by the State, to be used by a person licensed under section 923 of title 18, United States Code, for purposes of contacting the national instant criminal background check system. (5) A fund shall be established by the State for the operation of the point-of-contact system. (6) An appeals process in the case of any failure by the point-of-contact system to issue an approval number, with the burden of proof on the State to prove that there was a valid basis for failure to issue shall be established. (7) For each denial, the information will be transferred to the state or local law enforcement agency responsible for investigating the denial as a violation of law. 4. Reporting requirement To be in compliance with this section, a State that receives a grant under this Act shall publish an annual report that contains information substantially similar to the information included in a NICS operations report made by the Director of the Federal Bureau of Investigation and additionally includes the following: (1) The number of investigations resulting from failures to issue approval numbers. (2) Results of investigations reported. (3) Denied appeals that were overturned. (4) Total number of hours where point of contact system was not functional resulting in a halt in processing checks. (5) The number of persons arrestsed as a result of an information transfer under section 3(7). 5. Annual audit To be in compliance with this section, a State shall submit to an annual audit by the Director of the Federal Bureau of Investigation of the point-of-contact system established under section 3. 6. Definitions In this Act: (1) The term firearm has the meaning given such term in section 921 of title 18, United States Code. (2) The terms law enforcement agency and unit of local government have the meanings given such terms in section 901 of the Omnibus Crime Control and Safe Streets Act of 1968 ( 34 U.S.C. 10251 ). (3) The term State includes each of the several States, the District of Columbia, the Commonwealth of Puerto Rico, and any