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HomeMy WebLinkAbout2023 r CULLEN, & DANOWSKI, LLP CERTIFIED PU.BiIGACCC)UNTANTS RECEIVED OCT - 7 2024 July 19,2024 Southold Town Clerk To the Board of Fire Commissioners East Marion Fire District East Marion,New York We have audited the financial statements of each fund and account group of the East Marion Fire District (District) for the year ended December 31, 2023,and have issued our report thereon dated July 19, 2024. Professional standards require that we provide .you with information about our responsibilities under generally accepted auditing standards(and,if applicable,Government Auditing Standards),as well as certain information related to the planned scope and timing in our audit.We have communicated such information in our previous letter to you dated February 7, 2024. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Matters Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the District are described in Note 1 to the financial statements. No accounting policies were adopted and the application of existing policies was not changed during the year.We noted no transactions entered into by the District during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were: • Historical Cost Value of Certain Capital Assets - Management's estimate of the historical cost value of Land and Buildings is based on replacement cost converted to estimated historical cost using a conversion factor based on the year the item was placed in service. • Compensated Absences Liability - Management's estimate of the liability for compensated absences is based on historical information regarding employees who have separated from the District and their terminal payout amounts, in order to determine the probability and amount of future payouts to employees for vested accumulated sick,vacation and/or leave terminal payouts. 1650 ROUTE 112,PORT JEFFERSON STATION,NEW YORK 11776-3060 0 PHONE:631-473-3400•FAX:631-473-4863•WWW.CDLLP.NET East Marion Fire District For the Year Ended December 31,2023 • Actuarial Assumptions and Methods Underlying Pension Reporting - Management's acceptance of various actuarial assumptions and methods underlying the calculation of the District's pension reporting is based on the actuarial valuation prepared by the actuary for the ERS. • Actuarial Assumptions and Methods Underlying Length of Service Award Program (LOSAP) Reporting- Management's acceptance of various actuarial assumptions and methods underlying the calculation of the District's actuarial present value of benefits and liability is based on actuarial valuations prepared by the District's actuary for the LOSAP Plan. We evaluated the key factors and assumptions used to develop these estimates in determining that they are reasonable in relation to the financial statements taken as a whole. The financial statement disclosures are neutral,consistent,and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit,other than those that are trivial,and communicate them to the appropriate level of management. The attached audit adjustments correcting misstatements (which were accepted and recorded by the District) in our judgment, indicate matters that could have a significant effect on the District's financial reporting process. Disagreements with Management For purposes of this letter,a disagreement with management is a financial accounting,reporting,or auditing matter,whether or not resolved to our satisfaction,that could be significant to the financial statements or the auditor's report.We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated July 19,2024. Management Consultations with Other Indepen dent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters,similar to obtaining a"second opinion"on certain situations.If a consultation involves application of an accounting principle to the District's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts.To our knowledge, there were no such consultations with other accountants. -2- East Marion Fire District For the Year Ended December 31,2023 Other Audit Finding or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the District's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Matters We were engaged to report on the schedule of revenues,expenditures and changes in fund balance-budget and actual - general fund - operating, which accompanies the financial statements but is not required supplementary information (RSI). With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with the reporting provisions of the New York State Office of the State Comptroller,the method of preparing it has not changed from the prior period,and the information is appropriate and complete in relation to our audit of the financial statements.We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. Restriction on Use This information is intended solely for the information and use of the Board of Fire Commissioners and management of East Marion Fire District and is not intended to be and should not be used by anyone other than these specified parties. Very truly yours, &X e&yJ I. �, L--P Cullen&Danowski,LLP -3- V EAST MARION FIRE DISTRICT AUC-260 ADJUSTING JOURNAL ENTRIES 12/31/2023 Account Description Debit Credit AJE01 General Fund-To record checks dated 12/31/2023 as accounts payable since they were not sent out until January 2024. A0.1000.0200.000 Operating Acct:TD Bank 4,365.05 0.00 A0.2000.0600.000 Accounts Payable/Accruals 0.00 4,236.26 A0.2010.0601.001 Payroll Liabilities 5.64 0.00 A0.2010.0601.003 Payroll Liabilities:Federal/FICA Liability 70.54 0.00 A0.2010.0601.004 Payroll Liabilities:NYS Withholding Payable 0.00 204.97 Total 4,441.23 4,441.23 AJE02 General Fund-to accrue unrecorded payables identified in subsequent disbursement testing. A0.5170.3410.200 FP-Equipment A200 6,885.00 0.00 A0.5100.3410.402 FP-Building Costs/Building Repair 931.10 0.00 A0.5170.3410.200 FP-Equipment A200 9,179.48 0.00 A0.2000.0600.000 Accounts Payable/Accruals 0.00 16,995.58 H1.5170.3410.200 FP-Fire Equip Capital Outlay 9,768.00 0.00 1-11.2000.0600.000 Accounts Payable 0.00 9,768.00 Total 26,763.58 26,763.58 AJE03 LOSAP-To record prior period adjustment for prior year ending LOSAP asset balance A1.1200.461 Service Award Program Assets 1,264,029.99 0.00 A1.3020.895 Restricted:Service Award Program 0.00 1,264,029.99 Total 1,264,029.99 1,264,029.99 AJE04 LOSAP-To record the current year activity for the LOSAP asset. A1.1200.461 Service Award Program Assets 769.10 0.00 A1.5100.3410.4 Fire Contractual Expenditures 498.41 0.00 A1.5130.9025.8 Service Award Program Benefits 104,817.23 0.00 A1.4085.2770 Contributions 0.00 35,000.00 A1.4040.2401 Interest&Earnings 0.00 71,084.74 A0.5100.3410.410 FP-Admin/Professional Fees 6,731.66 0.00 A0.5130.9025.800 Employee Benefits/LOSAP 0.00 6,731.66 Total 112,816.40 112,816.40 AJE05 LOSAP-To record net change in restricted fund balance related to LOSAP. A1.3310.917 Unassigned FB 769.10 0.00 A1.3020.895 Restricted:Service Award Program 0.00 769.10 Total 769.10 769.10 AJE06 LTD/LOSAP-To record the change in LOSAP liability. W0.1090.0125.000 Provisions in Future Budgets 27,087.00 0.00 W0.2200.689 Service Award Program Liability 0.00 27,087.00 Total 27,087.00 27,087.00 AJE07 General Fund-to remote extra two postings of January 2023 T-Mobile cell tower rent. A0.4045.2410.002 Rental Income:Cell tower Rent 3,564.20 0.00 A0.1020.0380.000 Audit-Accounts Receivable 0.00 3,564.20 Total 3,564.20 3,564.20 AJE08 General Fund-to defer January 2024 T-Mobile cell tower rent payment(check rec'd 12/21/2023) A0.1000.0200.000 Operating Acct.-TD Bank 1,835.67 0.00 A0.2180.0630.000 Collections in Advance 0.00 1,835.67 Total 1,835.67 1,835.67 AJE09 General Fund-to record prepaid portion of workers comp.policies and manager fee(period from 7/1/2023 to 7/1/2024) A0.5130.9040.800 Employee Benefits/Work.Comp VFBL 0.00 2,314.48 A0.5130.9040.800 Employee Benefits/Work.Comp VFBL 0.00 1,093.40 A0.1050.0480.000 Prepaid Expenses 3,407.88 0.00 Total 3,407.88 3,407.88 AJE10 General Fund-to remove housing rent held in accounts receivable that was deposited in January 2023. A0.4045.2410.000 Rental Income:Housing rent 150.00 0.00 A0.1020.0380.000 Audit-Accounts Receivable 0.00 150.00 Total 150.00 150.00 AJE11 General Fund-to reclassify workers comp. dividend checks netting against the related expenditure code,and to accrue unrecorded dividend check receivable. A0.5130.9040.800 Employee Benefits/Work.Comp VFBL 4,648.21 0.00 A0.4075.2701.000 Refunds of Prior Year's expense 0.00 4,648.21 A0.1020.0380.000 Audit-Accounts Receivable 4,770.25 0.00 A0.4075.2701.000 Refunds of Prior Year's expense 0.00 4,770.25 Total 9,418.46 9,418.46 AIE12 General Fund-to correct the expenditure code for MLLP#7R. A0.5100.3410.404a FP-Fire Equip&Alarms/Equipment Repair 0.00 1,128.68 A0.5100.3410.425 FP-Admin/Miscellaneous 1,128.68 0.00 Total 1,128.68 1,128.68 AIE13 General Fund-to reclassify insurance claim proceeds out of"Equipment Repair"and into "Insurance Proceeds". A0.5100.3410.404a FP-Fire Equip&Alarms/Equipment Repair 4,075.86 0.00 A0.5100.3410.404a FP-Fire Equip&Alarms/Equipment Repair 1,570.00 0.00 A0.4060.2680.000 Insurance proceeds 0.00 5,645.86 Total 5,645.86 5,645.86 AIE14 General Fund-to reclassify insurance claim proceeds out of"Building Repair"and into "Insurance Proceeds". A0.5100.3410.402 FP-Building Costs/Building Repair 1,425.24 0.00 A0.4060.2680.000 Insurance proceeds 0.00 1,425.24 Total 1,425.24 1,425.24 AIE15 General Fund-to reclassify CK#12603 from "Equipment Repair"to"Building Repair". A0.5100.3410.402 FP-Building Costs/Building Repair 980.00 0.00 A0.5100.3410.404a FP-Fire Equip&Alarms/Equipment Repair 0.00 980.00 Total 980.00 980.00 AIE16 General Fund-to record prepaid portion of 2023-24 tax bill payment(CK#12798). A0.1050.0480.000 Prepaid Expenses 2,305.67 0.00 A0.5100.3410.425 FP-Admin/Miscellaneous 0.00 2,305.67 Total 2,305.67 2,305.67 AIE17 LTD-to record net pension liability per GASB 68 ERS report&remove prior year's net pension asset. W0.1090.0125.000 Provisions in Future Budgets 17,445.00 0.00 W0.2192.0637.000 Net Pension Liability:Proportionate Share 0.00 17,445.00 K0.1192.0108.000 Net Pension Asset:Proportionate Share 0.00 3,099.00 K0.3020.0899.000 Restricted-Pension 3,099.00 0.00 Total 20,544.00 20,544.00 AJE18 LTD-to record ERS deficiency payable per 2024 ERS annual invoice. W0.1090.0125.000 Provisions in Future Budgets 4,527.00 0.00 W0.2120.0637.000 Due to ERS<1 yr 0.00 501.00 W0.2122.0637.000 Due to ERS>1yr 0.00 4,026.00 Total 4,527.00 4,527.00 AJE19 Building Reserve-to close out equity at year end. H1.3310.0917.000 Unassigned Fund Balance Building Reserve 47,001.70 0.00 H1.3020.0878.000 Building&Grounds Reserve Fund 0.00 47,001.70 Total 47,001.70 47,001.70 AJE20 Equipment Reserve-to close out equity at year end. H0.3020.0878.000 Equipment&Apparatus Reserve 20,923.24 0.00 H0.3310.0917.000 Unassigned:Fund Balance 0.00 20,923.24 Total 20,923.24 20,923.24 AJE21 General Fund-to adjust equity at year end. A0.3010.0806.000 Nonspendable Fund Balance 3,870.80 0.00 A0.3305.0915.001 Assigned:Unappropriated/Encumbrances 0.00 0.00 A0.3300.0914.000 Assigned:Appropriated Fund Balance 15,000.00 0.00 A0.3310.0917.000 Unassigned:Fund Balance 0.00 18,870.80 Total 18,870.80 18,870.80 AJE22 GASB 87-to record opening lease receivable& deferred inflow for Crown Castle misc.rent. A0.1068.0454.000 Leases Receivable 37,496.12 0.00 A0.2520.0691.000 Deferred Leases 0.00 37,496.12 Total 37,496.12 37,496.12 AJE23 GASB 87-to reverse use of money or property recorded during the year and breakout between lease revenue and interest earned A0.4045.2410.002 Rental Income:Cell tower Rent 1,671.05 0.00 A0.4040.2401.002 Interest Inc 0.00 1,671.05 Total 1,671.05 1,671.05 AJE24 GASB 87-to record the current year change in the deferred inflow and lease receivable. A0.2520.0691.000 Deferred Leases 81,552.40 0.00 A0.1068.0454.000 Leases Receivable 0.00 81,552.40 Total 81,552.40 81,552.40 AJE25 FS purposes-To adjusted restricted cash for FS purposes only. A0.1000.0200.000 Operating Acct.-TD Bank 54,646.00 0.00 A0.1010.0200.000 Cash Restricted Reserves 0.00 54,646.00 Total 54,646.00 54,646.00 AJE26 Fixed Assets-to record the current year additions&deletions. K0.1070.0104.000 Equipment 160,000.00 0.00 K0.1070.0104.000 Equipment 0.00 54,253.00 K0.3000.0158.000 Investment in Capital Assets 0.00 105,747.00 Total 160,000.00 160,000.00 AJE27 To adjust encumbrances at 12/31/2023 A0.3305.0915.001 Assigned:Unappropriated/Encumbrances 142,189.95 0.00 A0.3310.0917.000 Unassigned:Fund Balance 0.00 142,189.95 Total 142,189.95 142,189.95 IE CI 'D 0 CT - 7 2024 SOUthold Town Clerk East Marion Fire District Financial Statements (Regulatory Basis) with Independent Auditor's Report December 31, 2023 I� EAST MARION FIRE DISTRICT _ Table of Contents December 31,2023 Page Independent Auditor's Report 1 _- Basic Financial Statements(Regulatory Basis) Balance Sheet-General Fund and Account Groups 4 -- Statement of Revenues,Expenditures,and Changes in Fund Balance-General Fund 5 -i Notes to Financial Statements 6 I Supplementary Information Schedule of Revenues,Expenditures,and Changes in Fund Balance -Budget and Actual-General Fund-Operating 24 - Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 25 I i AVOWS SKI, LLP CULLEN ;'& D CERTIFIED PU.B.LIC ACCOUNTANTS INDEPENDENT AUDITOR'S REPORT To the Board of Fire Commissioners East Marion Fire District East Marion,New York ' I Report on the Audit of the Financial Statements Opinions We have audited the accompanying financial statements (regulatory basis) of the East Marion Fire District (District), as of and for the year ended December 31, 2023, and the related notes to the financial statements, which collectively comprise the District's basic financial statements as listed in the table of contents. Unmodified 0 Opinion on Regulatory Basis o Accountin P 9 r1' of Accounting In our opinion,the financial statements referred to above present fairly,in all material respects,the respective financial position of each fund and account group of the East Marion Fire District, as of December 31,2023,and the respective changes in financial position for the year then ended,in accordance with the financial reporting provisions of the New York State Office of the State Comptroller,as described in Note 1. Adverse Opinion on U.S. Generally Accepted Accounting Principles In our opinion, because of the significance of the matter discussed in the "Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles section of our report,the financial statements referred to above do not present fairly,in accordance with accounting principles generally accepted in the United States of America, the financial position of the East Marion Fire District,as of December 31, 2023, and the respective changes in -. financial position for the year then ended. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America.Our responsibilities under those standards are further described in the"Auditor's Responsibilities for the Audit of the Financial Statements"section of our report.We are required to be independent of the District and to meet our other ethical responsibilities,in accordance with the relevant ethical requirements relating to our audit.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 - I 0 V PHONE:631-473,3400•FAX:631-473-4863•WWW.CDLLP.NET i Basis for Adverse Opinion on U.S.Generally Accepted Accounting Principles As described in Note 1,"Summary of Significant Accounting Policies,"the financial statements are prepared by i the East Marion Fire District,on the basis of the financial reporting provisions of the New York State Office of the State Comptroller, which is a basis of accounting other than accounting principles generally accepted in the United States of America,to meet the requirements of the New York State Office of the State Comptroller.The effects on the financial statements of the variances between the regulatory basis of accounting described in Note 1 and accounting principles generally accepted in the United States of America, although not reasonably determinable,are presumed to be material and pervasive. Responsibilities of Management for the Financial Statements - Management is responsible for the preparation and fair presentation of these financial statements in accordance with the financial reporting provisions of the New York State Office of the State Comptroller, as described in Note 1,to meet the reporting requirements of New York State. Management is also responsible for 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. i In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the District's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,whether due to fraud or error,and to issue an auditor's report that includes our opinions.Reasonable assurance is a high level of assurance but is not absolute assurance and,therefore,is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists.The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error,as fraud may involve collusion,forgery,intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with generally accepted auditing standards,we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements,whether due to fraud or error,and design and perform audit procedures responsive to those risks.Such procedures include examining,on a test basis,evidence regarding the amounts and disclosures in the financial statements. - • Obtain an understanding of internal control relevant to the audit 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 District's internal control.Accordingly,no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant — accounting estimates made by management,as well as evaluate the overall presentation of the financial statements. � r • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate,that raise substantial doubt about the District's ability to continue as a going concern for a reasonable period of time. -2- L We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit,significant audit findings, and certain internal control-related matters that we identified during the audit. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively i comprise the East Marion Fire District's basic financial statements. The accompanying schedule of revenues, expenditures,and changes in fund balance-budget and actual-general fund-operating on page 24 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements.The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion,the schedule of revenues,expenditures,and changes in fund balance-budget and actual-general fund -operating is fairly stated,in all material respects,in relation to the basic financial statements as a whole on the basis of accounting described in Note 1. Other Reporting Required by Government Auditing Standards - In accordance with Government Auditing Standards,we have also issued our report dated July 19, 2024,on our consideration of the East Marion Fire District's internal control over financial reporting and our tests of its compliance with certain provisions of laws,regulations,contracts,and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the East Marion Fire District's internal control over financial reporting or on compliance.That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering East Marion Fire District's internal control over financial reporting and compliance. a ; July 19,2024 , I -3- I EAST MARION FIRE DISTRICT Balance Sheet-General Fund and Account Groups December 31,2023 r 7 Account Groups Non-Current Non-Current General Governmental Governmental Fund Assets Liabilities Total - ASSETS Cash and Cash Equivalents Unrestricted $ 599,164 $ $ $ 599,164 Restricted 1,148,371 1,148,371 Accounts receivable 4,770 4,770 Lease receivable 251,871 251,871 Prepaids 33,532 33,532 Length of service award program 1,264,799 1,264,799 Land 2,493 2,493 Buildings and improvements 533,313 533,313 Equipment 1,604,702 1,604,702 Amount to be provided for retirement of long-term debt 1,384,398 1,384,398 Total Assets $ 3,302,507 $ 2,140,508 $ 1,384,398 $ 6,827,413 LIABILITIES Accounts payable $ 37,790 $ $ $ 37,790 Accrued liabilities 193 193 Guaranty and bid deposits 3,422 3,422 Collections in advance 25,727 25,727 P Due to employees'retirement system 4,527 4,527 Net pension liability-proportionate share 17,445 17,445 Length of service award program 1,362,426 1,362,426 Total Liabilities 67,132 1,384,398 1,451,530 DEFERRED INFLOWS OF RESOURCES Deferred lease 251,871 251,871 FUND BALANCE Investment in non-current governmental assets 2,140,508 2,140,508 Nonspendable:Prepaids 33,532 33,532 Restricted: Capital,building 507,844 507,844 Capital,equipment 640,527 640,527 Length of service award program 1,264,799 1,264,799 Assigned: Appropriated fund balance 32,000 32,000 Unappropriated fund balance 10,000 10,000 Unassigned 494,802 494,802 - Total Fund Balance 2,983,504 2,140,508 - 5,124,012 Total Liabilities,Deferred Inflows _ of Resources,and Fund Balance $ 3,302,507 $ 2,140,508 $ 1,384,398 $ 6,827,413 4 y , 1 - -- See Notes to Financial Statements -4- f EAST MARION FIRE DISTRICT L_ Statement of Revenues,Expenditures,and Changes in Fund Balance-General Fund For the Year Ended December 31,2023 j General Fund Length of Capital Service Award Operating Reserve Program Total REVENUES Real property taxes $ 554,655 $ $ $ 554,655 Payments in lieu of taxes 3,595 3,595 Interest and investment gains 20,392 26,959 71,085 118,436 Sale of equipment 1,500 1,500 - Insurance proceeds 7,071 7,071 _ Cell tower rental 111,581 111,581 Miscellaneous 11,579 11,579 Contributions 35,000 35,000 --, Total Revenues 710,373 26,959 106,085 843,417 t EXPENDITURES Personal services 54,573 54,573 Equipment and capital outlay 35,474 170,880 206,354 + Fire protection 343,237 499 343,736 State retirement system 7,062 7,062 Length of service award program 35,000 104,817 139,817 Social security 4,106 4,106 Workers'compensation 18,537 18,537 Unemployment Insurance 1,051 1,051 Total Expenditures 499,040 170,880 105,316 775,236 Excess(Deficiency)of Revenues Over Expenditures 211,333 (143,921) 769 68,181 P ' OTHER SOURCES AND USES Operating transfers in 170,000 170,000 Operating transfers out (170,000) (170,000) Total Other Sources and Uses (170,000) 170,000 - - Net Change in Fund Balance 41,333 26,079 769 68,181 Fund Balance- - Beginning of Year 529,001 1,122,292 1,264,030 2,915,323 Fund Balance-End of Year $ 570,334 $ 1,148,371 $ 1,264,799 $ 2,983,504 1 � I I f � t See Notes to Financial Statements -5- EAST MARION FIRE DISTRICT j Notes to Financial Statements 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the East Marion Fire District (District) as of and for the year ended December 31,2023,have been prepared in accordance with the financial reporting provisions of the New York State L Office of the State Comptroller(Regulatory Basis),which is a comprehensive basis of accounting other than 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 GAAP for governmental units. The financial statements of the District have been prepared using only the current financial resources measurement focus and the modified accrual basis of accounting. This method differs from GAAP,which requires the preparation of additional financial statements using the economic resources measurement focus and the accrual basis of accounting. GAAP basis financial statements require the capitalization and depreciation of property and equipment and the recording of long-term liabilities. Under the regulatory basis of accounting, property and equipment are recorded as an expenditure when purchased, the proceeds of long-term debt are reported as other financing sources and the payments of long-term debt and other long-term liabilities are recognized as expenditures to the extent that the liabilities mature during the year. In addition, GAAP requires the financial statements to be prepared in accordance with GASB Statement No. 34, Basic Financial Statements- and Management's Discussion and Analysis-for ? ! State and Local Governments. GASB Statement No. 34 financial statements require the presentation of government-wide financial statements, and management's discussion and analysis. The accounting practices used to prepare these financial statements do not require compliance with GASB Statement No. 34. The significant accounting policies of the District are described below: 1 -' A. Financial Reporting Entity The District is a district corporation and political subdivision of the State of New York,distinct from the municipalities in which it is located. In general, the District is governed by an elected board of fire commissioners (Board) and is required to have a treasurer and a secretary. The District has the legal authority to levy taxes on real property and to borrow in its own name. The District is governed by General Municipal Law(GML)and other laws of the state of New York and its subdivisions.The scope of activities included in the accompanying financial statements is the transactions that comprise the District's operations. - The primary function of the District is to provide fire protection,rescue,and emergency services to the community. Services such as firefighting, fire prevention, and public education support the primary �f function. i ! The financial reporting entity includes all funds, functions, and organizations over which the District's Board exercises oversight responsibility.Oversight responsibility is determined on the basis of financial interdependency, selection of governing authority, designation of management, ability to significantly influence operations,and accountability for fiscal matters. a B. Basis of Presentation Fund Financial Statements l � ! The District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to assist management by segregating - transactions related to certain government functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. -6- � i i i EAST MARION FIRE DISTRICT Notes to Financial Statements (Continued) The District records its transactions in the fund types described below: Governmental Funds Governmental funds are those through which most governmental functions are financed. The -, acquisition,use,and balances of expendable financial resources and the related liabilities are accounted for through governmental funds. The measurement focus of the governmental funds is based upon the determination of financial position and changes in financial position. The District utilizes the following fund type: General Fund - the general fund is the principal operating fund of the District. It is used to account for all financial resources except those required to be accounted for in another fund. k Account Groups -- Account groups are used to establish accounting control and accountability for the District's capital assets and general long-term obligations. The two account groups are not"funds". They are accounting - entities,not fiscal entities,and are concerned only with the measurement of financial position,and not with the results of operations. The District utilizes the following account groups: Non-Current Governmental Assets Account Group - the non-current governmental assets account group is used to account for land,buildings,improvements,and equipment owned by the District. Non-Current Governmental Liabilities Account Group - the non-current governmental - liabilities account group is used to account for all long-term debt and other liabilities of the District,as well as the District's proportionate share of the New York State and Local Employees' Retirement System's (ERS)net pension liability. j C. Measurement Focus and Basis of Accounting Measurement focus describes what type of information is reported,and is either the economic resources measurement focus or the current financial resources measurement focus. The economic resources measurement focus reports all assets, liabilities, and deferred resources related to a given activity, as �- well as transactions of the period that affect net position.For example,all assets,whether financial(e.g., cash and receivables)or capital (e.g.,property and equipment),and liabilities (including long-term debt and obligations) are reported. The current financial resources measurement focus reports more narrowly on assets,liabilities,and deferred resources that are relevant to near-term liquidity,along with net changes resulting from transactions of the period. Consequently, capital assets and the unmatured portion of long-term debt and certain other liabilities,the District would not expect to liquidate currently with expendable available financial resources (e.g.,compensated absences for employees still in active service)would not be reported. Basis of accounting describes when changes are recognized,and is either the accrual basis of accounting or the modified accrual basis of accounting.The accrual basis of accounting recognizes changes in net i position when the underlying event occurs,regardless of the timing of related cash flows.The modified accrual basis of accounting recognizes changes only at the point they affect near-term liquidity. -7- EAST MARION FIRE DISTRICT Notes to Financial Statements (Continued) i The governmental 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 governmental funds 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 pension costs,which are recognized as expenditures to the extent they have matured.Capital asset acquisitions are reported as expenditures in j governmental funds. Proceeds of general long-term debt and acquisitions under installment purchase agreements and leases are reported as other financing sources. D. Real Property Taxes Real property taxes are levied annually by the District no later than November 1st and become a lien on st December 1 . The District's tax levy is collected by the Town of Southold and then remitted to the District generally from January to June. The County of Suffolk is responsible for all uncollected taxes. _ E. Payments in Lieu of Taxes(PILOT) The District reports PILOT revenues in the general fund as part of other tax items revenues.These PILOT revenues are often the result of tax abatements granted by industrial development agencies of the Town and/or the County to help promote local economic development.Property owners make PILOT payments to the government agencies,which in turn remit the collected payments to the District. 1— The District's PILOT revenues also include payments from the Long Island Power Authority (LIPA) remitted to the Town of Southold.The LIPA Reform Act(Public Authorities Law§1020-q)gave LIPA tax exempt status, as a public authority, in respect to any property if acquired from LILCO (Long Island Lighting Company).Due to the potential fiscal impact of loss of local property tax revenues in response to the exemption, the LIPA Reform Act provides for LIPA's payment of PILOT to the municipalities —' affected by any acquisition of LILCO property.The District received$3,595 in PILOT revenue during the 2023 fiscal year. I � F. Use of Estimates The preparation of financial statements in conformity with a comprehensive basis of accounting other than GAAP requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, and deferred inflows of resources, and disclosure of contingencies at the date of the financial statements, and the reported revenues and expenditures during the reporting period. Accordingly,actual results could differ from those estimates.Estimates and assumptions are made in a variety of areas,including pension costs. G. Cash and Cash Equivalents Cash and cash equivalents consists of cash on hand,demand deposits,and short-term investments with original maturities of three months or less from date of acquisition. Certain cash balances are restricted by various legal and contractual obligations, such as legal reserves and debt agreements. i H. Receivables j Receivables are shown net of an allowance for uncollectibles, if any. However, no allowance for uncollectibles has been provided since it is believed that such allowance would not be material. -8- r- , EAST MARION FIRE DISTRICT I Notes to Financial Statements (Continued) I. Lease Receivable The District leases property it owns for cellular antenna equipment to multiple third parties. A lease ? receivable is measured and recorded at the present value of lease payments expected to be received by the District during the lease term using an implicit discount rate, net of any provision for estimated uncollectible amounts. As lease payments are received from the lessee, they are first allocated to the I amortization of the discount on the lease receivable and recognized as interest revenue,and then to lease receivable. J. 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 Balance Sheet using the consumption method. Under the consumption method,a current asset for the prepaid item is recorded at the time of receipt and/or purchase and an expenditure is -, reported in the year the goods or services are consumed. A portion of fund balance has been classified as nonspendable to indicate that prepaids do not constitute available spendable resources. K. Restricted Length of Service Award Program Investments -, The District sponsors the East Marion Fire District's Length of Service Award Program(LOSAP),a defined benefit pension plan,and has reported program assets.The underlying assets are reported at fair market L value based on quoted market prices and include cash,life insurance,and fixed income annuities. The LOSAP's assets are restricted for the purposes of providing benefits to the participants of the plan. L. Net Pension Asset/(Liability)Proportionate Share fl The District participates in the New York State and Local Employees'Retirement System (ERS),which is a cost-sharing multiple-employer, defined benefit, public employee pension plan. The ERS provides retirement,disability,withdrawal,and death benefits to plan members and beneficiaries related to years of service and final average salary.The District reports its proportionate share of the ERS'net pension asset or liability in either the non-current governmental assets group or the non-current governmental liabilities group.Net pension assets or liabilities of the ERS are determined based on an annual actuarial 1 valuation at the measurement date. M. Capital Assets Capital assets are reported in the non-current governmental assets account group at original 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.The capital threshold,the dollar j value above which asset acquisitions are added to the capital assets accounts,is$2,000 for all assets. a . -9- I EAST MARION FIRE DISTRICT Notes to Financial Statements (Continued) N. Collections in Advance ,- Collections in advance arise when resources are received by the District before it has a legal claim to I. them, as when grant monies are received prior to the incurrence of qualifying expenditures or when monies are received in advance from payers prior to the services being rendered by the District.These _ amounts are recorded as liabilities in the financial statements.The liabilities are removed and revenues are recognized in subsequent periods when the District has legal claim to the resources. 0. Other Benefits Eligible District employees participate in the ERS and eligible volunteer firefighters participate in the -- District sponsored LOSAP. j P. Deferred Inflows of Resources Deferred inflows of resources represents an acquisition of net assets that applies to a future period and r so will not be recognized as an inflow of resources (revenue/expense credit) until that time. In the 1 District-wide financial statements,long-term leases receivable for properties that the District leases to third parties is reported as deferred inflows.Revenues will be recognized systematically over the terms r- of the lease agreements. Q. Fund Balance The governmental fund financial 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,which are recorded in the general fund. Restricted - Consists of amounts that are subject to externally enforceable legal purpose restrictions imposed by creditors,grantors,contributors,or laws and regulations of other governments; or through -- constitutional provisions or enabling legislation. The District has established the following restricted fund balances: Capital Reserve A Capital Reserve (GML §6-g) is used to finance all or part of the costs of construction, reconstruction, or acquisition of "specific" or "type" capital improvements or equipment. The establishment of any capital reserve is subject to mandatory referendum (voter approval). Expenditures from a "specific" reserve require a resolution by the Board. Expenditures from a r~, "type" reserve require a resolution by the Board, subject to permissive referendum. The District has two capital reserves,which are accounted for in the general fund. Restricted for Length of Service Award Program The District sponsors a defined benefit service award program for its volunteer EMS/Ambulance workers and is legally responsible for annual contributions to the program. The program is administered through a trust. Payments made from the program are made from general assets, which are subject to the claims of the District's creditors.The Trust does not meet the criteria in paragraph 4 of GASB Statement No.73,Accounting and Financial Reporting forPensions and Related Assets ThatAre Not within the Scope of GASB Statement 68,andAmendments to Certain Provisions of -10- 1 � EAST MARION FIRE DISTRICT Notes to Financial Statements (Continued) L GASB Statements 67 and 68,because the assets are not protected from the District's creditors.The District reports the assets and restricted fund balance in the general fund. Assigned-Consists of amounts that are subject to a purpose constraint that represents an intended use _ established by the District's Board.The purpose of the assignment must be narrower than the purpose of the general fund, and in funds other than the general fund, assigned fund balance represents the 1 residual, positive amount of fund balance.Assigned fund balance includes an amount appropriated to - partially fund the subsequent year's budget,as well as encumbrances not classified as restricted at the end of the fiscal year. Unassigned - represents the residual classification for the District's general fund and could report a surplus or deficit.In funds other than the general fund,the unassigned classification is used only to report a deficit fund balance resulting from overspending of available resources. Fund Balance Classification 1 Any portion of fund balance may be applied or transferred for a specific purpose either by voter approval, -' if required by law, or by formal action of the Board if voter approval is not required. Amendments or modification to the applied or transferred fund balance must also be approved by formal action of the Board. The Board shall retain the authority to assign fund balance. In circumstances where an expenditure is incurred for a purpose for which amounts are available in multiple fund balance classifications (e.g., expenditures related to reserves) the expenditure is to be spent first from the restricted fund balance to the extent appropriated by any Board approved budget revision,then from the assigned fund balance to the extent appropriated by the Board, and then from - the unassigned fund balance. 2. FUTURE ACCOUNTING STANDARDS The GASB Statements are issued to set generally accepted accounting principles (GAAP) for state and local —i governments. The following is not an all-inclusive list of GASB statements issued,but the statements that the District feels may have a future impact on these financial statements. The District will evaluate the impact of these pronouncements and implement them,as applicable,if material. 1 Effective for the Year Ending Statement December 31,2024 GASB No.99-Omnibus 2022 December 31,2024 GASB No.101-Compensated Absences December 31,2025 GASB No.102-Certain Risk Disclosures { GASB Statement No.99 provides additional guidance to enhance comparability in accounting and financial reporting to improve consistency of previously issued literature. GASB Statement No. 101 was issued to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences.That objective is achieved by aligning the recognition and measurement guidance under a unified model and amending previously 2 required disclosures. e GASB Statement No. 102 provides users of government financial statements with essential information about risks related to a government's vulnerabilities due to certain concentrations or constraints. -11- i , EAST MARION FIRE DISTRICT 1 Notes to Financial Statements (Continued) l ! 3. STEWARDSHIP.COMPLIANCE.AND ACCOUNTABILITY A. Budgets The District's administration prepares a proposed budget for approval by the Board for the general fund, the only fund with a legally adopted budget.Budgets are adopted annually on the modified accrual basis I of accounting. Appropriations are established by the adoption of the budget,are recorded at the program line item level, r and 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 by budget amendments approved ` by the Board, 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. A summary of the general fund operating budget is as follows: r— Budget approved by the Board $ 689,652 Encumbrances from prior year 152,190 Final Budget $ 841,842 B. Encumbrances Encumbrance accounting is used for budget control and monitoring purposes,and is reported as a part of the governmental funds.Under this method, purchase orders,contracts,and other commitments for the expenditure of monies are recorded to reserve applicable ,appropriations. Outstanding — encumbrances as of year end are presented as part of assigned fund balance, unless classified as restricted,and do not represent expenditures or liabilities.These commitments will be honored in the subsequent period. Related expenditures are recognized at that time,as the liability is incurred,or the commitment is paid. C. Over Expenditure of Certain Appropriations Certain general fund appropriations were over expended. These were in the following appropriation categories of the budget:workers'compensation and unemployment insurance.The general fund budget in total was not over expended. -12- i V EAST MARION FIRE DISTRICT Notes to Financial Statements (Continued) r ' 4. DEPOSITS WITH FINANCIAL INSTITUTIONS AND INVESTMENTS f 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 U.S.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 may be unable to recover deposits or collateral securities that are in possession of an outside agency. GASB directs that deposits be r : disclosed as exposed to custodial credit risk if they are not covered by depository insurance.These deposits are as follows: A. Uncollateralized, J 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 r not in the District's name. The District's aggregate bank balances were covered by FDIC insurance or fully collateralized by letters of credit pledged on the District's behalf at year end. r-, The District did not have any investments at year end or during the year.Consequently,the District was not exposed to any material interest rate risk. r-- Investment Pool: The District participates in the New York Cooperative Liquid Assets Securities System (NYCLASS),a multi- municipal cooperative investment pool agreement pursuant to GML Articles 3-A and 5-G,whereby it holds a portion of the investments in cooperation with other participants. NYCLASS is rated by the S&P Global Ratings. The current rating is 'AAAm'. The investments are highly liquid and are considered to be cash r� equivalents.All NYCLASS investment and collateral policies and in accordance with GML§10 and§11. The District's investments in NYCLASS consisted of repurchase agreements, U.S. Treasury Securities,and collateralized bank deposits,with various interest rates and due dates.The dollar weighted average days to maturity(WAM) of NYCLASS at December 31, 2023,was 41 days to the weighted average life (WAL) was �- 87 days.These investments are included in cash and cash equivalents as follows: Carrying Fund Amount General Fund $ 100,479 Securities other than repurchase agreements,are valued at the most recent market bid price as obtained from one or more market makers for such securities. Repurchase agreements are recorded at cost,which approximates fair value.The lead participant of NYCLASS is the Village of Potsdam.Additional information 1-~ concerning NYCLASS,including the annual report,can be found on its website at www.newyorkclass.org. L; -13- EAST MARION FIRE DISTRICT Notes to Financial Statements (Continued) � I S. CAPITAL ASSETS A. Changes Capital assets balances and activity for the year ended December 31,2023 are as follows: t Balance Balance December 31, December 31, 2022 Additions Deletions 2023 r- Land $ 2,493 $ $ $ 2,493 Buildings and improvements 533,313 533,313 Equipment 1,498,955 160,000 (54,253) 1,604,702 r- $ 2,034,761 $ 160,000 $ (54,253) $ 2,140,508 B. Impairment Loss r" i The District evaluates prominent events or changes in circumstances affecting capital assets to determine whether impairment of a capital asset has occurred. The District's policy is to record an impairment loss in the period when the District determines that the carrying amount of the asset will not be recoverable.At December 31,2023,the District has not recorded any such impairment losses. 6. LEASE RECEIVABLE 4 ' Site Lease Agreements The District has entered into property lease agreements to allow other third parties to utilize District property for cellular antenna equipment.Under the agreements,the District receives installments in each year covered by the agreements.The monthly installments increase on the annual lease renewal dates based on the lease terms and agreement until the expiration dates.During the year ended December 31,2023,the District recognized lease revenue and lease interest in the amounts of$81,552 and$1,671,respectively.For �^ purposes of financial presentation,the$81,552 of lease revenue is reflected in the cell tower rental revenues r-- on the statement of revenues,expenditures,and changes in fund balance. 7. CAPITAL RESERVES Activity for the capital reserves during the year under audit is as follows: Building Equipment Total Reserve Balances-Beginning of Year $ 460,842 $ 661,450 $ 1,122,292 Additions to Reserve: Board approved transfers: Planned budget increase 45,000 125,000 170,000 Interest 11,770 15,189 26,959 Use of Reserve: Capital outlay (9,768) (161,112) (170,880) r Reserve Balances-End of Year $ 507,844 $ 640,527 $ 1,148,371 -14- r- EAST MARION FIRE DISTRICT Notes to Financial Statements (Continued) 8. LONG-TERM LIABILITIES j A. Changes Long-term liability balances and activity for the year,excluding pensions,are summarized below: jl Balance Balance Amounts December 31, December 31, Due Within 2022 Additions Reductions 2023 One Year Other long-term liabilities: Due to employees' retirement system $ - $ 4,527 $ - $ 4,527 $ 501 l The general fund has typically been used to liquidate long-term liabilities. 9. PENSION PLAN-NEW YORK STATE A. New York State and Local Employees'Retirement System Plan Description The District participates in the ERS. This is a cost-sharing, multiple-employer defined benefit, public employee,pension plan.The ERS provides retirement,disability,withdrawal,and death benefits to plan members and beneficiaries related to years of service and final average salary. r-� Provisions and Administration Obligation of employers and employees to contribute and benefits to employees are governed by the New York State Retirement and Social Security Law(NYSRSSL).The net position of the ERS is held in the New York State Common Retirement Fund(the Fund),which was established to hold all net assets and record changes in plan net position allocated to the ERS.As set forth in the NYSRSSL,the Comptroller of the State of New York(Comptroller) serves as the trustee of the Fund and is the administrative head of the ERS. Once a public employer elects to participate in the ERS,the election is irrevocable.The New York State Constitution provides that pension membership is a contractual relationship and plan benefits cannot be diminished or impaired.Benefits can be changed for future members only by enactment of a State statute. The District also participates in the Public Employees'Group Life Insurance Plan(GLIP),which provides death benefits in the form of life insurance.The ERS is included in the State's financial report as a pension trust fund. That report, including information with regard to benefits provided may be found at www.osc.state.ny.us/retire/publications/index.php or may be obtained by writing to: New York State and Local Employees'Retirement System,110 State Street,Albany,NY 12244. I j � -15- li L, EAST MARION FIRE DISTRICT Notes to Financial Statements (Continued) Funding Policies Plan members who joined the system before July 27,1976,are not required to make contributions.Those joining on or after July 27,1976,and before January 1,2010,with less than ten years of credited services are required to contribute 3%of their salary.Those joining on or after January 1,2010 and before April 1, 2012,are required to contribute 3% of their salary throughout active membership.Those joining on or after April 1, 2012, are required to contribute between 3% and 6% dependent on their salary -- throughout active membership.Employers are required to contribute at an actuarially determined rate _ based on covered salaries paid.For the ERS,the Comptroller annually certifies the actuarially determined rates expressly used in computing the employers'contributions for the ERS'fiscal year ended March 3 1st, _i and employer contributions are either paid by December 15th less a 1%discount or by February 1s.The District paid 100%of the required contributions as billed by the ERS for the current year.The District's average contribution rate was 16.8%of covered payroll for the ERS'fiscal year ended March 31,2023. L The Comptroller annually certifies the actuarially determined rates expressly used in computing the employer's contributions based on salaries paid during the ERS' fiscal year ending March 31. The resulting contributions paid in the current year,and two preceding years,were equal to 100 percent of the contributions required,and were as follows: r-, 2023 2022 2021 District contributions $ 6,486 $ 6,082 $ 6,509 1 B. Pension Asset/(Liability) At December 31,2023,the District reported the following asset/(liability)for its proportionate share of the net pension asset/(liability) for the ERS in the non-current governmental assets/(liability) account group.The net pension asset/(liability) was measured as of March 31, 2023.The total pension liability used to calculate the net pension asset/(liability) was determined by an actuarial valuation as of that date. The District's proportion of the net pension asset/(liability) was based on a projection of the District's long-term share of contributions to the system relative to the projected contributions of all F7 participating members, actuarially determined. This information was provided by the ERS in reports L provided to the District. Measurementdate March 31,2023 District's proportionate share of the net pension liability $ (17,445) District's portion of the Plan's net pension liability 0.0000814% Change in proportion since the prior measurement date 0.0000435 r , -16- I i r` EAST MARION FIRE DISTRICT Notes to Financial Statements (Continued) Actuarial Assumptions The total pension liability as of the measurement date was determined by using an actuarial valuation as noted in the table below,with update procedures used to roll forward the total pension liability to the measurement date.The actuarial valuations used the following actuarial assumptions: Measurement date March 31,2023 Actuarial valuation date April 1,2022 Inflation 2.9% Salary increases 4.4% Investment rate of return(net of investment expense,including inflation) 5.9% Cost of living adjustments 1.5% -' Annuitant mortality rates are based on April 1, 2015 - March 31, 2020 system experience with adjustments for mortality improvements based on the Society of Actuaries'scale MP-2021.The previous actuarial valuation as of April 1,2021 used the same assumptions for the measurement of total pension liability. The actuarial assumptions were based on the results of an actuarial experience study for the period April 1,2015-March 31,2020. The long-term expected rate of return on pension plan investments was determined using a building- block method in which best-estimate ranges of expected future real rates of return(expected return,net of investment expenses and inflation) are developed for each major asset class. These ranges are - combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of the arithmetic real rates of return for each major asset class r are summarized as follows: Long-term - Target Expected Real ` Allocation Rate of Return _i Measurementdate March 31,2023 Asset class Domestic equity 32.0% 4.30% 17 International equity 15.0% 6.85% Real estate 9.0% 4.60% Private equity 10.0% 7.50% r Alternative investments 10.0% 5.38-5.84% Fixed income 23.0% 1.50% Cash 1.0% 0.00% 100.00 % L' Real rates of return are net of a long-term inflation assumption of 2.5%. -17- i EAST MARION FIRE DISTRICT Notes to Financial Statements (Continued) Discount Rate - The discount rate used to calculate the total pension liability was 5.9%.The projection of cash flows used to determine the discount rate assumes that contributions from plan members will be made at the current contribution rates and that contributions from employers will be made at statutorily required rates,actuarially determined.Based upon the assumptions,the ERS'fiduciary net position was projected to be available to make all projected future benefit payments of current plan members.Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the Proportionate Share of the Net Pension Asset/Liability to the Discount Rate Assumption The following presents the District's proportionate share of the net pension liability calculated using the discount rate of 5.9%,as well as what the District's proportionate share of the net pension asset/liability - would be if it were calculated using a discount rate that is 1 percentage point lower (4.9%) or 1 percentage point higher(6.9%)than the current rate: Current 1%Decrease Assumption 1%Increase 4.9 % 5.9 % 6.9 District's proportionate share of the net pension asset(liability) $ (42,157) $ (17,445) $ 3,205 I I Pension Plan Fiduciary Net Position The components of the current-year net pension asset/(liability) of the employers, rounded to the nearest thousand,as of the measurement date were as follows: (Dollars in Thousands) Measurement date March 31,2023 Employers'total pension liability $ (232,627,259) i Plan fiduciary net position 211,183,223 Employers'net pension liability $ (21,444,036) Ratio of plan fiduciary net position to the employers'total pension liability 90.78% Prepayment to the Pension Plan Employer contributions are paid annually based on the ERS'fiscal year,which ends on March 31st.Annual payments are due February 1s.An employer can elect to prepay the amount due by December 15th to receive a 1%discount.The District paid the annual invoice in December,which resulted in a prepayment of$1,621 for the period January 1,2024 through March 31,2024.Employee contributions are remitted monthly. -18- _i EAST MARION FIRE DISTRICT Notes to Financial Statements (Continued) it 10. LENGTH OF SERVICE AWARD PROGRAM(LOSAEa A. General Information The District established a single employer defined benefit LOSAP for the active volunteer firefighters of the East Marion Fire Department. The program took effect on January 1, 1992. The program was established pursuant to Article 11-A of GML. The program provides municipally-funded pension-like benefits to facilitate the recruitment and retention of active volunteer firefighters. The District is the sponsor of the program.The information contained in this note is based on information for the LOSAP for the plan year ending on December 31,2023. -- B. Program Description Participation, Vesting,and Service Credit - Active volunteer firefighters who have reached the age of 18 and who have completed 1 year of firefighting service are eligible to participate in the program.Participants acquire a non-forfeitable right to a service award after being credited with 5 years of firefighting services or upon attaining the program's entitlement age.The program's entitlement age is age 62 and completion of 1 year of service. In general,an active firefighter is credited with a year of firefighting service for each calendar year after the establishment of the program for which he or she accumulates fifty points.Points are granted for the performance of certain activities in accordance with a system established by the sponsor on the basis of a statutory list of activities and point values. A participant may also receive credit for 5 years of firefighting service rendered prior to the establishment of the program. Benefits A participant's benefit under the program is life annuity with 10 years equal to $20 multiplied by the person's total number of years of firefighting service.The number of years of firefighting service used to compute the benefit cannot exceed 40 and except in the case of disability or death,benefits are payable when a participant reaches entitlement age. The program provides statutorily mandated death and disability benefits. _ Participants - At the December 31, 2023 measurement date, the following participants were covered by the benefit terms: Inactive participants currently receiving benefits 15 Inactive participants entitled to but not yet receiving benefits 18 - Active participants 14 47 Contributions GML§219-d(1)requires the Board,to contribute to an actuarially determined contribution on an annual basis.The actuarially determined contribution shall be appropriated annually by the Board. -19- EAST MARION FIRE DISTRICT Notes to Financial Statements (Continued) Trust Assets Although assets have been accumulated in an irrevocable trust such that assets are dedicated to providing pensions to plan members in accordance with benefit terms,the trust assets are not legally protected from creditors of the District. As such,the trust assets do not meet the criteria in paragraph 4 of GASB Statement No. 73. The underlying assets are reported at Level 1,which is fair value based on quoted market prices and includes the following: Level 1 Cash&money market $ 42,460 U.S.equities 417,578 International equities 131,662 Fixed income 594,730 Other assets 81,808 Interest Receivable 3,778 Benefits payable (7,217) $ 1,264,799 i _! C. Fiduciary Investment and Control Service credit is determined by the governing board of the sponsor,based on information certified to the governing board by each fire company having members who participate in the program. Each fire company must maintain all required records on forms prescribed by the governing board. The governing board of the sponsor has retained and designated Penflex, Inc. to assist in the administration of the program. The designated program administrator's primary responsibility is to administer the plan for the exclusive benefit of the participants and their beneficiaries. Such duties include,but are not limited to,determining eligibility of firefighters to participate in the plan,compute participant entitlement, authorize disbursements to participants, compute necessary contribution amounts, maintain all necessary records, and consult with the sponsor and the trustee on long-term investment plans. Disbursements of program assets for the payment of benefits or administrative expenses must be reviewed by the trustee,and the Board,and be signed by at least two board members prior to being disbursed by the administrator. Program assets are required to be held in trust by GML,for the exclusive purpose of providing benefits — to participants and their beneficiaries, or for the purpose of defraying the reasonable expenses of the _ operation and administration of the program. The Board created a service award program trust fund through the adoption of a trust document,a copy of which is available from the Fire District Secretary. The Board of Fire Commissioners is the program trustee. Authority to invest program assets is vested in the program administrator,with the Board's prior written approval. Subject to restrictions in the program document, program assets are invested in accordance with a statutory"prudent person' rule.The program document calls for all investment decisions to be chosen and approved by the trustee,prior to being invested by the administrator. The sponsor is required to retain an actuary to determine the amount of the sponsor's contributions to the plan.The actuary retained by the sponsor for this purpose is Penflex,IAL.Portions of the following information are derived from a report prepared by the actuary dated March 27, 2024 for the plan year ended December 31,2023. -20- EAST MARION FIRE DISTRICT Notes to Financial Statements (Continued) D. Program Financial Condition Assets and Liabilities Actuarial Present Value of Benefits at December 31 2023 1362 426 Less: Assets.Available for Benefits %of total Cash&money market 3.36% $ 42,460 U.S.equities 33.02% 417,578 International equities 10.41% 131,662 Fixed income 47.02% 594,730 Other assets 6.47% 81,808 - Interest Receivable 0.30% 3,778 Benefits payable -0.57% (7,217) Total Net Assets Available for Benefits 1,264,799 - Total Unfunded Benefits $ 97,627 Prior Service Costs Prior service costs are being amortized over a range of 10-19 years at a discount rate of 5.00%. Receipts and Disbursements Plan Net Assets,Beginning of Year $ 1,264,030 - Changes during the year JI +Plan contributions $ 35,000 __ +Investment income earned 50,921 +/-Changes in fair market value of investments 29,297 Investment expenses (9,133) Plan benefit withdrawals (90,920) +/-Changes in benefits payable (13,897) Administrative and other fees/charges (499) 769 Plan Net Assets,End of Year $ 1,264,799 Contributions -I' Amount of sponsor's contribution recommended by actuary: $ 28,558 Amount of sponsor's actual contribution: 35,000 -21- EAST MARION FIRE DISTRICT Notes to Financial Statements (Continued) Administration Fees Fees paid to designated program administrator $ 6,732 Normal Costs The actuarial valuation methodology used by the actuary to determine the sponsor's contribution is attained age normal cost method. The assumptions used by the actuary to determine the sponsor's contribution and the actuarial present value of benefits are: Assumed rate of return on investment 5.25% Mortality tables used for Withdrawal None Disability None Retirement None Death(actives) RP-2014 Male Death(inactives) RP-2014 Male Other None The actuarial valuation methodology used by the actuary to determine the sponsor's contribution is i ' attained age normal cost method. The assumptions used by the actuary to determine the sponsors 1 contribution and the actuarial present value of benefits are: Interest rate: 5.25%compounded annually Retirement: RP2000 combined-unisex 11. ASSIGNED:APPROPRIATED FUND BALANCE The amount of$32,000 has been appropriated to reduce taxes for the year ending December 31,2024. 12. COMMITMENTS AND CONTINGENCIES A. Encumbrances - All encumbrances are classified as either restricted or assigned fund balance. At December 31,2023,the District encumbered the following amounts: Assigned:Unappropriated General Fund Fire protection $ 10,000 � I i -22- EAST MARION FIRE DISTRICT Notes to Financial Statements (Continued) II _ B. Risk Management 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, etc.These risks are covered by commercial insurance purchased from independent third parties. There have been no significant -- reductions in insurance coverage as compared to the prior year,and settled claims from these risks have not exceeded commercial insurance coverage for the past three years. C. Litigation The District is not aware of any material,pending,or threatened litigation claims against the District.The District is also unaware of any unasserted claims or assessments that would require financial statement disclosure. 13. SPENDING LIMITATION The District did not exceed the statutory spending limitation imposed by New York State Law for the year ended December 31,2023,or the budget for the year ending December 31,2024. 14. SUBSEQUENT EVENT 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:on April 24,2024,the Board approved,subject to permissive referendum, the use of up to $350,000 from the unassigned fund balance and$250,000 from the building reserve to fund an asphalt and drainage project at the firehouse. ' I i -23- EAST MARION FIRE DISTRICT Schedule of Revenues,Expenditures,and Changes in Fund Balance- Budget and Actual-General Fund-Operating For the Year Ended December 31,2023 Board- Final Budget Approved Final Variance with Budget Budget Actual Actual REVENUES Real property taxes $ 554,652 $ 554,652 $ 554,655 $ 3 Payments in lieu of taxes 3,400 3,400 3,595 195 _ Interest and earnings 4,000 4,000 20,392 16,392 Sale of equipment 1,500 1,500 Insurance proceeds 7,071 7,071 Cell tower rental 80,600 80,600 111,581 30,981 Miscellaneous 11,579 11,579 Total Revenues 642,652 642,652 710,373 $ 67,721 APPROPRIATED FUND BALANCE Prior years'surplus 47,000 47,000 Prior year's encumbrances 152,190 Total Appropriated Fund Balance 47,000 199,190 - Total Revenues and Appropriated Fund Balance $ 689,652 $ 841,842 Final Budget Variance with Year End Actual and Encumbrances Encumbrances EXPENDITURES - Personal services $ 60,152 $ 60,152 54,573 $ $ 5,579 Equipment and capital outlay 46,000 46,000 35,474 10,526 Fire protection 345,500 497,690 343,237 10,000 144,453 State retirement system 8,000 8,000 7,062 938 Length of service award program 42,000 42,000 35,000 7,000 Social security 5,000 5,000 4,106 894 Workers'compensation 12,000 12,000 18,537 (6,537) Unemployment insurance 1,000 1,000 1,051 (51) Total Expenditures 519,652 671,842 499,040 10,000 162,802 OTHER FINANCING USES Operating transfers out 170,000 170,000 170,000 - Total Expenditures and Other Uses $ 689,652 $ 841,842 669,040 $ 10,000 $ 162,802 Net Change in Fund Balance 41,333 Fund Balance-Beginning of Year 529,001 Fund Balance-End of Year $ 570,334 Note to Supplementary Information Budget Basis of Accounting Budgets are adopted on the modified accrual basis of accounting. See Paragraph on Supplementary Information Included in Auditor's Report -24- CULLEN , & DANOWSKI, LLP CERTIFIED PU-Bf4d-AC-COUNTANTS ` _U-1- � �, i INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Fire Commissioners East Marion Fire District East Marion,New York We have audited,in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States,the financial statements of the East Marion Fire District(District),as of and for the year ended December 31, 2023, and the related notes to financial statements, which collectively comprise the District's basic financial statements, and have issued our report thereon dated July 19, 2024.As described more fully in Note 1, the East Marion Fire District has prepared these financial statements in accordance with the financial reporting provisions of the New York State Office of the State Comptroller,which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. Report on Internal Control Over Financial Reporting In planning and performing our audit of the financial statements,we considered the East Marion Fire District's - internal control over financial reporting(internal control)as a basis for designing the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements,but not for the purpose of expressing an opinion on the effectiveness of the East Marion Fire District's internal control. Accordingly,we do not express an opinion on the effectiveness of the East Marion Fire District's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements,on a timely basis.A material weakness is a deficiency,or combination of deficiencies,in internal control, such that there is a reasonable possibility that a material misstatement of the District's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness,yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies.Given these limitations,during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified. 1650 ROUTE 112,PORT JEFFERSON STATION,NEW YORK 11776-3060 O O PHONE:631-473-3400•FAX:631-473-4863•WWW.CDLLP.NET -25- Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the East Marion Fire District's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,contracts and grant agreements,noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit,and accordingly,we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of This Report - The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing,and not to provide an opinion on the effectiveness of the District's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. July 19,2024 -26-