he st at es, t heir m un icip alit ies, p olit ical su bd iv ision s, agen cies o r inst rum ent alit ies; d . t h e In t e r n at i o n a l Ba n k f o r Re c o n st r u c t i o n an d D ev e lo p m en t , t h e In t e r-A m er ic an D ev e lo p m en t Ban k , t h e A s ia n De v el o p m e n t Ba n k , t h e A f r ic a n D ev e lo p m e n t Bank , o r any ot her U nit ed St at es go v ernm ent spo nso red organizat ion of w hich t he Unit ed St at es is a mem ber? (No t e: In t erest m ust be p ay able in Un it ed St at es d o ll ar s. ) B. C o rp o r at e O b li g at i o n s 1 . If t he asso ciat ion inv est ed in co rpo rat e ob ligat ion s: a. w e re t h e y b o n d s, n o t e s , d eb e n t u r es , t r an s p o rt a t i o n e q u ip m e n t o b l i ga t i o n s, o r an y l o n g er t e rm e v i d en c e s o f i n d eb t e d n e ss is su e d o r g u a ra n t e ed b y a c o rp o r at i o n org anized u nd er t he law s of t he U nit ed St at es or it s st at es or t he D om inio n o f Canad a or it s pro v inc es (p rin c ip al a n d in t erest p ay ab le i n Un it ed St at es d o lla rs )? 2 . W e re t h e c o rp o r at e o b l ig a t i o n s r at e d a m o n g t h e t o p f o u r q u al it y c a t e g or ies b y a n at i o n al ly r ec o g n ized rat i n g ag en c y ? C. O t h e r O b li g at i o n s 1 . If t he asso ciat ion inv est ed in ban ker s acc ept anc es or d epo sit n o t e s o f U n it e d St a t e s b an k s, w er e t h e y is su ed b y b an k s rat ed in t he h igh est f ou r qu alit y cat ego ries by a nat ion ally rec o gn ized rat i ng ag en c y ? 2 . If t he asso ciat ion inv est ed in cert if icat es of dep osit (CD’ s), w ere t he CD ’ s: a. i ss u ed b y U n i t e d St a t e s b an k s o r s av i n g s i n st i t u t i o n s rat e d in t h e h ig hest f o u r q ualit y c at e go ries b y a n at i o n al ly r ec o g n ized rat i n g ag en c y , o r w ho se cer t if icat es of dep osit w ere f ully insu red b y f ederal a g en c i es ; o r b . i ss u ed b y c r e d it u n i o n s in a m o u n t s u p t o t h e li m i t o f insu ranc e co v erage p rov ided by t he N at ion al Credit U n i on A d m i n is t r at i o n ?
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