Loading...
HomeMy WebLinkAbout2019 FI Waste Management District FISHERS ISLAND WASTE MANAGEMENT DISTRICT State of New York FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION WITH INDEPENDENT AUDITOR'S REPORT December 31,2019 FISHERS ISLAND WASTE MANAGEMENT DISTRICT TABLE OF CONTENTS Paae Independent Auditor's Report 1 Management's Discussion and Analysis(MD&A) 3 Basic Financial Statements: 9 Statement of Net Position 10 Statement of Activities Balance Sheet-General Fund 11 Reconciliation of the General Fund Balance Sheet to the Statement of Net Position 12 Statement of Revenues,Expenditures and Change in Fund Balance-General Fund 13 Reconciliation of the General Fund Statement of Revenues, 14 Expenditures and Change in Fund Balance to the Statement of Activities 15 Notes to Financial Statements Required Supplementary Information other than MD&A: Schedule of Revenues,Expenditures and Change in Fund Balance- 21 Budget and Actual-General Fund VINCENT D.CULLEN,CPA LLP (1 950-2013) CULLEN & DANOWS KI, LLP JAMES E.DANOWSKI,CPA CERTIFIED PUBLIC ACCOUNTANTS PETER F.RODRIGUEZ,CPA JILL S.SANDERS,CPA DONALD J.HOFFMANN,CPA CHRISTOPHER V.REINO,CPA ALAN YU,CPA INDEPENDENT AUDITOR'S REPORT To the Board of Commissioners Fishers Island Waste Management District Fishers Island,New York We have audited the accompanying financial statements of the governmental activities and each major fund of the Fishers Island Waste Management District(District),a component unit of the Town of Southold, New York,as of and for the year ended December 31,2019,and the related notes to the financial statements,which collectively comprise the District's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America;this includes the design,implementation,and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement,whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit.We conducted our audit in accordance with auditing standards generally accepted in the United States of America.Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements, The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements,whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates nude by management,as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 1650 ROUTE 112,PORT JEFFERSON STATION,NEW YORK 11776-3060 PHONE:631-473-3400•FAX:631-473-4863•WWW.CDLLP.NET Opinions In our opinion,the financial statements referred to previously present fairly, in all material, respects, the respective financial position ofthe governmental activities and each major fund ofthe Fishers island Waste Management District as of December 31,2019,and the respective changes in financial position for the year then ended in conformity with accounting principles generally accepted in the United States of America. Other Matters-Required Supplementary Information Accounting principles generally accepted in the United States of America require that management's discussion and analysis and schedule of revenues, expenditures and changes in fund balance - budget and actual - general fund on pages 3 through 8 and 21,be presented to supplement the basic financial statements.Such information,although not a part of the basic financial statements,is required by the Governmental Accounting Standards Board,who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing tyre information and comparing the information for consistency with management's responses to our inquiries,the basic financial statements, and other knowledge we obtained during our audit ofthe basic financial statements.We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. May 8,2020 .2- FISHERS ISLAND WASTE MANAGEMENT DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS The Fishers Island Waste Management District's (District) discussion and analysis of the financial performance provides an overall review of the District's financial activities for the fiscal year ended December 31, 2019, in comparison with the year ended December 31,2018,with emphasis on the current year. The intent of this discussion and analysis is to look at the District's financial performance as a whole. This should be read in conjunction with the financial statements,which immediately follow this section. 1. INANCIA HIGHII Key financial highlights for fiscal year 2019 are as follows: • The District's total net position,as reflected in the government-wide financial statements,decreased by $60,843. This was due to an excess of expenses over revenues using the economic resources measurement focus and the accrual basis of accounting. The District's total net position was$2,619,134 at December 31,2019. • The District's general fund total fund balance,as reflected in the fund financial statements,increased by $75,277. This was due to an excess of revenues over expenditures using the current financial resources measurement focus and the modified accrual basis of accounting. The District's general fund total fund balance was$400,966 at December 31,2019. 2. E V E TH N NC L S A I ME TS' This annual report consists of three parts Management's Discussion and Analysis (MD&A) (this section),the basic financial statements,and required supplementary information. The basic financial statements consist of government-wide financial statements, fund financial statements,and notes to financial statements.A graphic display of the relationship of these statements follows:. OMAN Managemen Statements T] Analysis overnment- Fund Financial Financial Wide Financial Statements Statements Statements A. Government-Wide Financial Statements The government-wide financial statements are organized to provide an understanding of the fiscal performance of the District as a whole in a manner similar to a private sector business. There are two govern ment-wide financial statements-the Statement of Net Position and the Statement of Activities. These statements provide both an aggregate and long-term view of the District's finances. .3- FISHERS ISLAND WASTE MANAGEMENT DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) These statements utilize the economic resources measurement focus and the accrual basis of accounting. This basis of accounting recognizes the financial effects of events when they occur, without regard to the timing of cash flows related to the events. TlIe Sta nipoff_N i Po smti The Statement of Net Position presents information on all of the District's assets and liabilities, with the difference between the two reported as net position. Increases or decreases in net position may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. The tate ent Act". itis The Statement of Activities presents information showing the change in net position during the'.fiscal year. All changes in net position are recorded at the time the underlying financial event occurs. Revenues are recognized in the period when they are earned and expenses are recognized in the period when the liability is incurred.Therefore,revenues and expenses are reported inthe statement for some items that will result in cash flow in future fiscal periods. B. Fund Financial Statements The fund financial statements provide more detailed information about the District's funds,not the District as a whole. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives, The District may use fund accounting to ensure compliance with finance-related legal requirements. The funds of the District are reported in the governmental funds. These statements utilize the current financial resources measurement focus and the modified accrual basis of accounting.This basis of accounting recognizes revenues in the period that they become measurable and available. It recognizes expenditures in the period in which the District incurs the liability,except for certain expenditures related to long-term liabilities,which are recognized as expenditures to the extent the related. liabilities matures each period. Additionally, capital asset additions are reported as expenditures in. governmental funds, whereas they are capitalized and depreciated in the government-wide financial statements. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, the governmental fund financial statements focus on shorter terin inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year for spending in future years. Consequently, the governmental fund statements provide a detailed short-term view of the District's operations and the services it provides. Because the focus of governmental funds is narrower than that of government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the govern me:nt-wide financial statements. By doing so,the reader may better understand the long-term impact of the District's near-term financing decisions. Both the governmental funds Balance Sheet and the governmental funds Statement of Revenues, Expenditures and Changes in fund Balance provide a reconciliation to facilitate this comparison between .governmental funds and governmental activities. The District maintains one individual governmental fund,the general fund. -4- FISHERS ISLAND WASTE MANAGEMENT DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) 3. FINA CI L ANALSI F HE DI T IC"I"A A HH E A. Net Position The District's total net position decreased by$60,843 between fiscal year 2019 and 2018.A summary of the District's Statements of Net Position is as follows: Increase Percentage 2019 2018 (Decrease Chan Current and Other Assets $ 417,414 $ 351,981 $ 65,433 18.59 % Capital Assets,Net 2,218,168 2,354,288 136,120 (5.78)% Total Assets 2,635,582 2,706,269 (70,687 (2.61)% Current and Other Liabilities 16,448 26,292 9,844 (37.44)% Net Position Net Investment in Capital Assets 2,218,168 2,354,288 (136,120) (5.78)% Unrestricted 400,966 325,689 75,277 23.11 13'4 $ 2,67'9,977n,843 (2.27)% Total Net Position $ 2,6. 9,1 Current and other assets increased by $65,433, as compared to the prior year, The increase is primarily related to an increase in cash of$355,926,offset by a decrease in the principal amount invested in certificates of deposit with maturities greater than three months of$293,459. Capital assets,net decreased by$136,120,as compared to the prior year.This decrease is due to depreciation expense in excess of capital asset additions. The accompanying Notes to the Financial Statements, Note 5 "Capital Assets"provides additional information. Current and other liabilities decreased by$9,841,as compared to the prior year.This decrease is attributable to decreases in accounts payable of$4,605 and payroll taxes payable of$5,239. The decreases are mainly due to timing differences of bills paid at year end. The net investment in capital assets is the investment in capital assets at cost such as land, buildings and improvements, and machinery and equipment, net of depreciation. This number decreased from the prior year because of depreciation expense of$136,120,There were no capital asset additions in fiscal year 2019. The unrestricted amount of$400,966 relates to the balance of the District's net position. 5 FISHERS ISLAND WASTE MANAGEMENT DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) B. Changes in Net Position The results of operations as reported in the Statement of Activities are as follows: Increase Percentage 2019 2018 (Decrease) Chan ee Revenues Pro am Revenues Charges for Services $ 48,586 $ 53,850 $ (5,264) (9.78)% General Revenues 86 Real Property Taxes 4,131 855,586 8,545 1.00 Other 8,315 7,717 598 7.75 % Total Revenues 921,032 917,153 3,879 0.42 % Expenses % General Government Support 981,875 1,038,081 .... (5.41)% $.. Decrease in Net Position 60,843° $ 120,928) $ 60,085 (49.69)% The District primarily relies on real property taxes to support its operations. The net increase in total revenues in 2019 as compared to 2018 was $3,879, as shown above. The increase is due to real property taxes of$8,545, offset by a decrease in charges for services of$5,264. The total expenses in 2019 were $56,206 or 5.41% less than 2018. In 2019, the District had decreased consulting expenses of$77,833 and hazardous waste removal of$15,540,offset by an increase in employee benefits,taxes,and wages of$38,980. 4. FIN CIA AN LYS C1F THE DISTIIIC 'S l ND At December 31, 2019, the general fund, which is the only governmental fund, reported a fund balance of $400,966, which is an increase of$75,277 over the prier year. This increase is due to revenues in excess of expenditures for the fiscal year,and is the same as the change in unrestricted net position. Increase 2019 2018 (Decrease)_ General Fund Nonspendable:Prepaids $ 24,635 $ 21,669 $ 2,966 Assigned:Designated 228,699 228,699 Unassigned:Fund balance 147,632 75,321 72,311 400,966 =1====325,689 $ 75,277 -6- FISHERS ISLAND WASTE MANAGEMENT DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) 5. EN RAL F NIl BIID TRY HIGHLIGM A. 2019 Budget The District's general fund original budget for the year ended December 31,2019 was$917,531. The budget was primarily funded by real property taxes. B. Change in General Fund's Unassigned Fund Balance (Budget to Actual) The general fund's unassigned fund balance is the component of total fund balance that is the residual of prior years'excess revenues over expenditures,assignments, and amounts classified as nonspendable,The change in this balance demonstrated through a comparison of the actual revenues and expenditures for the year compared to budget follows: Opening,Unassigned Fund Balance $ 75,321 Revenues Over Budget 3,501 Expenditures Under Budget 71,776 Change in Nonspendable Fund Balance (2,966) Closing,Unassigned Fund Balance $ 147,632 -QP s The $75,321 shown in the table is the portion of the District's December 31, 2018 fund balance that was unassigned. RgygnmOv r Bucl et The 2019 budget for revenues was $917,531. Actual revenues recognized for the year were $9121,032. Actual revenues were more than estimated or budgeted revenues by$3,501.This difference increases the unassigned portion of the general fund-fund balance from December 31,2018 to December 31,2019. E—xPdit�t�r sere The 2019 budget for expenditures was$917,531. Actual expenditures for 2019 were $845,755. The final budget was under expended by$71,776.This under expenditure increases the unassigned portion of the general fund-fund balance from December 31,2018 to December 31,2019. Change in Nanspe�lable Fun� B alac e The District prepaid various insurance policies at December 31, 2019, This resulting balance sheet asset (prepaids)cannot be spent because it is not in a spendable form, ineaning it will not be converted to cash. Accordingly, an equal amount of fund balance is classified as nonspendable.The increase in nonspendable fund balance decreases unassigned fund balance. Dja a ance Based upon the summary changes shown in the above table,the District will begin the 2020 fiscal year with an unassigned fund balance of$147,632.This is a$72,311 increase over the prior year's unassigned fund balance. -7- FISHERS ISLAND WASTE MANAGEMENT DISTRICT MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) 6. CA9aAL—A55—EVS At December 31,2019,the District had invested in a broad range of capital assets,as indicated in the table below. The net decrease in capital assets is due to depreciation of$136,12,0.There were no capital additions for the year ended December 31,2019. A summary of the District's capital assets, net of depreciation at December 31, 2019 and December 31,2018 is as fbllows: Increase 2019 2018 Land $ 517,262 $ 517,262 $ Buildings and improvements 1,496,511 1,585,264 (88,753) Machinery and equipment 204,395 251,762 _E,367) Capital assets,net $ 2,218,168 $ 2,354,288 $ (136,120) 7. D NEXT YEAR_S BUD-Ci-E-1 A. Subsequent Year's Budget The general fund budget for the year ending December 31, 2020 is$943,413, This is an increase of$25,882 or 2.82%from the previous year's budget. The District budgeted property tax revenues at a$17,282 increase (2.00%) over the prior year's estimate. B. Tax Cap New York State law limits the increase in the property tax levy of local governments to the lesser of 2% or the rate of inflation.There are additional statutory adjustments in the law.Local governments,may override the tax levy limit by first passing a local law that allows for the tax levy limit to be exceeded.The override vote requires a 60% vote of the total voting power of the governing board, The District's 2020 tax levy required an override vote. 8. CD TA. TINGJ THE DTR IS jfT— This financial report is designed to provide the reader with a general overview of the District's finances and to demonstrate the District's accountability for the funds it receives. Requests for additional information can be directed to: Bruce Hubert, Chairman P.O. Box 22 Fishers Island,NY 06390 FISHERS ISLAND WASTE MANAGEMENT DISTRICT Statement of Net Position December 31,2019 ASSETS $ 392,779 Cash 24,635 Prepaids Capital assets: 517,262 Not being depreciated-land 1,700,906 Being depreciated,net of accumulated depreciation 2,,635,582 Total Assets LIABILITIES Payables 14,370 Accounts payable 2,078 Payroll taxes payable Total Liabilities 16,448 NET POSITION 2,218,168 Net investment in capital assets 400,966 Unrestricted Total Net Position $ 2,619,1.34 See Notes to Financial Statements - FISHERS ISLAND WASTE MANAGEMENT DISTRICT Statement of Activities For The Year Ended December 31,2019 Program Net(Expense) Revenues Revenue and Charges for Changes in Ex enses Services Net Position FUNCTIONS/PROGRAMS $ (981,875) General government support $ 981,875 $ Compost facility 48,586 48,586 Total Functions and Programs $ 981.,875 $ 48,586 (933,289) GENERAL REVENUES 864,131 Real property taxes 8,315 Use of money and property Total General Revenues 872,446 Change in Net Position (60,843) Total Net Position-Beginning of Year 2,679,977 Total Net Position-End of Year $ 2,619,134 - 10- See Notes to Financial Statements FISHERS ISLAND WASTE MANAGEMENT DISTRICT Balance Sheet-General Fund December 31,2019 General ASSETS $ 392,779 Cash 24,635 Prepaids Total Assets $ 417,414 LIABILITIES Payables Accounts payable $ 14,370 Payroll taxes payable 2"078 Total Liabilities 16,448 FUND BALANCE Nonspendable:Prepaids 24,635 Assigned,Designated for: Compost facility/monitoring 93,192 Compost facility/equipment 17,550 Other equipment 17,957 100,000 Wages 147,632 Unassigned:Fund balance Total Fund Balance 400,.966 Total Liabilities and Fund Balance $ 41.7,414 See Notes to Financial Statements - 11 - FISHERS ISLAND WASTE MANAGEMENT DISTRICT Reconciliation of the General Fund Balance Sheet to the Statement of Net Position December 31,2019 Total Governmental Fund Balance $ 400,966 Amounts reported for governmental activities in the Statement of Net Position are different because: The costs of building and acquiring capital assets(land,buildings, equipment)financed from the governmental funds are reported as expenditures in the year they are incurred,and the assets do not appear on the Balance Sheet.However,the Statement of Net Position includes those capital assets among the assets of the District as a whole,and their original costs are expensed annually over their useful lives. Original cost of capital assets $ 4,049,342 Accumulated depreciation1''8„31,1741 2,218.,168 Total Net Position $ 2,619,134 See Notes to Financial Statements - 12 - FISHERS ISLAND WASTE MANAGEMENT DISTRICT Statement of Revenues,Expenditures and Change in Fund Balance-General Fund For The Year Ended December 31,2019 General REVENUES Real property taxes $ 864,131 Use of money and property 8,315 48,586 Compost facility Total Revenues 921,032 EXPENDITURES General government support 670,066 72'874 Transportation 102,815 Employee benefits Total Expenditures 845,755 Net Change in Fund Balance 75'277 Fund Balances- Beginning of Year 325,689 End of Year $ 400,966 See Notes to Financial Statements - 13- FISHERS ISLAND WASTE MANAGEMENT DISTRICT Reconciliation of the General Fund Statement of Revenues,Expenditures and Change in Fund Balance to the Statement of Activities For The Year Ended December 31,2019 Net Change in Fund Balance $ 75,277 Amounts reported for governmental activities in the Statement of Activities are different because: C it 1pjgd 1��1"�'er en - Capital outlays to purchase or build capital assets are reported in governmental funds as expenditures.However,for governmental activities those costs are capitalized and shown in the Statement of Net Position and allocated over their useful lives as annual depreciation expense in the Statement of Activities.This is the amount by which depreciation exceeded capital outlays in the period. Capital outlays $ Depreciation expense 13 ,120 (136,120) Change in Net Position of Governmental Activities -$ _60,843a_ See Notes to Financial Statements - 14- FISHERS ISLAND WASTE MANAGEMENT DISTRICT NOTES TO FINANCIAL STATEMENTS GNIFI A AC OU TI POLICIES Fishers Island Waste Management District (District) is governed by Town Law and other general laws of the State of New York. The Board of Commissioners is the legislative body responsible for overall operations,The Board of Commissioners consists of five members.The primary function of the District is to provide safe and efficient disposal of household garbage, furniture, appliances, recyclables, construction waste, and yard and landscaping debris. The financial statements of the District have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) for governmental units. The Governmental Accounting Standards Board (GASB) is the standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of these accounting policies are as follows: A. Financial Reporting Entity The Town of Southold, New York(Town) is financially accountable, as a result of fiscal dependency, for the District. Long-term debt and operating deficits (if any) of the District,which are backed by the full faith and credit of the Town,and other fiscal matters, result in a fiscal interdependency with the Town. Accordingly, the District has been determined to be a component unit of the Town of Southold,New York. B. Basis of Presentation overnrn,et_wj�Iel.­nnciaL:Stajeme­wLa The Statement of Net Position and the Statement of Activities present information about the overall governmental financial activities of the District.The Statement of Net Position presents the financial position of the District at fiscal year end, The Statement of Activities presents a comparison between expenses for waste disposal and revenues for the fiscal year. Program revenues include fees charged for certain disposal services and operating grants.Revenues that are not classified as program revenues,including real property taxes,are presented as general revenues. Fun_d_r-JDajic a] 5Lajtm__en_t5 �J_ The fund financial statements provide information about the Districes funds. The District only has one fund, the general fund. The general fund is the principle operating fund of the District and is used to account for all financial transactions of the District except those required to be accounted for in another fund,of which there are none. C. Measurement Focus and Basis of Accounting Accounting,and financial reporting treatment is determined by the applicable measurement focus and basis of accounting. Measurement focus indicates the type of resources being measured such as current financial resources,or economic resources. The basis of accounting indicates the timing of transactions or events for recognition in the financial statements. The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash transaction takes place. Non-exchange transactions,in which the District gives or receives value without directly receiving or giving equal value in exchange, include real property taxes. On an accrual basis, revenue from real property taxes is recognized in the fiscal year for which the taxes are levied., FISHERS ISLAND WASTE MANAGEMENT DISTRICT NOTES TO FINANCIAL STATEMENTS (Continued) The fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when measurable and available. The District considers all revenues reported in the general fund to be available if the revenues are collected within 60 days after the end of the fiscal year. Expenditures are recorded when the related fund liability is incurred, except for certain expenditures related to long-term liability,if any,which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in the governmental funds. D. Real Property Taxes Property taxes are collected by the Tower of Southold Receiver of Taxes on behalf of the District.The'rown of Southold Receiver of Taxes collects all property taxes for the Town,Suffolk County,Town Special Districts and School Districts.Town and Countytaxes are levied annually,and are due by October 1st,The Town remits the amount of real property tax levied to the District from December to June.Responsibility for collection of unpaid taxes is assumed by Suffolk County.There was no amount due from the Town at December 31,2019. E. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial. statements and the reported revenues and expenses/expenditures during the reporting period, Accordingly, actual results could differ from those estimates. Estimates and assumptions are made in a variety of areas, including potential contingent liabilities. F. Cash and Cash Equivalents/Investments Cash and cash equivalents consist of cash on hand,bank deposits and investments with a maturity date of three months or less from date of acquisition. G. Prepaid Items Prepaid items represent payments:made by the District for which benefits extend beyond year-end. These payments to vendors reflect costs applicable to future accounting periods and are recorded as assets on the Statement of Net Position and balance Sheet using the consumption method.Under the consumption method, a current asset for the prepaid amounts is recorded at the time of purchase and an expense/expenditure is reported in the year the goods or services are consumed. H. Capital Assets Capital assets are reflected in the government-wide financial statements. Capital assets purchased or acquired with an original cost of$1.0,000 or more are required to be capitalized according to District policy and are reported at actual cost, when the information is available, or estimated historical cost based on professional third-party information, Donated assets are reported at acquisition value at the date of donation. - 16- FISHERS ISLAND WASTE MANAGEMENT DISTRICT NOTES TO FINANCIAL STATEMENTS (Continued) All capital assets,except land and construction in progress,are depreciated on a straight line basis over their estimated, useful lives. Costs incurred for repairs and maintenance are expensed as incurred. Estimated useful lives of capital assets as reported in the government-wide statements are as follows: Estimated Useful Life Buildings 20-40 years Improvements and other 15-30 years Machinery and equipment 8-10 years Infrastructure 25 years I. Equity Classifications ernment-"A"icl tatenen In the government-wide statements there are two classes of net position: Net investment in capital assets - consists of net capital assets (cost less accumulated depreciation) reduced by outstanding balances of related debt obligations from the acquisitions, construction and improvements of those assets. Unrestricted - reports the balance of net position that does not meet the definition of the above classification. Fu t° eats The fund statements report fund balance classifications according to the relative strength of spending constraints placed on the purpose for which resources can be used, as follows: Nonspendable - Consists of amounts that are inherently nonspendable in the current period either because of their form or because they must be maintained intact.Nonspendable fund balance consists of prepaids. Assigned- Consists of amounts that are subject to a purpose constraint that represents an intended use established by the District's Board of Commissioners.The purpose of tale assignment must be narrower than the purpose of the general fund. Unassigned - represents the residual classification for the District's general fund and could report a surplus or deficit. Fund Balance la cca n Any portion of fund balance may be applied or transferred for a specific purpose by law, voter approval if required by law or by formal action of the Board of Commissioners if voter approval is not required. Amendments or modification to the applied or transferred ft,ind balance must:also be approved by formal action of the Board of Commissioners. In circumstances where an expenditure is incurred for a purpose for which amounts are available in multiple fund balance classifications (that is restricted, assigned or unassigned) the expenditure is to be spent first from the restricted fund balance to the extent appropriated by either the original budget or a board approved. budget revision and then from the assigned fund balance to the extent that there is an appropriation and then from the unassigned fund balance. - 17- FISHERS ISLAND WASTE MANAGEMENT DISTRICT NOTES TO FINANCIAL STATEMENTS (Continued) 2. ESP AN'ATIO DF RTAIN DIF ER Ni E BETWI NV HE , ND STAT MENTS AND E 0 V 'RNtiNMENTY WIDE ST AT RM "1" Due to the differences in the measurement focus and basis of accounting used in the fund statements and the government-wide statements, certain financial transactions are treated differently. The basic financial statements contain a full reconciliation of these items. The differences result primarily from the economic resource measurement focus of the government-wide statements, compared with the current financial resources measurement focus of the fund statements. A. Total Fund Balances of General Fund vs.Net Position of Governmental Activities Total fund balances of the District's general fund differ from net position of governmental activities reported in the Statement of Net Position.This difference primarily results from the long-term economic focus of the Statement of Net Position versus the current financial resources focus of the governmental fund Balance Sheet. B. Statement of Revenues,Expenditures and Changes in Fund Balance vs.Statement of Activities Differences between the Statement of Revenues, Expenditures and Changes in Fund Balance and the Statement of Activities can fall into any of three broad categories; however, the District does not have any long-term revenue,expense or debt transaction differences. Lotti -T rm l vera me a a Erns Diff.ren es Long-term revenue differences arise because governmental funds report revenues only when they are considered"available",whereas the Statement of Activities reports revenues when earned. Differences in long-term expenses arise because governmental funds report on a modified accrual basis, whereas the accrual basis of accounting is used on the Statement of Activities. a iM.I�� e Differen Capital related differences include the difference between proceeds from the sale of capital assets reported on fund statements and the gain or loss on the sale of assets as reported on the Statement of Activities,and the difference between recording an expenditure for the purchase of capital items in the fund statements and depreciation expense on those items as recorded in the Statement of Activities. _Qjn -Term Debt r n acti n Differgs Long-term debt transaction differences occur because the issuance of long-term debt provides current financial resources to governmental funds,but is recorded as a liability in the Statement of Net Position. In addition, both interest and principal are recorded as expenditures iin the fund statements when due and payable, whereas interest expense is recorded in the Statement of Activities as it accrues, and principal payments are recorded as a reduction of liabilities in the Statement of Net Position. - 18- FISHERS ISLAND WASTE MANAGEMENT DISTRICT NOTES TO FINANCIAL STATEMENTS (Continued) 3. kNCE AND ACC V.NJA--B-1L-1Ty A. Budgets The District administration prepares a proposed budget for approval by the Board of Commissioners for the general fund, the only fund with a legally adopted budget. The budget is then submitted to the Town of Southold for inclusion in the Town budget and a public hearing is held thereon. Appropriations are adopted at the program line item level. Appropriations established by the adoption of the budget constitute a limitation on expenditures (and encumbrances) that may be incurred. Appropriations authorized for the year are increased by the amount of encumbrances carried forward from the prior year.Appropriations lapse at the end of the fiscal year unless expended or encumbered. Encumbrances will lapse if not expended in the subsequent year.Appropriations authorized for the current year can be funded by the planned use of specific reserves,and can be increased bybudget amendments approved by the,Board of Commissioners as a result of selected new revenue sources not included in the original budget (when permitted by law) and appropriation of fund balances, These supplemental appropriations may occur subject to legal restrictions, if the Board approves them because of a need that exists which was not determined at the time the budget was adopted. No supplemental appropriations occurred during the year. Budgets are adopted annually on a basis consistent with GAAP. 4. JAL INSTIT JTIQ SA—MVIN—M-1—MENJILS The District's investment policies are governed by state statutes and District policy. Resources must be deposited in Federal Deposit Insurance Corporation (FDIC) insured commercial banks or trust companies located within the state. Permissible investments include obligations of the U.S, Treasury and US. Agencies, repurchase agreements and obligations of New York State or its localities.Collateral is required for demand and time deposits and certificates of deposit not covered by FDIC insurance. Obligations that may be pledged as collateral are obligations of the United States and its Agencies and obligations of New York State and its municipalities. Investments are stated at fair value. Custodial credit risk is the risk that in the event of a bank failure,the District's deposits may not be returned to it. GASB directs that deposits be disclosed as exposed to custodial credit risk if they are not covered by depository insurance and the deposits are as follows: A. Uncollateralized, B. Collateralized by securities held by the pledging financial institution, or C. Collateralized by securities held by the pledging financial institution's trust department or agent but not in the District's name. The District's aggregate bank balances and certificates of deposit were covered by FDIC insurance at year end. The District was not exposed to any material interest rate risk or foreign currency risk. - 19- FISHERS ISLAND WASTE MANAGEMENT DISTRICT NOTES TO FINANCIAL STATEMENTS (Continued) 5. CAP`IT'AL SS JS Capital asset balances and activity for the year ended December 31, 2019 were as follows: Balance Balance 12 31 2018 Additions Reductions 12/31 f 2019 Governmental activities Capital assets not being depreciated $ 517,262 $ $ $ 517,262 Land Capital assets being depreciated Buildings and improvements 2,777,259 2,777,259 Machinery and equipment 754,821 754,821 Total capital assets being depreciated 3,532,080 - - 3,532,080 Less accumulated depreciation for: Buildings and improvements 1,191,995 88,753 r,1 1,280,748 Machinery and equipment 503,059 47,367 550,426 Total accumulated depreciation 1,695,054 136,120 1,831,174 Total capital assets, being depreciated,net 1,837,026 136,120 1,700,906 Capital assets,net $ 2,3'54',288 (1.3 x,12 $ - $ 2'218,168 Depreciation expense was$136,120. 6. l M N EM T The District is exposed to various risks of loss related to torts, theft of, damage to, and destruction of assets* injuries to employees; errors and omissions; and natural disasters, These risks are covered by commercial insurance purchased from independent third parties. Settled claims from these risks have not exceeded commercial insurance coverage for the past three years. 7. SUESE'Q I 1ENT E-VE NIS The District has evaluated subsequent events through the date of the auditor's report, which is the date the financial statements were available to be issued. No significant events were identified that would require adjustment of or disclosure in the financial statements,except for the following: The COVI D-19 outbreak is disrupting business activity across a range of industries.At this point,the extent of the impact of COVID-19 on the District's operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, and the effect on the District's residents, employees and vendors,all of which are uncertain and cannot be predicted. -20- FISHERS ISLAND WASTE MANAGEMENT DISTRICT Schedule of Revenues,Expenditures and Change in Fund Balance Budget and Actual-General Fund For The Year Ended December 31,2019 Final Budget Original Final Variance with Budget Budget Actual Actual REVENUES 86 Real Property Taxes $ 4,131 $ 864,131 $ 864,131 $ Use of Money&Property 3,400 3,400 8,315 4,915 Compost Facility 50,000 50,000 48,5861,414 Total Revenues $ 917,531 $ 917,531 921,032 $ 3,501 EXPENDITURES Accounting $ 11,000 $ 11,000 11,000 $ Bank Charges 3,100 5,400 5,351 49 Building Maintenance 5,500 5,500 5,467 33 Building Utilities 8,198 14,198 14,152 46 Commissioner's Fees 13,000 13,000 11,720 1,280 Compost Equipment Maintenance 7,215 7,215 2,060 5,155 Compost Facility Maintenance 7,100 7,033 67 Compost Facility Supplies 2,000 1,953 47 Compost Facility Utilities 3,500 3,500 3,260 240 Consultants 100,000 25,000 21,497 3,503 Employee Benefits,Taxes&Wages 529,800 529,800 487,812 41,988 Employee Training 10,000 10,000 4,277 5,723 Equipment Maintenance 26,550 26,550 17,523 9,027 Ferry Transportation 60,000 72,900 72,874 26 Garbage Tipping Fees&Hauling 77,000 111,600 111,525 75 Hazardous Waste Removal 300 300 300 Insurance 24,870 28,170 28,098 72 Legal Fees 10,000 10,000 9,135 865 Office Expense 4,300 7,000 6,939 61 Transfer Station Utilities 4,000 4,700 4,646 54 Transfer Station Improvements 7,198 7,198 4,128 3,070 Workers'Compensation 12,000 15,400 15,305 95 Total Expenditures $ 917,531 $ 91.7,531 845,755 $ 71,776 Net Change in Fund Balance 75'277 Fund Balance-Beginning of Year 325,689 Fund Balance-End of Year $ 400,966 Note to Required Supplementary Information .OAAgt Basi ea i Budgets are adopted on the modified accrual basis of accounting consistent with accounting principles generally accepted in the United States of America. See Paragraph on Required Supplementary Information Included in Auditor's Report - 21 -