HomeMy WebLinkAbout1999
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TOWN OF SOUTHOLD
SINGLE AUDIT REPORTS
. December 31, 1999
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RECEIVED
. APR
6 2001
Southold Town Clerk
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TABLE OF CONTENTS
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. Independent Auditors' Report 1-2
GENERAL PURPOSE FINANCIAL STATEMENTS
. Combined Balance Sheet
All Fund Types, Account Groups and Discretely
Presented Component Units.................................................................................. 3
Combined Statement of Revenues, Expenditures and Changes in Fund Balances
All Govemmental Fund Types and Discretely Presented Component Units............ 4
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Combined Statement of Revenues, Expenditures, and
Changes in Fund Balances-Budget and Actual:
General Fund.................................................................................................... 5
. Special Revenue Funds.................................................................................... 6
Notes to Financial Statements.................................................................................... 7-24
COMBINING INDIVIDUAL FUND STATEMENTS AND SCHEDULES
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Special Revenue Funds:
Combining Balance Sheet.............................................................................. 25
Combining Statement of Revenues, Expenditures and
. Changes in Fund Balance ........................................................................... 26
Special Districts - Special Revenue Funds:
Combining Balance Sheet.............................................................................. 27
. Combining Statement of Revenues, Expenditures and
Changes in Fund Balance ........................................................................... 28
Fiduciary Funds:
Combining Balance Sheet.............................................................................. 29
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Discretely Presented Component Units:
Combining Balance Sheet.............................................................................. 30
Combining Statement of Revenues, Expenditures and
. Changes in Fund Balance ........................................................................... 31
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TABLE OF CONTENTS
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OTHER REPORTS
Schedule of Expenditures of Federal Awards............................................................. 32
. Notes to Schedule of Expenditures of Federal Awards .............................................. 33
Report on Compliance and on Internal Control Over
Financial Reporting Based on an Audit of Financial
Statements Performed in Accordance with Government
Auditing Standards..................................................................................................... 34-35
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Report on Compliance with Requirements Applicable
To Each Major Program and Internal Control Over
Compliance in Accordance with OMB Circular A-133................................................. 36-37
. Schedule of Findings and Questioned Costs.............................................................. 38-41
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ALBRECHT, VIGGIANO, ZURECK
& COMPANY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
. 25 SUFFOLK COURT
HAUPPAUGE. NY 11788
(631) 434-9500
. INDEPENDENT AUDITORS' REPORT
Town Board
. Town of Southold
Southold, New York
We have audited the accompanying general purpose financial statements of the Town of
Southold, New York as of and for the year ended December 31, 1999 as listed in the table
. of contents. These general purpose financial statements are the responsibility of the Town
of Southold, New York management. Our responsibility is to express an opinion on these
general purpose financial statements based on our audit.
Except as discussed in the following paragraph, we conducted our audit in accordance with
. generally accepted auditing standards and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the general purpose financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the general purpose financial statements. An audit also
. includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
The financial statements supporting the financial activities 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. Those
financial activities are included in the component unit column and represent 100% of the
assets and revenues, respectively, of the discretely presented component unit's column.
. In our opinion, except for the effects of such adjustments, if any, as might have been
determined to be necessary had the unaudited component units mentioned above, been
audited, or had we been able to satisfy ourselves as to those financial activities by other
auditing procedures, the general purpose financial statements referred to above present
fairly, in all material respects, the financial position of the Town of Southold, as of
. December 31, 1999, and the results of its operations for the year then ended in conformity
with generally accepted accounting principles.
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Our audit was conducted for the purposes of forming an opinion on the general purpose
financial statements taken as a whole. The combining individual fund statements and
schedules listed in the table of contents is presented for purposes of additional analysis and
is not a required part of the general purpose financial statements of the Town of Southold,
New York. Such information, except for the information pertaining to the Town of
Southold's discretely presented component units on page 33 and 34 on which we express
no opinion, has been subjected to the auditing procedures applied in the audit of the
general purpose financial statements and, in our opinion, is fairly stated in all material
respects in relation to the general purpose financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report dated
May 17, 2000 on our consideration of the Town of Southold, New York internal control over
financial reporting and our tests of its compliance with certain provisions of laws,
regulations, contracts and grants.
Our audit was performed for the purpose of forming an opinion on the general purpose
financial statements, taken as a whole. The accompanying schedule of expenditures of
federal awards is presented for purposes of additional analysis as required by U.S. Office
Management and Budget Circular A-133, Audits of States, Local Governments, and Non-
Profit Organizations, and is not a required part of the general purpose financial statements
of the Town of Southold, New York. Such information has been subjected to the auditing
procedures applied in the audit of the general purpose financial statements and, in our
. opinion, is fairly stated, in all material respects, in relation to the general purpose financial
statements taken as a whole.
0Jj,.....M V' - -Z~ y ~ "P.c..
. . .'11'---, .
Hauppauge, New York
May 17, 2000
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GENERAL PURPOSE FINANCIAL STATEMENTS
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TOWN OF SOUTH OLD
COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES
. IN FUND BALANCE - BUDGET AND ACTUAL
GENERAL FUND
Year ended December 31, 1999
Variance
Favorable
. Budget Actual (Unfavorable)
REVENUES
Real Property Taxes $ 9,433,481 $ 9,433,481
Other Real Property Tax Items 35,470 45,256 $ 9,786
Non-Property Tax Items 250,000 287,344 37,344
Departmental Income 307,288 316,388 9,100
. Intergovernmental Charges 57,500 148,783 91,283
Use of Money and Property 528,982 557,134 28,152
Licenses and Permits 149,800 162,543 12,743
Fines and Forfeitures 102,000 91,306 (10,694)
Sale of Property and Compensation for Loss 25,712 32,552 6,840
. Miscellaneous Local Sources 211,360 95,657 (115,703)
State Aid 610,997 1,072,070 461,073
Federal Aid 161,405 127,840 (33,565)
Total Revenues 11 ,873,995 12,370,354 496,359
EXPENDITURES
. General Government Support 2,843,213 2,614,425 228,788
Public Safety 4,894,116 4,697,762 196,354
Public Health 43,100 40,548 2,552
Transportation 363,240 310,491 52,749
Economic Assistance and Opportunity 667,628 642,490 25,138
. Culture and Recreation 529,684 464,101 65,583
Home and Community Services 214,375 181.047 33,328
Employee Benefits 2,327,352 2,023,322 304,030
Debt Service - Principal and Interest 1,297,050 1,180,779 116,271
Total Expenditures 13,179,758 12,154,965 1,024,793
. Excess (Deficiency) of Revenues
Over Expenditures (1,305,763) 215,389 1,521,152
Other Financing Sources (Uses)
Operating Transfers In 881,151 842,681 (38,470)
. Operating Transfers Out (870,549) (835,227) 35,322
Total Other Financing Sources (Uses) 10,602 7,454 (3,148)
Excess (Deficiency) of Revenues and Other
Sources Over Expenditures and Other Uses $ (1,295,161) 222,843 $ 1,518,004
. Fund Balance at Beginning of Year 3,430,798
Fund Balance at End of Year $ 3,653.641
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See notes to the financial statements.
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TOWN OF SOUTH OLD
COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES
. IN FUND BALANCES - BUDGET AND ACTUAL
SPECIAL REVENUE FUNDS
Year ended December 31, 1999
Variance
Favorable
. Budget Actual (Unfavorable)
REVENUES
Real Property Taxes $ 4,508,450 $ 4,499,783 $ (8,667)
Other Real Property Tax Items 1,300 1,309 9
Non-Property Tax Items 122,000 140,881 18,881
Departmental Income 1,508,500 1,613.316 104,816
. Intergovernmental Charges 46,500 48,800 2,300
Use of Money and Property 151,400 176,402 25,002
Licenses and Permits 145,925 130,209 (15,716)
Sale of Property and Compensation for Loss 109,500 134,684 25,184
Miscellaneous Local Sources 11 ,000 17,925 6,925
. Interfund Revenues 9,250 9.250
State Aid 460,268 402,758 (57,510)
Federal Aid 66,199 66,199
Total Revenues 7,064,843 7,241,516 176,673
. EXPENDITURES
General Government Support 55,951 23,109 32,842
Public Safety 625,928 585,926 40.002
Public Health 5,750 5,477 273
Transportation 2,768,139 2,522,866 245,273
Home and Community Services 2,668,472 2,457,225 211,247
. Employee Benefits 438,216 340,368 97,848
Debt Service - Principal and Interest 746,033 434,190 311,843
Total Expenditures 7,308,489 6,369,161 939.328
Excess (Deficiency) of Revenues
. Over Expenditures (243,646) 872,355 1,116,001
Other Financing Sources (Uses)
Operating Transfers In 40,000 40,000
Operating Transfers Out (455,055) (422,956) 32,099
. Total Other Financing Sources (Uses) (455,055) (382,956) 72,099
Excess (Deficiency) of Revenues and Other
Sources Over Expenditures and Other Uses $ (698,701 ) 489,399 $ 1,188,100
.
Fund Balance at Beginning of Year 1,781,498
Fund Balance at End of Year $ 2,270,897
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See notes to the financial statements.
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TOWN OF SOUTH OLD
NOTES TO FINANCIAL STATEMENTS
. December 31, 1999
A. Summary of Significant Accounting Policies
The financial statements of the Town of Southold have been prepared in conformity with
generally accepted accounting principles (GAAP) as applied to govemment units. The
. Governmental Accounting Standards Board (GASB) is the accepted standard setting body
for establishing governmental accounting and financial reporting principles. The more
significant of the government's accounting policies are described below.
1. Financial Reporting Entity
. The Town of Southold, which was established in 1640, is governed by its Charter, the
Local Municipal Law and other general laws of the State of New York and various local
laws. The Town Board is the legislative body responsible for overall operations, the
Supervisor serves as Chief Executive Officer and as Chief Fiscal Officer.
Basic services provided included Public Safety, Health, Transportation, Economic
. Assistance and Opportunity, Culture and Recreation, and Home and Community
Services. All governmental activities and functions performed for the Town are its direct
responsibility. No other governmental organizations have been included or excluded
from the reporting entity.
. The financial reporting entity consists of (a) the primary government which is the Town
of Southold, (b) organizations for which the primary government is financially
accountable and (c) other organizations for which the nature and significance of their
relationship with the primary government are such that exclusion would cause the
reporting entity's financial statements to be misleading or incomplete as set forth in
GASB Statement 14.
.
The decision to include a potential component unit in the Town's reporting entity is
based on several criteria set forth in GASB 14 including legal standing, fiscal
dependency, and financial accountability. Based on the application of these criteria,
the following is a brief review of certain entities considered in determining the Town of
. Southold's reporting entity.
Certain special districts of the Town of Southold provide sanitation, ferry, and park
services to residents and businesses within the districts. These special districts are
organized under New York State Town law and have separately elected boards. Long-
term debt backed by the full faith and credit of the Town and other financial matters
. result in a fiscal interdependency with the Town. Accordingly, these special districts
have been determined to be component units of the Town of Southold and are
presented discretely in a separate column in the combined financial statements to
emphasize that they are legally separate from the primary government. These districts
include the following:
. The Fishers Island Ferry District, established in 1947
Orient Mosquito District, established in 1916
Fishers Island Garbage and Refuse District, established in 1952
Cutchogue-New Suffolk Park District, established in 1953
Orient-East Marion Park District, established in 1969
. Southold Park District, established in 1907
Mattituck Park District, established in 1941
. -8-
TOWN OF SOUTH OLD
NOTES TO FINANCIAL STATEMENTS
. December 31, 1999
A. Summary of Significant Accounting Policies (continued)
1. Financial Reporting Entity (continued)
. Complete financial statements of these component units can be obtained from their
respective administrative offices:
Orient Mosquito District Fishers Island Garbage
Main Road & Refuse District
. Orient, NY 11957 Fishers Island, NY 06390
Cutchogue-New Suffolk Orient-East Marion
Park District Park District
P.O. Box 311 Route 25
. Cutchogue, NY 11935 Orient, NY 11957
Southold Park District Mattituck Park District
P.O. Box 959 P.O. Box 1413
South old ,NY 11971 Mattituck, NY 11952
. Fishers Island Ferry District
Main Street
Southold, NY 11971
. 2. Fund Accounting
The Town of Southold uses funds and account groups to report on its financial position
and the results of its operations. Fund accounting is designed to demonstrate legal
compliance and to aid financial 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. An
account group, on the other hand, is a financial reporting device designed to provide
accountability for certain assets and liabilities that are not recorded in the funds
because they do not directly affect net expendable available financial resources.
.
The Town records its transactions in the fund types and account groups described
below.
Fund Categories
. Governmental Funds - Governmental funds are those through which most
governmental functions are financed. The acquisition, use and balance of
expendable financial resources and the related liabilities are accounted for through
governmental funds. The measurement focus of the governmental funds is upon
. determination of financial position and changes in financial position. The following
are the Town's governmental fund types.
. -9-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
. December 31, 1999
A. ~ummary of Significant Accounting Policies (continued)
2. Fund AccountinQ (continued)
. Fund Categories (continued)
General Fund - the principal operating fund which includes all operations not
required to be recorded in other funds.
Special Revenue Funds - used to account for the proceeds of specific revenue
. sources that are legally restricted to expenditures for specific purposes. The
following Special Revenue Funds are utilized:
Highway Funds - To maintain and operate highways.
General Fund Part Town - To provide general services outside the Village of
. Greenport.
Special Grant Fund - Segregate and account for projects funded by Community
Development revenue.
Special District Funds - To provide special services to areas that encompass
. less than the whole town.
Capital Projects Fund - used to account for financial resources to be used for the
acquisition or construction of major capital facilities (other than those financed by
special assessment funds and trust funds).
. Fiduciary Funds - used to account for assets held by the local government in a
trustee or custodial capacity:
Trust and Agency Funds - used to account for money received and held in the
capacity of trustee, custodian or agent. These include expendable trusts, non
. expendable trusts, and agency funds.
Account Groups
Account Groups are used to establish accounting control and accountability for
general fixed assets and general long-term debt. The two account groups are not
. "funds". They are concerned with measurement of financial position and not results of
operations.
The General Fixed Assets Account Group - used to account for land, buildings,
improvements other than buildings, and equipment utilized for general government
purposes, except those accounted for in proprietary funds.
. The General Long-Term Debt Account Group - used to account for all long-term
debt except that accounted for in proprietary and special assessment funds.
.
.
-10-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
. December 31, 1999
A. Summary of Significant Accounting Policies (continued)
3. Basis of Accounting/Measurement Focus
. Basis of accounting refers to when revenues and expenditures and the related assets
and liabilities are recognized in the accounts and reported in the financial statements.
Basis of accounting relates to the timing of the measurements made, regardless of the
measurement focus. Measurement focus is the determination of what is measured, I.e.
. expenditures.
Modified Accrual Basis - All Governmental Funds and Expendable Trust Funds are
accounted for using the modified accrual basis of accounting.
Under this basis of accounting, revenues are recorded when measurable and available.
. Available means collectible within the current period or soon enough thereafter to be
used to pay liabilities of the current period.
Material revenues that are accrued include real property taxes, state and federal aid,
sales tax and certain user charges. If expenditures are the prime factor for determining
. eligibility, revenues from federal and state grants are accrued when the expenditure is
made.
Expenditures are recorded when incurred except that:
. Expenditures for prepaid expenses and inventory-type items are recognized at the
time of use.
Principal and Interest on indebtedness are not recognized as an expenditure until
due.
. Compensated absences, such as vacations and sick leave, which vests or
accumulates, are charged as an expenditure when paid.
Account Groups - General fixed assets are recorded at actual or estimated cost or, in
. the case of gifts and contributions, at the fair market value at the time received. No
provision for depreciation is made. General long-term debt liabilities are recorded at the
par value of the principal amount. No liability is recorded for interest payable at
maturity.
4. Encumbrances
.
Encumbrance accounting, under which purchase orders, contracts and other
commitments for the expenditure of monies are recorded for budgetary control
purposes to reserve that portion of the applicable appropriations is employed in all
Governmental funds. Encumbrances are reported as reservations of fund balances
. since they do not constitute expenditures or liabilities. Expenditures for such
commitments are recorded in the period in which the liability is incurred.
.
-11-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
. December 31, 1999
A. SummarY of Significant Accounting Policies (continued)
5. Assets. Liabilities and Fund Equity
. Receivables
Receivables include amounts due from Federal, State, and other governments and
individuals for services provided by the Town. Receivables are recorded and revenues
are recorded as earned or as specific program expenditures are incurred.
.
Inventory - Materials and Supplies
Inventory in the General Fund is valued at cost, using weighted average cost method.
Inventory in these funds is accounted for under the consumption method.
.
ProDerty. Plant and EquiDment - General
Fixed assets purchased for general governmental purposes are recorded as
expenditures in the governmental funds and are capitalized at costs (or estimated
. historical costs for assets purchased prior to 1976) in the General Fixed Assets Account
Group. Contributed fixed assets are recorded at fair market value at the date received.
Fixed assets consisting of certain infrastructure type improvements other than buildings,
including roads, bridges, curbs and gutters, streets and sidewalks, drainage and lighting
. systems, have not been capitalized. Such assets normally are immovable and of value
only to the Town. Therefore, the purposes of stewardship for capital expenditures can
be satisfied without recording these assets. No depreciation has been provided on
general fixed assets, nor has interest on general fixed assets construction in progress
been capitalized.
. Deferred Revenue
Deferred revenues are those where asset recognition criteria have been met, but which
revenue recognition criteria have not been met. Such amounts have been deemed to
be "measurable" but not "available" pursuant to GAAP.
.
Long-Term Obligations
Long-term debt is recognized as a liability of a governmental fund when due. For other
long-term obligations, only that portion expected to be financed from expendable
. available financial resources is reported as a fund liability of a governmental fund. The
remaining portion of such obligations is reported in the General Long-Term Debt
Account Group.
.
.
-12-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
. December 31, 1999
A. Summary of Significant Accounting Policies (continued)
5. Assets. Liabilities and Fund Equity (continued)
.
Fund Equity - Reservations and Designations
Portions of fund equity are segregated for future use and therefore not available for
future appropriation or expenditure. Amounts reserved for encumbrances, inventory,
. insurance claims, represent portions of fund equity which are required to be segregated
in accordance with State law or GAAP. Designations of fund balances in governmental
funds indicate the utilization of these resources in the subsequent year's budget or
tentative plans for future use.
. 6. Revenue and Expenditures
ProDerty Taxes
Real property taxes for the ensuing year are levied annually and become a lien on
December 1. Taxes are collected during the period December 1 to May 31, with the first
. half due January 10 and the second half due May 31. Tax payments made during the
period December 1 to December 31 are recognized as revenue in the subsequent year.
Taxes for county purposes (apportioned to the area of the county inside the Town of
Southold) are levied together with taxes for town and special district purposes as a
. single bill. The towns and special districts receive the full amount of their levies
annually out of the first amounts collected on the combined bills. The county assumes
enforcement responsibility for all taxes levied in the towns (and for unpaid county taxes
in the Town).
. Unpaid village taxes and school district taxes are turned over to the county for
enforcement. Any such taxes remaining unpaid at year-end are relieved as county
taxes in the subsequent year.
Interfund Transactions
. Interfund Revenues
Interfund revenues, quasi-external transactions, in the operating funds represent
amounts charged for services or facilities provided by operating funds. The amounts
paid by the fund receiving the benefit of the service or facilities are reflected as an
. expenditure of that fund.
Operating Transfers
Operating transfers represent payments to the Risk Retention Fund and Capital
. Projects Fund from other funds for their appropriate share of the risk retention and
capital projects.
.
-13-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
. December 31, 1999
A. Summary of Significant Accounting Policies (continued)
6. Revenue and Expenditures (continued)
. Insurance
The Town assumes the liability for most risk including, but not limited to, property
damage and personal injury liability. Judgments and claims are recorded when it is
probable that an asset has been impaired or a liability has been incurred and the
. amount of loss can be reasonably estimated.
Compensated Absences
Vested or accumulated vacation or sick leave of governmental funds that is expected to
. be liquidated with expendable available financial resources is reported as an
expenditure and a fund liability of the respective fund that will pay it. Amounts of vested
or accumulated vacation or sick leave of governmental funds that are not expected to
be liquidated with expendable available financial resources are reported in the General
Long-Term Debt Account Group. No expenditure is reported for these amounts. In
. accordance with the provisions of Statement No. 16 of the Governmental Accounting
Standards Board, Accounting for Compensated Absences, no liability is recorded for
non-vesting accumulating rights to receive sick pay benefits.
Total Columns on the General Purpose Financial Statements
. Total columns on the general-purpose financial statements are captioned
"Memorandum Only" to indicate that they are presented only to facilitate financial
analysis. Data in these columns do not present financial position, results of operations
or changes in financial position in conformity with generally accepted accounting
. principles, nor is such data comparable to a consolidation. Interfund eliminations have
not been made in the aggregation of the data.
B. Stewardship. Compliance. Accountability
Budgetary Data
.
1. Budget Basis of Accounting
Budgets are adopted annually on a basis consistent with generally accepted
accounting principles. Appropriations authorized for the current year are increased
. by the amount of encumbrances carried forward from the prior year.
Budgetary controls for special revenue funds are established in accordance with the
applicable grant agreement, which may cover a period other than the Town's fiscal
year. Appropriate budgetary adjustments have been made to reflect these grant
. agreements during the Town's fiscal year.
. -14-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
. December 31, 1999
B. Stewardship. Compliance. Accountability (continued)
Budgetary Data (continued)
. 2. Budget Policies - The budget policies are as follows:
a. No later than October 1, the Supervisor submits a tentative budget to the Town
Board for the upcoming fiscal year. The tentative budget includes the proposed
means of financing for all funds.
. b. After public hearings are conducted to obtain taxpayer comments, no later than
November 20, the Town Board adopts the budget.
c. All modifications of the budget must be approved by the Town Board. However,
the Supervisor is authorized to transfer certain budgeted amounts within
departments.
.
3. Material Violations of Finance Related Activities
There are no material violations of finance-related provisions.
. 4. Fund Balances
1. Certain funds of the Town apply to areas less than the entire Town. These fund
balances and the General Fund at December 31, 1999 are allocated as follows:
. General Fund (Townwide) $ 3,653,641
Special Revenue Funds
General Fund Part Town 511,371
Highway Fund -- Townwide 435,297
Highway Fund -- Part Town 237,741
Special Grant 20,000
. Special District Funds
Shorecrest Road Improvement 207
Lands End Road Improvement 596
East-West Fire Protection 71,300
South old Wastewater Disposal 252,765
. Fishers Island Sewer 48,219
Solid Waste Management 693,401
Discretely Presented Component Units
Fishers Island Refuse & Garbage 441,999
Fishers Island Ferry 589,222
. Cutchogue-New Suffolk Park 47,989
South old Park 12,172
Orient-East Marion Park 8,288
Mattituck Park 27,517
Orient Mosquito 11.204
. Total $ 7.062.929
. -15-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
. December 31, 1999
C. Detail Notes on all Funds and Account Groups
1. Assets
. Cash and Investments
Cash consists of funds deposited in demand accounts, time deposit accounts and
certificates of deposit with maturities of less than three months.
. Town investment policies are governed by state statutes. In addition, the Town has its
own written investment policy. Town monies are deposited in FDIC insured commercial
banks or trust companies located within the state. The Supervisor is authorized to use
demand accounts and certificates of deposits. Permissible investments include
obligations of the U.S. Treasury and U.S. Agencies, repurchase agreements,
. obligations of New York State or its localities, and investments made by the
Cooperative Liquid Asset Security System (CLASS). CLASS is a cooperative
investment plan consisting of U.S. Treasury obligations and repurchase agreements
relating to treasury obligations.
. The written investment policy requires that repurchase agreements be purchased from
banks located within the State and that underlying securities must be obligations of the
federal government. Underlying securities must have a market value of at least 102
percent of the cost of the repurchase agreemel]t.
. Collateral is required for demand deposits and certificates of deposit at 102 percent of
all deposits not covered by federal deposit insurance. Obligations that may be pledged
as collateral are obligations of the United States and its agencies and obligations of the
State and its municipalities and school districts.
DeDosits - All deposits, including certificates of deposits, are carried at cost plus
. accrued interest. Deposits at year-end were entirely covered by federal depository
insurance or by collateral held by the Town's custodial banks in the Town's name.
At December 31, 1999, the cash in banks was $16,734,564 and collateral held against
cash in banks was $26,094,579 consisting of FDIC insurance and/or securities held in
. the name of the Town of Southold.
Restricted Cash
Restricted Cash consists of assessments collected by the Receiver of Taxes not yet
. remitted to the appropriate governmental entity.
.
.
-16-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
. December 31, 1999
C. Detail Notes on all Funds and Account Groups (continued)
2. Fixed Assets
. A summary of changes within the General Fixed Assets Account Group for the Town of
Southold for the year ended December 31, 1999 is as follows:
Balance Balance
1/1/99 Additions Deletions 12/31/99
. Primary Government
Land $ 8.352,435 $1,821.244 $ 10.173.679
Building and improvements 2,432,855 72,500 2,505,355
Machinery and equipment 9.976.529 749.963 $ 616.013 10.110,479
Total $j!0.761.819 $2.643.707 $ 616.013 $ 22.789.513
. Balance Balance
1/1/99 Additions Deletions 12/31/99
Component Units:
Land $ 41,717 $ 41,717
Building and improvements 4,348,299 $ 442,820 4,791,119
Machinery and equipment 3.521.529 156.001 0 3.677.530
. Total $ 7.911.545 $ 598.821 $ o ~ 8.510.366
3. Interfund Receivables and Payables
Interfund receivables and payables for the primary government at December 31,1999
. were as follows:
Interfund Interfund
Fund Receivables Payables
General Fund Whole Town $ 39,387 $ 4,835,042
. General Fund Part Town 272,483
Highway Fund Whole Town 998,770
Highway Fund Part Town 1,861,696
Special Grant 25,000
Shorecrest Road Imp. District 175
. Lands End Road Imp. District 590
East-West Fire Protection District 251,126
Solid Waste Management District 1,226,961 24,400
Wastewater Disposal District 2,744
Fishers Island Sewer District 8,528
. Capital Projects 265,245 7,359
Trust & Agency 1.389 85.763
Total $ 4.953.329 $ 4,953.329
.
.
-17-
TOWN OF SOUTH OLD
NOTES TO FINANCIAL STATEMENTS
. December 31, 1999
C. Detail Notes on all Funds and Account Groups (continued)
4. Due TolFrom Primary Government and Component Units
. Amount Amount
Receivable Payable
Component Units:
Fishers Island Refuse & Garbage District $ 470,470
Fishers Island Ferry District 357,146
. Orient Mosquito District 50,000
Cutchogue-New Suffolk Park District 92,750
Southold Park District 215,750
Orient-East Marion Park District 22,000
Mattituck Park District 238,610
. Primary Government
General Fund $1.446.726
Totals $ 1.446.726 $1.446.726
5. Indebtedness
. Short-Term Debt
Liabilities for bond anticipation notes (BAN's) are generally accounted for in the capital
projects fund. The notes or renewal thereof may not extend more than two years
beyond the original date of issue unless a portion is redeemed within two years and
. within each 12 month period thereafter.
State law requires that BAN's issued for capital purposes be converted to long term
obligations within five years after the original issue date. However, BAN's issued for
assessable improvement projects may be renewed for periods equivalent to the
. maximum life of the permanent financing, provided that stipulated annual reductions of
principal are made.
To Be Redeemed 2000
Interest Budget
Description Amount Rate Appropriations Bonds
. Various Purposes $ 670,000 3.42% $ 190,000 $ 480,000
Various Purposes 585,000 3.74% 174,000 411,000
Landfill Closure 936.048 .00% 641.175 294.873
Total $2.191.048 $ 1.005.175 $ 1.185.873
. Long-Term Debt
a) At December 31, 1999 the total outstanding indebtedness of the Town, excluding
the above obligations aggregated $9,620,000. This entire amount was subject to
the constitutional debt limit and represented approximately 9.02% of its debt limit.
.
. -18-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
.
C. Detail Notes on all Funds and Account Groups (continued)
5. Indebtedness (continued)
. Long-Term Debt (continued)
b) Serial Bonds - The Town borrows money in order to acquire land or equipment or
construct buildings and improvements. This enables the cost of these capital assets
to be borne by the present and future taxpayers receiving the benefit of the capital
. assets. These long term liabilities, which are full faith and credit debt of the local
government, are recorded in the General Long-Term Debt Account Group. The
provision to be made in future budgets for capital indebtedness represents the
amount exclusive of interest, authorized to be collected in future years from
taxpayers and others for liquidation of the long-term liabilities.
. c) Other Long-Term Debt - In addition to the above long-term debt, the local
government had the following non-current liabilities:
. Due to New York State Department of Environmental Conservation
. (NYSDEC) - Represents the non-current portion of the liability due under the
settlement at the Cutchogue landfill were dropped.
. Compensated Absences - Represents the value of earned and unused
portion of the liability for compensated absences.
. d) Summary Long-Term Debt - The following is a summary of long-term liabilities
outstanding at December 31, 1999 by fund type and account group:
General Discretely
Long Term Presented
. Debt Component
Lia bilitv Account Group Unit Total
Serial Bonds $ 9,431,045 $ 188,955 $ 9,620,000
Due to NYSDEC 130,000 130,000
. Compensated Absences 2,242,735 2,242,735
Judgments and Claims 2.000.000 2.000.000
Total Long-Term Debt
Account Group $ 13.803.780 $ 188.955 $ 13.992.735
.
.
. -19-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
. C. Detail Notes on all Funds and Account Groups (continued)
5. Indebtedness (continued)
Long-Term Debt (continued)
.
e) The following is a summary of changes in the long term liabilities for the period
ended December 31, 1999:
Bonds and Due to Compensated
. Notes NYSDEC Absences
Payable at beginning of
Fiscal Year $ 8,116,045 $ 195,000 $ 2,145,397
Additions 1,900,000 97,338
Deletions 585,000 65,000
. Payable at end of
Fiscal Year $ 9.431.045 $ 130.000 $ 2.242.735
Additions and deletions to compensated absences are shown net since it is
impracticable to determine these amounts separately.
.
f) The following table summarizes the Town's future debt service requirements for
Serial Bonds as of December 31, 1999:
Year Ending Principal Interest
.
2000 $ 665,000 $ 510,937
2001 695,000 470,493
2002 645,000 430,118
2003 665,000 391,019
. 2004 675,000 351,053
2005-2009 2,805,000 1,242,323
2010-2014 2,310,000 557,856
2015-2019 1,160,000 121,235
. Totals $ 9,620.000 $ 4,075.034
g) The following table summarizes the Town's future payment requirements for the
stipulation of settlement with the NYS Dept. of Environmental Conservation as of
December 31, 1999:
. Year Ending Amount
2000 $ 65,000
2001 65.000
. Total L 130.000
.
-20-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
. December 31, 1999
C. Detail Notes on all Funds and Account Groups (continued)
6. Retirement System
. Plan Descriotion
The Town participates in the New York Employee's Retirement System, the New York
State Policemen's and Firemen's Retirement System and the Public Employee's Group
Life Insurance Plan (Systems). These are cost-sharing multiple-employer retirement
. systems. The Systems provide retirement benefit as well as death and disability
benefits. Obligations of employers to contribute and benefits to employees are
governed by the New York State Retirement and Social Security Law (NYSRSSL). As
set forth in the NYSRSSL, the Comptroller of the State of New York (Comptroller)
serves as sole trustee and administrative head of the Systems. The Comptroller shall
adopt and may amend rules and regulations for the administration and transactions of
. the business of the Systems and for the custody and control of their funds. The
Systems issue a publicly available financial report that includes financial statements
and required supplementary information. That report may be obtained by writing the
New York State and Local Retirement System, Gov. Alfred E. Smith State Office
Building, Albany, N. Y. 12244.
.
Funding Policy
The Systems are noncontributory except for employees who joined the New York State
and Local Employees' Retirement System after July 27, 1976 who contribute 3% of
. their salary. Under the authority of the NYSRSSL, the Comptroller shall certify annually
the rates expressed as proportions of payroll of members, which shall be used in
computing the contributions required to be made by employers to the pension
accumulation fund.
. The Town of Southold is required to contribute at an actuarially determined rate. The
required contributions for the current year and two preceding years were as follows:
ERS PERS
. 1999 $ 24,343 $ 67,993
1998 $ 71,505 $ 68,060
1997 $ 84,275 $ 273,906
The Town's contributions made to the Systems were equal to 100% of the contributions
. required for each year.
.
.
-21-
TOWN OF SOUTH OLD
NOTES TO FINANCIAL STATEMENTS
. December 31, 1999
C. Detail Notes on all Funds and Account Groups (continued)
6. Retirement System (continued)
. Funding Policy (continued)
Since 1989, the Systems' billings have been based on Chapter 62 of the Laws of 1989
of the State of New York. This legislation requires participating employers to make
payments on a current basis, while amortizing existing unpaid amounts relating to the
. Systems' fiscal years ending March 31, 1988 and 1989 (which otherwise were to have
been paid on June 30, 1989 and 1990, respectively) over a 17-year period, with an
8.75% interest factor added. Local governments were given the option to prepay this
liability. The Town elected to make the full payment on December 15, 1993, by issuing
serial bonds to replace this debt.
.
Pursuant to Chapter 12 of the Laws of 1995 and Chapter 30 of the Laws of 1996, the
State Legislature authorized local governments to make available a retirement incentive
program with total costs of $32,300 plus interest, of which $8,445 was charged to
expenditures in the governmental funds in the current fiscal year. The cost of the
. programs are billed and paid over five years and began December 15, 1996 for Chapter
12 and December 15, 1997 for Chapter 30. Furthermore, another incentive was made
available pursuant to Chapter 47 of the Laws of 1998 with a total estimated cost of
$9,880 plus interest, and will be billed and paid over five years beginning December 15,
1999.
. 7. Post Retirement Benefits
In addition to providing pension benefits, the Town provides health insurance coverage
and survivor benefits for retired employees and their survivors. Substantially, all Town
. employees may become eligible for these benefits if they reach normal retirement age
while working for the Town. Health care benefits and survivors' benefits are provided
through either an insurance company or a self-funded plan whose premiums are based
on the benefits paid during the year. The Town recognizes the cost of providing benefits
by recording its share of insurance premiums or the actual benefits paid from the
General Fund as an expenditure in the year paid. During the year, $1,411,991 was
. paid on behalf of 67 retirees and 206 active employees and is recorded as expenditures
in the General Fund. The cost of providing benefits for retirees is not separable from
the cost of providing benefits for active employees.
.
.
.
-22-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
. December 31, 1999
C. Detail Notes on all Funds and Account Groups (continued)
8. Compensatory Absences
. Town employees are granted vacation and sick leave and earn compensatory
absences in varying amounts. In the event of termination or upon retirement, an
employee is entitled to payment for accumulated vacation and sick leave and unused
compensatory absences at various rates subject to certain maximum limitations.
. Estimated vacation and sick leave and compensatory absences accumulated by
governmental fund type employees have been recorded in the general long term
obligations account group.
Vested vacation and sick leave are recorded as a long-term liability in the general long
. term debt account group if payable from future financial resources, or as a fund liability
and expenditures if payable from current resources.
9. Deferred Compensation Plan
. In October 1997, the Governmental Accounting Standards Board issued Statement No.
32 Accounting and Financial Reporting for Internal Revenue Service Code Section 457
Deferred Compensation Plans. This statement established accounting and financial
reporting standards for Internal Revenue Service Code Section 457 deferred
compensation plans for state and local governments.
. On October 1, 1998, the Town of South old Deferred Compensation Committee created
a Trust and Custody agreement making Nationwide Trust Company F.S.B. and FMB
Trust Company N.A. the Trustees and Custodians of the Town of South old Deferred
Compensation Plan. Consequently, Statement No. 32 became effective for the Town's
. Deferred Compensation Plan as of October 1, 1998. Since the Town is no longer the
trustee of the plan, the plan no longer meets the criteria for inclusion in the Town's
financial statements. Therefore, effective October 1, 1998, the market value of the plan
assets are no longer displayed in the financial statements.
D. Commitments and Contingencies
.
There is a matter under discussion with the United States Coast Guard regarding the
reconstruction of the Brushes Creek Bridge. The Town believes it is at least reasonably
possible that there will be $1,000,000 of potential forced capital outlay to reconstruct the
bridge. This amount has been provided for in the General Long-Term debt account group.
.
The Town is self-insured for medical insurance only. The amount of claims outstanding at
December 31, 1999 is $182,700 and is reserved against fund balance in the General Fund.
.
. -23-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
. December 31, 1999
D. Commitments and Contingencies (continued)
1. Landfill Closure and Postclosure Care Costs
. The Town ceased accepting waste at it's Cutchogue landfill as of October 8, 1993. The
Town entered into a stipulation of settlement with the New York State Department of
Environmental Conservation in October of 1994 in which all charges of operational
violations at the Cutchogue landfill were dropped. Under the stipulation, the Town
agreed to close and place a final cover over the landfill and to pay a civil penalty of
. $650,000 over seven years. In addition to placement of the final cover on the landfill,
state and federal regulations presently require the Town to perform certain
maintenance and monitoring functions at the site for up to thirty years.
Actual costs associated with the placement of the final cover are estimated at
. $5,800,000. Financing for closure activities will be provided through a grant from the
New York State Department of Environmental Conservation up to the maximum of
$2,000,000 with the balance provided with a State subsidized loan through the New
York State Environmental Facilities Corporation. Costs associated with postclosure
care will be covered by charges to future landfill users and future tax revenue.
. 2. Litigation
The State of New York has commenced a lawsuit against the Town for unlawful
discharge of gasoline and petroleum products at the Town's Highway department on
. Peconic Lane. As of the date of this report, the likelihood of an unfavorable outcome is
uncertain, but is at least reasonably possible that cleanup costs and interest could total
up to $1,000,000.
Any amounts reserved on all lawsuits have been recorded in the General Long-Term
Debt account group and in the opinion of the Town's management and legal counsel,
. all other claims are expected to be resolved with no further anticipated reserves
considered necessary.
3. Lease Commitments and Leased Assets
. The Town leases property and equipment under operating leases. Total rental
expenditures on such leases for the fiscal year ended December 31, 1999 were
approximately $26,949. Future obligations over the primary terms of the Town's leases
as of December 31, 1999 are as follows:
. 2000 $ 50,156
2001 38,320
2002 13,554
2003 9,262
2004 & thereafter 3.425
. Total $ 114.717
.
-24-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
. December 31, 1999
E. Condensed Financial Statements for the Discretely Presented Component Units
The following represents condensed financial statements for the discretely presented
. component units as of and for the year ended December 31, 1999:
Condensed Balance Sheet
Assets and Other Debits Liabilities
Amounts
to be
. Due From Property Provided for Other Bonds and
Current Primary Building & Long~ Tenn Current Long-Term
Assets Government EaulDment Debt Liabilities liabilities
Fishers Island Ferry District $ 939,599 $ 357.146 $ 7,662.308 $ 188,955 $ 350,377 $ 188,955
Fishers Island Garbage Disbict 936,822 470,470 607.524 494,823
Cutchogue-New Suffolk Park Dis!. 140,739 92,750 145,100 92,750
Southold Park District 227,922 215,750 215,750
. Orient-East Marlon Park District 36,780 22,000 28.492
Mattituck Park District 277.128 238,610 95.434 249,611
Orient Mosquito District 61.204 SO.OOO 50 000
$ 2.620.194 $ 1.446.726 $ 8.510.366 $ 188 955 S 1 481 803 S 188 955
Condensed Statement of Revenues, Expenditures and Changes in Fund Balances
. Excess
(Deficiency)
EXDenditures of Revenues
Capital Debt and
Revenues Current Outlav Service EXDenditures
Fishers Island Ferry District $ 1,436,388 $ 1,137,793 $ 315,235 $ 44.994 $ (61.634)
. Fishers Island Garbage District 489,838 488,630 1,208
Cutchogue-New Suffolk Park Dis!. 82,571 49,476 11,328 21,767
Southold Park District 223.466 137,972 78,818 6,676
Orient-East Marlon Park District 16,999 21.261 (4.262)
Mattituck Park District 252,808 211,765 29,289 11,754
Orient Mosquito Disbict 53.778 52.026 1752
S 2.555.848 $ 2.098.923 S 434.670 S 44994 S (22 739)
.
F. Other
In the State Annual Update Document, the Road Improvement Districts are included in the
Highway Fund Whole Town; in the audit report, these funds are included as Special District
. Funds.
.
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. -29-
TOWN OF SOUTHOLD
FIDUCIARY FUNDS
. COMBINING BALANCE SHEET
December 31, 1999
Agency and Trust
. Fishers Island
Town Ferry District Totals
ASSETS
Cash and Investments $ 254,685 $ 15,882 $ 270,567
. Other Receivables 32,731 32,731
Due from Other Funds 1,389 1,389
Total Assets $ 256,074 $ 48,613 $ 304,687
. LIABILITIES AND FUND EQUITY
LIABILITIES
Due to Other Funds $ 38,617 $ 47,146 $ 85,763
Other Liabilities 113 113
. Deposits Held 217,344 1 ,467 218,811
Total Liabilities $ 256,074 $ 48,613 $ 304,687
.
.
.
.
.
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. . . . . .
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OTHER REPORTS
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. -32-
TOWN OF SOUTHOLD
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
. December 31, 1999
. Federal FUND
Federal Grantor/Pass CFDA BALANCE
Through Grantor/Program Title Number 1/1/99 Expenditures
U.S Department of Agriculture
Passed through Suffolk County:
. Cash-In-Lieu of Food Awards 10.550 $ -0- $ 33,099
U.S. Department of Agriculture
Natural Resource Conservation Service
Wildlife Habitat Incentive Program 10.914 $ -0- $996
. U.S Department of Health & Human Services
Passed through Suffolk County:
Nutrition 93.045 $ -0- $ 53,306
. U.S Department of HousinQ and Urban Development
Passed through Suffolk County:
Community Development Block Grant 14.218 $ -0- $ 66,199
U.S. Department of Justice
. U.S Department of Justice
Office of Community Oriented Policing Services
COPS FAST 16.710 $ -0- $ 40,439
Department of Transportation
. Federal Highway Administration
Passed through the State of New York
Scenic Byway Program pursuant to Section
1047 of the Intermodal Surface Transportation
Efficiency Act of 1991 20.205 $ -0- $ 30,800
. Total Expenditures of Federal Awards $ 224,839
.
. See accompanying note to schedule of expenditures of federal awards.
.
-33-
TOWN OF SOUTHOLD
NOTE TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
. December 31, 1999
Note A - Basis of Presentation
. The accompanying schedule of expenditures of federal awards includes the federal grant
activity of the Town of South old and is presented on the modified accrual basis of
accounting. The information in this schedule is presented in accordance with the
requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit
Organizations. Therefore, some amounts presented in this schedule may differ from
amounts presented in, or used in the preparation of, the basic financial statements.
.
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. .34-
ALBRECHT, VIGGIANO, ZURECK
. & COMPANY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
25 SUFFOLK COURT
HAUPPAUGE, NY 11788
(631) 434-9500
. REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER
FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS
PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Town Board
. Town of Southold
Southold, New York
We have audited the general purpose financial statements of the Town of Southold, New
York as of and for the year ended December 31, 1999, and have issued our report thereon
. dated May 17, 2000, which was qualified because all of the discretely presented component
units were not audited as of the report date. We conducted our audit in accordance with
generally accepted auditing standards and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of the
United States.
.
Compliance
As part of obtaining reasonable assurance about whether the Town of Southold, New
York's general purpose financial statements are free of material misstatement, we
. performed tests of its compliance with certain provisions of laws, regulations, contracts, and
grants, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. 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 that are required to be reported under Government Auditing Standards.
Internal Control Over Financial ReDorting
In planning and performing our audit, we considered the Town of Southold, New York's
internal control over financial reporting in order to determine our auditing procedures for the
. purpose of expressing our opinion on the general purpose financial statements and not to
provide assurance on the internal control over financial reporting. However, we noted
certain matters involving the internal control over financial reporting and its operation that
we consider to be reportable conditions. Reportable conditions involve matters coming to
our attention relating to significant deficiencies in the design or operation of the internal
. control over financial reporting that, in our judgment, could adversely affect the Town of
Southold, New York's ability to record, process, summarize, and report financial data
consistent with the assertions of management in the general purpose financial statements.
Reportable conditions are described in the accompanying schedule of findings and
questioned costs as item 99-1.
.
. -35-
A material weakness is a condition in which the design or operation of one or more of the
internal control components does not reduce to a relatively low level the risk that
. misstatements in amounts that would be material in relation to the general purpose financial
statements being audited may occur and not be detected within a timely period by
employees in the normal course of performing their assigned functions. Our consideration
of the internal control over financial reporting would not necessarily disclose all matters in
the internal control that might be reportable conditions and, accordingly, would not
necessarily disclose all reportable conditions that are also considered to be material
. weaknesses. However, we believe that none of the reportable conditions described above
is a material weakness.
This report is intended solely for the information of the Town Board, management, others
within the organization, and federal awarding agencies and pass-through entities and is not
. intended to be and should not be used by anyone other than those specified parties.
~ V~I?~I- ~,t:c-
.
Hauppauge, New York
May 17, 2000
.
.
.
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.
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. -36-
ALBRECHT, VIGGIANO, ZURECK
& COMPANY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
. 25 SUFFOLK COURT
HAUPPAUGE, NY 11788
(631) 434.9500
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO
EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER
. COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
Town Board
Town of South old
Southold, New York
. Compliance
We have audited the compliance of the Town of Southold, New York with types of
compliance requirements described in the U. S. Office of Management and Budget (OMB)
Circular A-133 Compliance Supplement that are applicable to each of its major federal
. programs for the year ended December 31, 1999. The Town of Southold, New York's
major federal programs are identified in the summary of auditor's results section of the
accompanying schedule of findings and questioned costs. Compliance with the
requirements of laws, regulations, contracts, and grants applicable to each of its major
federal programs is the responsibility of the Town of Southold, New York's management.
. Our responsibility is to express an opinion on the Town of Southold, New York's compliance
based on our audit.
We conducted our audit of compliance in accordance with generally accepted auditing
standards; the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States; and OMB Circular A-
. 133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards
and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable
assurance about whether noncompliance with the types of compliance requirements
referred to above that could have a direct and material effect on a major federal program
occurred. An audit includes examining, on a test basis, evidence about the Town of
. Southold, New York's compliance with those requirements and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion. Our audit does not provide a legal
determination of the Town of Southold, New York's compliance with those requirements.
. As described in item 99-2 in the accompanying schedule of findings and questioned costs,
the Town of South old did not comply with requirements regarding allowable costs/cost
principles that are applicable to its Community Development Block Grant Program.
Compliance with such requirements is necessary, in our opinion, for the Town of Southold,
New York to comply with requirements applicable to that program.
. In our opinion, except for the noncompliance described in the preceding paragraph, the
Town of Southold, New York complied, in all material respects, with the requirements
referred to above that are applicable to each of its major federal programs for the year
ended December 31, 1999.
.
.
-37-
Internal Controls Over Compliance
. The management of the Town of Southold, New York is responsible for establishing and
maintaining effective internal control over compliance with the requirements of laws,
regulations, contracts, and grants applicable to federal programs. In planning and
performing our audit, we considered the Town of Southold, New York's internal control over
compliance with requirements that could have a direct and material effect on a major
. federal program in order to determine our auditing procedures for the purpose of expressing
our opinion on compliance and to test and report on the internal control over compliance in
accordance with OMB Circular A-133.
We noted certain matters involving the internal control over compliance and its operations
that we consider to be a reportable condition. Reportable conditions involve matters
. coming to our attention relating to significant deficiencies in the design or operation of the
internal control over compliance that, in our judgment, could adversely affect the Town of
Southold, New York's ability to administer a major federal program in accordance with the
applicable requirements of laws, regulations, contracts, and grants. The reportable
conditions are described in the accompanying schedule of findings and questioned costs as
. item 99-2 and 99-3.
A material weakness is a condition in which the design or operation of one or more of the
internal control components does not reduce to a relatively low level the risk that
noncompliance with applicable laws, regulations, contracts, and grants that would be
. material in relation to a major federal program being audited may occur and not be detected
within a timely period by employees in the normal course of performing their assigned
functions. Our consideration of the internal control over compliance would not necessarily
disclose all matters in the internal control that might be reportable conditions, and
accordingly, would not necessarily disclose all reportable conditions that are also
. considered to be material weaknesses However, we believe none of the reportable
conditions described above is a material weakness.
This report is intended solely for the information of the Town Board, management, others
within the organization, and federal awarding agencies and pass-through entities and is not
. intended to be and should not be used by anyone other than those specified parties.
~ V~I 2-v-1--r G J"L 'J ?c.
. Hauppauge, New York
May 17, 2000
.
.
.
-38-
TOWN OF SOUTHOLD
. SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year ended December 31, 1999
SUMMARY OF AUDIT RESULTS
. 1. The auditor's report expresses a qualified opinion on the general purpose financial
statements of the Town of Southold due to the fact that all of the seven component units
of the Town of Southold that were discretely presented were not audited.
2. Two reportable conditions disclosed during the audit of the financial statements are
reported in the "REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER
. FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATMETNS
PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS".
None of the conditions are reported as a material weakness.
3. No instances of noncompliance material to the financial statements of the Town of
. South old were disclosed during the audit.
4. Two reportable conditions disclosed during the audit of the major federal award
programs are reported in the U REPORT ON COMPLIANCE WITH REQUIREMENTS
APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER
. COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133", The conditions are
not reported as material weaknesses.
5. The auditor's report on compliance for the Community Development Block Grant
Program expresses a qualified opinion; the report on the remaining programs are
. unqualified.
6. Audit findings relative to the major federal award programs for the Town of South old are
reported in this schedule.
. 7. The program tested as major program includes:
CFDA Number Name of Federal Prooram or Cluster
14.218 Community Development Block Grant Program
.
8. The threshold for distinguishing Types A and B programs was $300,000.
9. The Town of Southold was not determined to be a low-risk auditee.
.
.
.
-39-
TOWN OF SOUTHOLD
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
. Year ended December31, 1999
FINDINGS-FINANCIAL STATEMENTS AUDIT
REPORTABLE CONDITIONS
99-1 OFFICE OF THE TAX RECEIVER
.
Criteria
A good system of internal control should ensure proper segregation of duties so that
no one person is in charge of all accounting functions.
Condition
.
The Tax Receiver of the Town of South old signs refund checks that are reviewed and
processed by an independent employee in the department. The segragation of duties
control would be stronger if there was a dual signature requirement. The person who
processes the overpayment is independent of the person who issues the refund
. check to the taxpayer, however an additional employee should review and sign
before the issuance of a refund check to the taxpayer. The Office of the Receiver of
Taxes makes large deposits of tax payments without regular security.
Effect
Internal controls are not as strong as they could be without proper segregation of
. duties.
Recommendation
We recommend that the Town initiate a procedure to require dual signatures on all
checks issued by the Tax Receiver's Office to ensure that the same individual does
not perform each function.
.
FINDINGS AND QUESTIONED COSTS- MAJOR FEDERAL
AWARD PROGRAMS AUDIT
99-2 COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM- CFDA No. 14.218
.
Criteria
In accordance with the Davis Bacon Act, all laborers and mechanics employed by
contractors or subcontractors to work on construction contracts in excess of $2,000
. financed by Federal assistance funds must be paid wages not less than those
established for the locality of the project (prevailing wage rates) by the US
Department of Labor. All entities receiving Federal funds for such projects are
responsible for ensuring compliance with this requirement.
.
.
.
-40-
REVISED
TOWN OF SOUTHOLD
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
. Year ended December 31, 1999
FINDINGS AND QUESTIONED COSTS- MAJOR FEDERAL
AWARD PROGRAMS AUDIT
Condition
.
The Town of Southold obtains signed documentation from its vendors stating that
they are paying prevailing wage rates in accordance with the Department of Labor.
The Town relies on the County of Suffolk, New York for most of its compliance testing
relating to Davis Bacon. However, documentation for this may not be maintained at
. the Town. The Town has written procedures relating to Davis Bacon. It should be
noted that there were no contracts subject to Davis Bacon for the year under review.
Effect
. The possibility exists that documentation of Davis Bacon compliance would not be
available.
Recommendation
. We recommend that the Town of Southold properly document compliance with Davis-
Bacon Act including retaining all related documentation. This documentation should
include evidence of follow up site visits, wage rates and interviews with construction
workers. These requirements are included in the Town's procedures dated August
1998.
. Questioned Cost $ -0-
.
.
.
.
. -41-
REVISED
TOWN OF SOUTHOLD
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
. Year ended December 31, 1999
99-3 HOME IMPROVEMENT PROGRAM
Criteria
. It is the policy of the Town of South old and in compliance with Federal guidelines to
contract project delivery costs for the Communi~y Development Block Grant Program,
CFDA No. 14.218, for the Home Improvement Program.
Condition
.
During our audit of the claims from the North Fork Housing Alliance (NFHA), charged to
the Home Improvement program, we noted that only project delivery costs were
charged to the program and there were no benefits paid to qualified recipients.
. Effect
The grant agreement states that administrative costs be commensurate with services
rendered. The NFHA did not have adequate records to support this provision.
. Recommendation
We recommend that the NFHA properly document their services for the project delivery
costs related to the Home Improvement Program. This documentation should include
. the date of services, the qualified recipient benefited and the amount of time expended.
It should be noted that many of the direct costs relating to these administrative costs
began in 2000.
Questioned Cost ~ 5.1 t6.07
.
.
.
.