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HomeMy WebLinkAbout2024 Federal Single Audit TOWN OF SOUTHOLD, NEW YORK Uniform Guidance Schedules and Independent Auditors' Reports Year Ended December 31, 2024 TOWN OF SOUTHOLD, NEW YORK Uniform Guidance Schedules and Independent Auditors' Reports Table of Contents Page Independent Auditors' 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........................................................... 1-2 Independent Auditors' Report on Compliance for Each Major Federal Program, Report on Internal Control over Compliance and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance..................................................... 3-5 Schedule of Expenditures of Federal Awards.......................................................................................... 6 Notes to Schedule of Expenditures of Federal Awards.............................................................................. 7 Schedule of Findings and Questioned Costs.............................................................................................. 8-9 013PKF 000NNOR DAVIES ACCOUNTANTS AND ADVISORS 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 Independent Auditors' Report The Honorable Supervisor and Town Board of the Town of Southold, New York We have audited, in accordance with the 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 governmental activities, business-type activities, each major fund and the aggregate remaining fund information of the Town of Southold, New York ("Town") as of and for the year ended December 31, 2024, and the related notes to the financial statements. We were not engaged to audit the financial statements of the aggregate discretely presented component units. These financial statements collectively comprise the Town's basic financial statements. We have issued our report thereon dated September 29, 2025. Our report disclaims an opinion on the aggregate discretely presented component units because the financial statements of Fishers Island Ferry District, Fishers Island Waste Management District, Cutchogue-New Suffolk Park District, Southold Park District, Orient-East Marion Park District, Mattituck Park District, and Orient Mosquito District have not been audited, and we were not engaged to audit the Fishers Island Ferry District, Fishers Island Waste Management District, Cutchogue-New Suffolk Park District, Southold Park District, Orient-East Marion Park District, Mattituck Park District, and Orient Mosquito District financial statements as part of our audit of the Town's basic financial statements. The Fishers Island Ferry District, Fishers Island Waste Management District, Southold Park District, Cutchogue-New Suffolk Park District, Orient-East Marion Park District, Mattituck Park District, and Orient Mosquito District's financial activities are included in the Town's basic financial statements as a part of the aggregate discretely presented component units and represent 100% of the assets, net position, and revenues of the Town's aggregate discretely presented component units. Our report includes a reference to other auditors who audited the financial statements of Southold Local Development Corporation, as described in our report on the Town's financial statements. This report does not include the results of the other auditors testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors. Report on Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Town's internal control over financial reporting ("internal control") as a basis for designing 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 Town's internal control. Accordingly, we do not express an opinion on the effectiveness of the Town's internal control. PKF O'CONNOR DAVIES,LLP 878 Veterans Memorial Highway,41h Floor, Hauppauge,NY 11788 I Tel:631.434.9500 I Fax:631.434.9518 1 www.pkfod.com PKF O'Connor Davies,LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms. -1- Report on Internal Control Over Financial Reporting (continued) 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 a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the Town's financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a 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. Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the Town'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 Town'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 Town's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. PI�F Pazn� "' J I-LIJ PKF O'Connor Davies, LLP Hauppauge, New York September 29, 2025 -2- PKF OCONNOR DAVIES ACCOUNTANTS AND ADVISORS Report on Compliance for Each Major Program, Report on Internal Control Over Compliance and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance Independent Auditors' Report Honorable Supervisor and Town Board Town of Southold Southold, New York Report on Compliance for Each Major Federal Program Opinion on Each Major Federal Program We have audited the Town of Southold, New York's (the "Town") compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of the Town's major federal programs for the year ended December 31, 2024. The Town's major federal programs are identified in the summary of auditors' results section of the accompanying schedule of findings and questioned costs. The Town's basic financial statements include the operations of the Fishers Island Ferry District, a discretely presented component unit, which received approximately $1,465,000 in federal awards which is not included in the Town's schedule of expenditures of federal awards during the year ended December 31, 2024, except as to report the amounts passed-through to Fishers Island Ferry District. Our audit described below, did not include the operations of the Fishers Island Ferry District. In our opinion, the Town complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2024. Basis for Opinion on Each Major Federal Program We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America ("GAAS"); the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States ("Government Auditing Standards"); and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards ("Uniform Guidance"). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditors' Responsibilities for the Audit of Compliance section of our report. We are required to be independent of the Town and to meet our other ethical responsibilities, in accordance with 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 opinion on compliance for each major federal program. Our audit does not provide a legal determination of the Town's compliance with the compliance requirements referred to above. Responsibilities of Management for Compliance Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements applicable to the Town's federal programs. PKF O'CONNOR DAVIES LLP 878 Veterans Memorial Highway, Fourth Floor, Hauppauge, NY 11788 1 Tel:631.434.9500 1 Fax:631.434.9518 I www.pkfod.com PKF O'Connor Davies LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms. -3- Auditors'Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the Town's compliance based on our audit. 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 GAAS, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error; as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Non-compliance with the compliance requirements referred to above is considered material, if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the Town's compliance with the requirements of each major federal program as a whole. In performing an audit in accordance with GARS, Government Auditing Standards, and the Uniform Guidance, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material noncompliance, 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 Town's compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. • Obtain an understanding of the Town's internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the Town's internal control over compliance. Accordingly, no such opinion is expressed. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. Other Matters The results of our auditing procedures disclosed instances of noncompliance which are required to be reported in accordance with the Uniform Guidance and which are described in the accompanying schedule of findings and questioned costs as item 2024-001. Our opinion on each major federal program is not modified with respect to these matters. Government Auditing Standards requires the auditor to perform limited procedures on the Town's response to the noncompliance findings identified in our compliance audit described in the accompanying schedule of findings and questioned costs. The Town's response was not subjected to the other auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. The Town is responsible for preparing a corrective action plan to address the audit findings included in our auditors' report. The Town's corrective action plan was not subjected to the auditing procedures applied in the audit of compliance, and accordingly, we express no opinion on it. Report on Internal Control Over Compliance Our consideration of internal control over compliance was for the limited purpose described in the Auditor's Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, as discussed below, we did identify a certain deficiency in internal control over compliance that we consider to be a significant deficiency. -4- Report on Internal Control Over Compliance (continued) A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. We consider the deficiency in internal control over compliance described in the accompanying schedule of findings and questioned costs as item 2024-001 to be a significant deficiency. Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed. Government Auditing Standards requires the auditor to perform limited procedures on the Town's response to the internal control over compliance findings identified in our audit described in the accompanying schedule of findings and questioned costs. The Town's response was not subjected to the other auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, business-type activities, each major fund, and the aggregate remaining fund information of the Town, as of and for the year ended December 31, 2024, and the related notes to the financial statements, which collectively comprise the Town's basic financial statements. We issued our report thereon dated September 29, 2025, which contained unmodified opinions on the respective financial position of the governmental activities, business-type activities, each major fund, and the aggregate remaining fund information, and a disclaimer of opinion on the aggregate discretely presented component units. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. We did not audit the financial statements of Southold Local Development Corporation. Those financial statements were audited by other auditors whose reports thereon have been furnished to us and our opinion, insofar as it relates to the amounts included for such component units, is based solely on the reports of the other auditors. The financial statements of the Town of Southold's discretely presented component units were not audited as of the report date, nor were we able to satisfy ourselves as to those financial activities by other auditing procedures. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance 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 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 expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole. 1)w 69*-W� ". 0 &P PKF O'Connor Davies, LLP Hauppauge, New York September 29, 2025 -5- TOWN OF SOUTHOLD SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year Ended December 31, 2024 Federal Pass-Through Total Expenditures Federal Grantor/Pass-through Grantor Assistance Listing Entity Identifying Provided to Program by Assistance Program or Cluster Title Number Number Subrecipients Expenditures Listing Number U.S.Department of Housing and Urban Development Passed-through Suffolk County Department of Economic Development and Planning CDBG-Entitlement/Special Purpose Grants Cluster Community Development Block Grant/Entitlement Grants 14.218 N/A $ 21,135 Community Development Block Grant/Entitlement Grants 14.218 N/A 39,446 $ 60,581 Total CDBG-Entitlement/Special Purpose Grants Cluster 60,581 Total U.S.Department of Housing and Urban Development 60,581 U.S.Department of Transportation Direct Program: Airport Improvement Program 20.106 N/A $ 40,075 40,075 Airport Improvement Program 20.106 N/A 1,322,072 1,322,072 Airport Improvement Program 20.106 N/A 72,900 72,900 Airport Improvement Program 20.106 N/A 8,055 8,055 COVID-19 Airport Improvement Program 20.106 N/A 22,000 22,000 1,465,102 1,465,102 Passed-through New York State Governor's Traffic Safety Committee Highway Safety Cluster State and Community Highway Safety 20.600 PTS-2024 2,381 State and Community Highway Safety 20.600 PTS-2024 3,269 5,650 Total Highway Safety Cluster 5,650 Total U.S.Department of Transportation 1,470,752 U.S.Department of Health and Human Services Passed-through Suffolk County Office for the Aging Aging Cluster Special Programs for the Aging-Title III,Part C -Nutrition Services 93.045 SC00000014587 71,952 71,952 Nutrition Services Incentive Program 93.053 SC00000014587 16,260 16,260 Total Aging Cluster 88,212 Total U.S.Department of Health and Human Services 88,212 U.S.Department of the Interior Passed-through New York State Environmental Facilities Corporation Clean Vessel Act 15.616 NYFY2024 5,000 5,000 Total U.S.Department of the Interior 5,000 U.S.Department of Justice Direct Program: Bulletproof Vest Partnership Program 16.607 N/A 11,980 11,980 Total U.S.Department of Justice 11,980 U.S.Department of the Treasury Passed-through New York State Division of Homeland Security and Emergency Services COVID 19 Coronavirus State and Local Fiscal Recovery Funds 21.027 N/A 249,442 846,967 846,967 Total U.S.Department of the Treasury 846,967 Total Expenditures of Federal Awards $ 1,7 44,544 $ 2,483,492 N/A-Information not applicable See accompanying notes to schedule of expenditures of federal awards. -6- TOWN OF SOUTHOLD, NEW YORK NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year Ended December 31, 2024 Note 1 -Basis of Presentation The accompanying schedule of expenditures of federal awards (the "Schedule") includes the federal grant activity of the Town of Southold, New York (the "Town") under programs of the federal government for the year ended December 31, 2024. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). All federal financial assistance passed through to other government agencies is included in the schedule of expenditures of federal awards. Because the Schedule presents only a selected portion of the operations of the Town, it is not intended to and does not present the financial position, changes in net position, or cash flows of the Town. Note 2 -Summary of Significant Accounting Policies (1) Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. (2) Pass-through entity identifying numbers are presented where available. (3) The Town has elected not to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance. (4) Federal grants received by the Town are subject to audit and adjustment. If any expenditure is disallowed by the grantor agencies as a result of such an audit, the grantor agencies could make claims for reimbursement,which would become a liability of the Town. -7- TOWN OF SOUTHOLD, NEW YORK SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ended December 31, 2024 Section I -Summary of Auditors' Results Financial Statements Type of report the auditor issued on whether the financial statements audited were prepared in accordance with GAAP Unmodified on financial statements and disclaimer of opinion on discretely presented component units Internal control over financial reporting: • Material weakness(es) identified? Yes X No • Significant deficiency(ies) identified? Yes X None reported Noncompliance material to financial statements noted? Yes X No Federal Awards Internal control over major federal programs: • Material weakness(es) identified? Yes X No • Significant deficiency(ies)identified? X Yes None reported Type of auditors' report issued on compliance for major federal programs Unmodified Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)of U.S. OMB Uniform Guidance? X Yes No Identification of major federal programs: Assistance Listing Name of Federal Program or Cluster Numbers 20.106 Airport Improvement Program 20.106 COVID-19 Airport Improvement Program 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Dollar threshold used to distinguish between Type A and Type B programs $750,000 Auditee qualified as low-risk auditee? Yes X No -8- TOWN OF SOUTHOLD, NEW YORK SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ended December 31, 2024 Section II - Findings - Financial Statement Audit None noted Section III - Findings - Federal Award Findings and Questioned Costs 2024-001 AIRPORT IMPROVEMENT PROGRAM — FEDERAL ASSISTANCE LISTING NUMBER 20.106 — Subrecipient Agreements Criteria In accordance with 2 CFR § 200.332(a) of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), pass-through entities are required to "clearly identify to the subrecipient" certain information and requirements at the time of subaward, including the Federal award identification, all compliance requirements, and any additional terms and conditions imposed by the pass-through entity. Condition During our audit of the airport improvement program grant awarded to the Town, we noted that the Town did not execute a formal subrecipient agreement with Fishers Island Ferry District, to whom federal funds were passed through during the audit period. Specifically, no written agreement was in place outlining the subrecipient's responsibilities, applicable compliance requirements, or the terms and conditions of the award. Cause The Town did not have procedures in place to ensure that subrecipient agreements are issued for this program. Effect Without a formal subrecipient agreement, the entity increased the risk that the subrecipient may not fully understand or comply with federal award requirements. This could result in noncompliance with federal regulations, potential misuse of funds, and questioned costs. Additionally, the entity is not in full compliance with Uniform Guidance. Questioned Costs None Recommendation We recommend that the Town develop and implement procedures to ensure that formal written subrecipient agreements are executed prior to the disbursement of federal funds. These agreements should contain all elements required by 2 CFR § 200.332(a), including the identification of the federal award, applicable compliance requirements, and any additional terms and conditions. Views of Responsible Officials The Town agrees with this finding. The absence of subrecipient agreements for the airport improvement program was an oversight. Procedures have since been put in place to ensure that formal written subrecipient agreements are executed prior to the disbursement of federal funds. -9- TOWN OF SOUTHOLD, NEW YORK SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ended December 31, 2024 2024-002 AIRPORT IMPROVEMENT PROGRAM — FEDERAL ASSISTANCE LISTING NUMBER 20.106 — Subrecipient Agreements Criteria In accordance with 2 CFR § 200.332(a) of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), pass-through entities are required to "clearly identify to the subrecipient" certain information and requirements at the time of subaward, including the Federal award identification, all compliance requirements, and any additional terms and conditions imposed by the pass-through entity. Condition During our audit of the airport improvement program grant awarded to the Town, we noted that the Town did not execute a formal subrecipient agreement with Fishers Island Ferry District, to whom federal funds were passed through during the audit period. Specifically, no written agreement was in place outlining the subrecipient's responsibilities, applicable compliance requirements, or the terms and conditions of the award. Cause The Town did not have procedures in place to ensure that subrecipient agreements are issued for this program. Effect Without a formal subrecipient agreement, the entity increased the risk that the subrecipient may not fully understand or comply with federal award requirements. This could result in noncompliance with federal regulations, potential misuse of funds, and questioned costs. Additionally, the entity is not in full compliance with Uniform Guidance. Questioned Costs None Recommendation We recommend that the Town develop and implement procedures to ensure that formal written subrecipient agreements are executed prior to the disbursement of federal funds. These agreements should contain all elements required by 2 CFR § 200.332(a), including the identification of the federal award, applicable compliance requirements, and any additional terms and conditions. Views of Responsible Officials The Town agrees with this finding. The absence of subrecipient agreements for the airport improvement program was an oversight. Procedures have since been put in place to ensure that formal written subrecipient agreements are executed prior to the disbursement of federal funds. -10-