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1986
Ill TOI~ OF SOI. ITHOI,D Ab~IT REPORT DECEMBER 31, 1986 E. F. KALDOR, C.P.A., P.C. CERTIFIED PUBLIC ACCOUNTANT 162 GRIFFING AVENUE RIVERHEAO. NEW YORK 111~01 TELEPHONE E 16 - 727-7888 JUL 2 7 July ~0, 1987 Town Board Town of Southold 53095 Main Road Southoid, NY llg?l Members of the Board: We have examined the general purpose financial statements of the Town of Southold for the year ended December 31, 1986. Our examination was made in accordance with generally accepted auditing standards as set forth in OMB Circular A-128~ and accordingly~ included such tests of the accounting records, tests of the internal financial control systems, and other such auditing procedures as was considered necessary in the circumstances. With regard to Federal Funds, please note that the Town's financial operations are conducted properly~ the financial statements are presented fairly, the Town has complied with laws and regulations affecting the expenditure of Federal Funds and that internal procedures have been established to meet the objectives of the programs. Financial reports submitted to County and Federal governments contained accurate and reliable financial information. Report on Federal Grant Activities is shown on pages 22-23 Our examination was made for the purpose of forming an' opinion on the general purpose financial statements taken as a whole. The Supplementary Schedules are presented for purposes of additional analysis and are not a required part of the general purpose financial statements. Such information has been subjected to the auditing procedures applied in the examination 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. Town Board Town of Southold Page Two In our opinion, the general purpose financial statements present fairly the financial position of each of the fund types and account groups of the Town of Southold at December 31, 1~86 then ended in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. Respectfully submitted~ EFK/vemc E. F. Kaldor~ P. C. Certified Public Accountant TOWN OF SOUTHOLD INDEX STATEMENTS Combined Balance Sheet - Ail Fund Types & Account Groups ............................... 1-2 Combined Statement of Revenues, Expenditures and Changes in Fund Balance - Ail Governmental Fund Types ................................... 3-4 Combined Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - Ail Governmental Fund Types ............... 5-6 Combining Statements of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Funds ................................................. 7 Special Revenue Funds ......................................... 8 Special District and Capital Funds ............................ 9 Combining Balance Sheets - General Funds ................................................. 10 Special Revenue Funds ......................................... 11 Combining Statement of Revenues, Expenditures and Changes in Fund Balance - General Funds ................................................. 12 Special Revenue Funds ......................................... 13 SCHEDULES Schedule of Long Term Debt ...................................... 14 Fisher's Island Ferry District - Balance Sheet ................................................. 15 Statement of Revenues, Expenditures and Changes in Fund Balance ..................................................... 16 Departmental Bank Reconciliations Town Clerk .................................................... 17 Tax Receiver .................................................. 17 Justices of the Peace ......................................... 18 Fiduciary Bank Reconciliations Payroll Account ............................................... 19 Supervisor's Tax Account ...................................... 19 E-W Water District ............................................ 19 Report on Internal Accounting Control ......................... 20-21 Report of Federal Grant Activities ............................ 22-23 Schedule of Federal Grant Activity .............................. 24 Notes to Report ............................................... 25-35 -GOVERNMES~AL FLeD TYPES- -FIDUCIARY SPECIAL CAPITAL SPECIAL REVENL~ PROJECTS DISTRICI TRU$I & AGENCY -ACCOUNi GROL~S- -~MORAN~DUM ON~Ly- · G~NE~AL LONG TER}< Totals FIXED ASSETS DEBT 12/31/86 12/31/85 State & Federal Receivables Local Sources Receivables Land Building TOTAL ASSETS $523,£36.00 $i,263,44C.00 S!,191,599.00 24,977.00 3,554.00 321,743.00 80,198.00 3,0]&.O0 41,652.00 4,310.00 S873,572.00 $1,388,844.00 $3,4B7.00 S58,433.00 $1,!95,909.00 $3.&$7.00 $58.433.00 SI,226,995.00 1,578,387.00 5,762,895.00 3,040.797.00 $ 4,085,006.00 2£,531.00 -0- 401,941.00 257,194.00 44,666.00 -0- 4,310.00 -0- 1,226,995.00 665,995.00 1,57~,387.00 1,578,387.06 5,762,895.00 3,744,265.00 $2,463,076.00 2,463,076.00 S&,568,277.00 S2,463,076.00 $1~,551,598.00 2,403,633.00 $12,734,48C.0f: LiAbILITIES 6 FUND BALANCE TOTAL LIASILITIES $ 24,939.00 $ 68,640.00 S 118,478.00 18,596.00 3,554.00 39,797.00 445,225.00 902,234.00 964,600.00 556.00 $470,164.00 Sl,029,267.00 Si,087,188.00 S24,061.00 2,230.00 7,475.00 24,667.00 -0- $58,433.00 S 212,057.00 $ 42,373.00 46,211.00 -0- 42,027.00 39,293.00 S 380,010.00 387,485.00 461,816.00 1,367,459.00 256,401.00 24,667.00 22,344.00 488,066.00 488,066.00 287,640.00 1,595,000.00 2,559,600.00 4,405,650.00 556.00 -0- -0- $2,463,076.00 $ 5,106,128.00 $ 5,515,517.00 -1- T01~ OF SoffrltOLD DOI,~INED BALANCE SREET ALL FUlleD TYPF~ & ACCOUNT GROUPS DECEMBER 31, 1986 G~ERAL -GO%~PA.~AL FUND TYPES- SPECIAL C~ITAL REVENL~- PROJECTS DISTRICT TRUST & AGENCY -ACCOUNT GROUPS- -.~MOR~NDL~ O.%~LY- GEXEk~L LONG TER}: Totals FIXED ASSETS DEBT 12/3i/86 12/31/85 TOTAL LIAbILITIES--From Preceding Page $470116&.00 $1,029,267.00 $1,087,188.00 S -0- $581433.00 -0- S2,~63,076.00 $ 5,108,128.00 S 5,515,517.0¢ FUND BALANCE Investment in Fixed Assets Reserve for Encumbrances Other R~serve$ Appropriated Ensuin8 Year's Budge= Unappropriated TOTAL FUND BALANCE TOTAL LIABILITIES ~ND $ 44,423.00 $310,000.00 137,271.00 $1,068,549.00 $3,487.00 93,408.00 177,883.00 (959.828.00) $403,408.00 S 359,577.00 $ 108,721.00 $3,487.00 S -0- $873,572.00 $1,388,844.00 $1,195,909.00 S3,487.00 $58,433.00 $8,568,277.00 $8.568,277.00 $ 8,568,277.00 S 5,988,647.06 44,423.00 75,595.0C -0- 69,879.0C 1,519,307.00 972,799.0£ (688,537.00) 112,043.0C -0- S 9,443,470.00 $ 7,218,963.00 $8~568,277.00 $2,463,076.00 $14,551,598.00 S12,73~,&8C-O( NOTES TO FINANCIAL STATEmeNTS ARE AK INTEGRAL PART OF THIS STATF.ME~"r -2- TO~; OF SOb'fHOLD COMBINED STATE, tEN%r OF REVENUES, E~Ek~ITLIRE£ ~ CHANTS IN ~ B.MAKCE JAN~d.ARY 1 - DEC~IBEK 31, 1986 General Revenue Pro?c~s District Rea! Property %axes $1,775,117 Re&! Property Iax Items 20,303 Departmental Income 101,634 In:ergovernmental Charges 1,440 Use of Money and Property 73,021 License~ and Permits 37,062 Fines and Porfeitures 31,510 Property 5ales and Loss Compensation 124,888 M~scellaaeous Local Sources 9,341 In~erfund Revenues State Aid 886,379 Federal Aid 18,774 Proceeds of Obligations Capital Notes Redeemed Fro~ Appropriations TOTAL REVENi~S S3,079,469 Public Safety Health $4,039,545 308,121 ]49,506 $ 155,875 529 58 355,826 2,609 15,116 50,000 259,634 153,480 307,170 613,604 25~,800 43.750 74,125 33,350 2,&15 102 $5,435,505 Sl,274,118 S109.992 $1,257,263 $ 1~4,643 S 977,183 105,6~5 2,060,239 5,961 4,810 247,456 1,547,391 117,203 41,114 203,558 242,O61 476,266 382,588 513,942 380,021 96£,810 317.666 153.074 $ 57,010 TOTALS 12151/86 5.88~,787 20,303 443,105 1,440 380,817 37,591 31,510 124,946 367.87g 65,116 1.299,493 939,548 254,800 ~3,750 $ 9.899.08& 2.379,089 2.165,884 10,771 1,912,050 244,672 242,061 1,429,806 1,348,831 470,740 12131/85 $5,349,173 21,458 281,807 480 539,985 45,647 21,335 94,747 836,436 29,543 1,219.101 S9.675~126 $1,265,855 1,930,705 14.551 2,060,725 209,532 195,351 2,544,711 1,274,209 361,820 -3- COMBINED STAT~L~-N'f OF P.~'VEN'L'ES, EXPL-N~ITURES & CH~'qGES Il( FUNS BAi~.NC~ GOVEKN~JfAL FUNS TFPES JAN'UARY I - DECEMBER 31, E>L~E~(DITURES - continued: Balances Broush~ Forward Interfund Iransfers TOTAL EX~DITURES Special Capital Special Genera] Revenue Propects District S2,073,453 $5,465,113 $i,608,328 $ 57,01C $ 50.000 $3,073,453 $5.A65,113 S!,608,328 S107,010 TOTAL~ 12/31!86 S 50,000 $10,253,90~ 12/31/85 $9,$57,459 $9,857,459 gxcess Revenue Over (Unaer) Expenditures Fund ~alance January t, 1986 Adjustment for Prior Year Accruals AdJus:ment for Notes Payable F~J, BALANCE DECEb~Et 31, 1986 6,016 £ (28,608) $ (334,210) $ 2,982 397,695 389,185 442,931 505 (303) &03.40~ $ 359,577 ~ 108.72! $ 3,&87 (354,820) 1,230,316 (303) ~75,193 $ (182,333) 4,192,556 24,991 (2,804,900) NOTES TO FINAKCIAI STATE.~NT ARE A~ INTEGRAL PART OF THIS STATL~-NT -4- TO~.~ OF SOtJIT~LD C~$I ~km~D ST^T~",']' OF RS'VI~XUES, EXTEi~]'TURES AkD CHA',:GES IE ~ ~ AK~ ACTLIAL - ALL {~OVERt,94L~TAZ FL'I;D T~?ES J.~NUARY I - DECE~E~ ~1, 1986 Real Property Taxem Real Property lax Items Use of Money and Property Stat~ Aid ~ederal Aid Proceeds of ObliBation~ Capital Note~ Redeemed From Approp- Appropriated Fun~ Balance TCTAL -GOI~\%Ek~AL FUN~ ~TE BUDgeTS- Special Capi:ai Special 7o:ai Genera] Revenue ~rojecZs Dis~ric~ Budgets Actual $1,775,117 S4,039,545 $ 7&,125 S 5,88£,787 $ 5,888.787 16,000 16,006 20,302 74,800 300,431 60,000 435,231 4L3,105 65,100 157,O00 222.100 380.817 39,600 5.850 45,450 37,591 1£,000 18,000 31,510 105,425 3,000 106,425 124,946 3,500 475,69~ $ 89,566 56£,760 367,878 E,000 £,000 65,116 614,450 275,90a 183,194 1,073,548 1,299,~93 106,08~ 896.771 1,004,859 939.545 70.000 70,000 254,800 2,004,800 2,00&,800 43,750 S2,712,992 $5,371.512 $3,246,331 S134,125 SlI,&6~,966 ~ 9.895,06~ &06,373 &00,26~ '806,641 $5,119,365 $5,771,780 $3,246~331 S134,125 $12,271,601 4,303 7,87A 4~0 158,717 (7,859) 13,510 16,52t (200,882) 57,116 225,945 (65,311) 184,800 (1.961,050) S(1,565.876) E}~ENDI TU.~Z$ Public Safety Health Economic Assistamce and Opportunity Balancez Carried Porward $1,272,702 S 1&6,696 $1,826,000 S 3,239,398 $ 2,379,089 106,619 2,060,386 2,167,O05 2,165,884 6,1OO 4,811 10,911 10,771 249,~05 1,625,123 122,240 1,996,768 1,912,050 ~5,597 237,153 282,750 244,672 $16,500 S 860,309 1,121 140 68,218 38,078 -5- Specie] CapBta~ Spe;~a] ?oral Genera] Revenue Pr~ie:ts D~strict Budgets Brought Forward $4.07L,169 Sl,942.240 Deb: Service 320,113 153,800 132,800 57,125 695,838 470,740 ~n~erfun~ Transfers 50,000 TCTA~ E~ENDITUP~£ S3,119,365 $5~771,780 S3,246,331 $i34.125 S12.271,601 lx~es$ Revenues Over (L~6er) Expenditures (406,373) (400,268) (806,641) Fund Balance Jenner}- 1, 1986 106,701 14,256 782,~31 1i 903,399 $1,680,423 S 7,696,832 S 6,712,46~ 516.253,90~ (354,820) 1,230,316 (303) S16,50C, S16,50b S 967,86~ 71,453 195,09£ $2,001.197 NOTES TO FINANCIAL STATEM]~'T ARE A~( IN~rEGRAL PART OF Th]IS STAT~q.¢T Z U -CAPITAL FUNDg- -SPECTAL DL~TRYCT FUND- BUllET ACTUAL VARIANCE BUDGET ACI'UAL YAR/.ANCE -0- -0- -0- $ 76,125 $ 74,125 -0- -0- -0- -0- 60,000 33,350 $ 26,650 -0- $ 155,875 $ 155,875 -0- 2,415 12,4151 $ 89,566 2,6oq (86,957) -0- 102 11021 183,194 153,680 (29,114) -0- -0- -0- 898,771 613,604 1285,167) -0- -0- ~0- ...... -0~- . __)9,9O9_ ..... S9, O0_q -0- -0- -0- $1,171,531 $ 975,568 $ (195,q63) $J3f%125 _$109t992 $ 24,133 EXPENDITURES 3' o 'rAL__E?'_ _~:N_D_LT_U R_ EE Ftmd Balance Jammry 1, 1986 _F_u_nA .8za. Ia_n.c.e D~e_~.~?~bbe~ _3]:,_ 198~9 $1,R20,000 $ 977,181 $ R42,fl17 122,240 I 17,203 5,{137 1,169,291 513,9/+2 655,31,9 $ 77,000 $ 57,010 $ 19,990 ___ .77 ....... _-_0= ..... 7~= -o- 5o,oo0 (50,00o) ~3,]j,&,j3~ jJ~60~,3~8 ~1,63~z{~0~ ~.~k,~ $107,010 $ 27,115 -0- $ (334,210) $ -0- $ 2,982 NOTES '1o FINANCIAl. STATEMENT ARE AN IN'FE(;RAL PART OF THIS STATEHENT -9- TOWN OF SOUTHOLD GENERAL FUND BALANCE SHEET D~ER 31, 1986 TOWN~IDE 12/31/86 12/31/85 ASSETS Cash Due from other Funds Due from other ~overnments State and Federal Receivables $523,838 $283,512 24,977 -0- 321,743 214,463 3,014 -0- $873,572 $497,975 $ 24,939 $ 22,080 445,225 78{200 $470,164 $100,~280 LIABILITIES & FUND BALANCE Accounts Payable Deferred Revenue TOTAL LIABILITIES FL%~ BALANCE Reserved for Encumbrances Unreserved - Appropriated for Ensuing Year ' s Budget Unappropriated TOTAL FUND BALANCE $ -0- $ 46,206 310,000 310,000 93,408 41,4~ $403,408 $397,695 $873,572 $497~975 TC~AL LIABILITIES & FUND BALANCE NOTES TO FINANCIAL STATE:M~ ARE AN INTEGRAL PART OF THIS ST~ -]0- k $595,237 $i77,692 15.796 S61~997 $21,505 $3&.670 $17.051 $732 $7,72~ S10,623 $1,386~8&& S605,899 $27~410 $17,051 $5,636 $ &,665 $ 66,640 $ 17,673 S 5,591 6,&81 $73i 2,315 3,477 18,596 38.135 1,157 505 39,797 20,840 $505,910 $1,021,430 $ 157,237 5225,351 2,060,239 143,870 773 S3,052,721 $639,179 $1,208.016 $22~35i S105.773 $ (66,215) S(15,379) $ 41,053 $ (92) $ 13,678 $17,051 $1,547.391 $i.a24,571 8157,742 $732 822,144 522,940 203,558 187,883 382,588 35~,E39 10.348 683 2,431 968,810 92~.92£ 153,074 2bi,32© 2,060,239 1,84L.872 S (83) $(I,567) 4,862 $ 4,779 $ -0- $-0- 5(1,380) 997 $ (29,608) $ 16,425 2,179 389,185 37£,722 2.176 $ 359:577 5 35c,155 -13- Highway Equipment Lan6 Purchas~ - Parking Field TO~5 OF SObTHOLD SCHEDULE OF LONG TER~ DEB7 DEC~ER ~1, 1986 Original Final Interest OutstandinE Issue Date h~aturit>' Rate 1/1/86 05/81 05/86 5.39 $ 15,600 03/82 03/87 5.00 36,000 06/82 05/87 4.50 22,800 12/82 12/87 4.17 42,000 11/83 12/86 4.24 360,000 06/83 06/88 4.65 150,000 08/84 08/86 4.94 1,000,000 10/84 10/87 4.18 750,000 02/84 01/89 5.23 72,000 04/84 10/86 5.33 43,750 04/84 04/2005 9.10 1,662,500 06/85 06/90 4.65 79,000 08/85 08/90 4.2~ 68,000 10/85 10/90 4.50 102,000 01/86 01/91 5.00 10/86 10/91 4.45 $4,405,650 Issued Paid Outstanding in !986 in 1986 12~51/86 15,600 6 -0- 19,000 19,000 11,400 11,400 2i,000 21,000 120,000 2a0,000 50.000 10C,O00 506,000 250,000 16,000 54,000 43,750 -0- 67.500 1,595,000 15,800 63,200 12,600 54,400 26,400 ~1,600 $30,000 3C,000 40,000 ~,000 $70,000 $1~916,050 $2,559~600 NOTES TO FINANCIAL STATLM~T8 ARE A~ IS'TEGRAL PART OF THIS STATLM~NT -14- FISHERS ISL~,ND FERRY DISTRICT COMBINED BAI&NCE SHEET DEC1DIBER 31, 1986 GE.¥ER~L CAPITAL TRUST & FUN]) FLND AGENCY LONG TER~! DEBT ACCOUNT GROUP I'.I~.~ORAN~DU3i ONZY TOTALS 12/31/86 12/21/85 ASSETS Cash Accounts Receivable Due From Other Funds Amount To Be Provided For Long Term Debt TOTAL ASSETS $443,119 $-0- $47~884 -0- -0- -0- 38,003 -0- -0- -0- -0- -0- $481,112 $-0- $47,884 $870,000 $870~000 $ 491,003 $ 218,247 -0- 82,246 38,003 -0- 870,000 920,000 $1,399,006 $1,220,493 LIABILITIES & FUND BALANCE LIABILITIES Deposits Held Accounts Payable Deferred Revenues Doe To Other Funds Serial Bonds Payable TOTAL LIABILITIES Reserve For Encumbrances, Current Year TOTAL L/3%BILITTF. q, RESERVES FUND BALANCE $ -0- $-0- $ -0- 3,221 -0- 9,881 27,789 -0- -0- -0- -0- 38,003 -0- -0- -0- $ 31,010 $-0- $47,884 $ 7,363 $-0- $ -0- $442,749 $-0Z $ -0- $481,122 $-0- $47,884 870,000 $870,000 $ -0- $ -0- $870,000 $ -0- $ 2,720 13,102 -0- 27,789 6,300 38,003 -0- 870,000 920,000 $ 948,894 $ 929,02~ $ 7,363 $ -0- $ 442,749 $ 291,473 $1,399,006 $1,220,493 NOTES TO FINANCIAL ST~ ARE AN INTEGRAL PART OF THIS ST~ -15- I:ISIIERS ISI2",ND [:ERI~.Y I)ISTRICT COMBINED STATIS'qliNT OF I>,EV[~NUI!fi, EXPI':NI)ITU[~1S AND CIIANGES IN FUNI) BALANCI~ JANUARY 1 - DIiCI:'31BIiR 51, 1986 REVI~N[JF, S Rmal Property Tax Items Departmental Incomm Use of Money & Property Property Sales & Loss C~sation State Aid Federal Aid ~'.ADRANDUM ONLY GI{NI!IU~I. CAP ITEM, TGI'ALS FUNI) FIJNI) 12/31/86 12/31/~ $142,285 $ 142,285 $ 145,115 807,965 807,965 752,125 23,233 23,233 46,240 -0- -0- 179 832 832 -0- 9,982 9,982 ~0- $984,297 $-0- $984,297 $ 943,659 EXP~qDITURES Personal Services Contractual Expense Capital Outlay Employee Benefits Debt Service Excess Revenues Over (Under) Expenditures Fund Balance JaDn~ry 1, 1986 Fund Balance December 31, 1986 $330,076 $ $330,076 $ 287,890 245,472 245,472 532,020 62,608 62,608 794,943 68,697 68,697 46,844 118,805 118,805 101,692 $825,658 $-0- $825,658 $1,763,389 $158,639 $-0- $158,639 $ (819,730) 291,473 -0- 291,473 1,111,203 $450,112 $-0- $450,112 $ 291,473 BK)TE~ TO THIS FINANCIAL STAT~MSIN*f ARE AN INTEGRAL PART OF THIS -16- TOWN OF SOUR%IOLD DEPARTMENTAL BANK R~CONCILIATIONS D~ 31, 1986 TOWN CLERK - JUDITH T. TERRY Bank Balance 12/31/86 Add: Deposit in Transit Less: Outstanding Checks $ 69,566.66 2,183.55 71,526.65 $ 223.56 Ledger Balance 12/31/86 - Due to Supervisor $ 223.56 TAX RECEIVER - GEORGE Checking Account Bank Balance 12/31/86 Add: Deposit in Transit Less: Outstanding Checks : Bank Error Savings Account Bank Balance 12/31/86 Add: Deposits in Transit Money Market Account Bank Balance 12/31/86 Add: Deposits in Transit $1,750,978.00 1,750,000.00 978.00 $3,131,795.10 $ 245,279.92 531,787.82 $3,131,795.10 $ 777,067,74 $3,908,862.84 Ledger Balance Add: Interest on Money Market Interest on Savings Bank Adjustment on Deposit $3,905,177.94 1,793.85 1,891.04 .01 $3,908,862.84 NOTES TO FINANCIAL STAT~V]D~ ARE AN INTS~RAL PART OF THIS ST~ TOWN OF SOUTHOLD JUSTICES OF THE PEACE - BANK RECONCIL!3tTIONS DEC~RRR 31, 1986 JUSTICE PRICE Bank Balance 12/31/86 Checking D~count Bail Account ~d: Deposit in Transit Less: Outstanding Checks $ 4,410.00 5,965.26 $10,375.26 Justice's Ledger Bail FDney Due to Comptroller $5,965.26 4,410.00 $10,375.26 JUSTICE TEDESC~I Bank Balance 12/31/86 Add: Deposits in Transit : Fines Receivable Less: Outstanding Checks $ 8,095.00 345.00 95.00 252.00 $ 8,283.00 Justice ' s Ledger Bail Money Appeal Fee Due to Comptroller $2,751.00 5.00 5,527.00 $ 8,283.00 JUSTICE EDWARDS Bank Balance 12/31/86 Add: Deposits in Transit Less: Outstanding Checks $ 1,000.00 1,000.00 Justice's Ledger NOTES TO FINANCIAL ST~ ARE AN INTEGRAL PART OF THIS STATeCRafT TOWN OF SOUTHOLD FIDUCIARY BANK RECONCILIATIONS DECEMBER 31, 1986 PAYROLL ~/IDOUNT Bank Balance 12/31/86 Add: Deposit in Transit Less: Outstanding Checks Ledger Balance - Due from Agency & Trust $ 89,744.09 90,161.72 $ (417.63) SUPERVISOR ' S TAX Bank Balance 12/31/86 Add: Deposit in Transit Less: Outstanding Checks Bank Error to be Reversed $1,141,642.09 1,141,625.00 17.09 Ledger Balance $ -0- E-W ~ATER DISTitIC~ Bank Balance 12/31/86 $ .39 Add: Deposit inTransit -0- Less: Outstanding Checks -0- Ledger Balance - Interest Earned Due to District $ .39 NOTES TO FINANCIAL STATEMENT ARE AN INTEGRAL PART OF THIS STAT~iM~T -]9- E. F. KALDOR, C.P.A., P.C. CERTIFIED PUaLiC ACCOUNTANT 162 GRIFFING AVENUE RIVERHEAD. NEW YORK 11901 TIEI. E~'HONE c; 16 ~ 727-7888 July ~0, 1~87 REPORT ON INTERNAL ACCOUNTING CONTROL COMPLIANCE FOR FEDERAL GRANT ACTIVITIES 1/1 - 1~/31/86 Town Board Town of Southold 53095 Main Road Southold, NY ll~?l Members of the Board: We have examined the general purpose financial statements of the Town of Southold for the year ended December 31, 1986 and have issued our report thereon dated July 20, 1987. As a part of our examination, we have made a study and evaluation of the Town's system of internal accounting control to the extent we considered necessary to evaluate the system as required by generally accepted auditing standards. The purpose of our study and evaluation was to determine the nature, timing and extent of the auditing procedures necessary for expressing an opinion on the Town's financial statements. The Town Board of the Town of Southold is responsible for establishing and maintaining a system of internal accounting control. In fulfilling this responsibility, estimates and judgements buy the Board are required to assess the expected benefits and related costs of control procedures. The objectives of a system are to provide the Board with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with the Board's authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles. -20- Report on Internal Accounting Controll Compliance for Federal Grant~ Activities Page Two Because of inherent limitations in any system of internal accounting controls~ errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the system to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the degree of compliance with the procedures may deteriorate. In our opinion, the system of internal accounting controls of the Town of Southold that existed during the year ended December 31, 198~ taken as a whole, was sufficient to meet objectives stated above insofar as those objectives pertain to the prevention or detection of errors or irregularities in amounts that would be material in relation to the financial statements of the Town of Southold. This report is intended solely for the use of the Town Board and the cognizant agency and should not be used for any other purpose. Very truly yours, E. F. Kaldor~ P. C. Certified Public Accountant EFK/vemc -21- E. f. KALDOR, C.P.A., P.C. CERTIFIED PUBLIC ACCOUNTANT July 20~ 1987 REPORT ON FEDERAL GRANT ACTIVITIES 1/1 - 1E/31/8~ Town Board Town of Southold 53095 Main Road Southold, NY 11971 Members of the Board: We have examined the combined financial statements of the Town of Southold as of December 31, 1986 and for the year then ended and have issued our opinion thereon dated July 20, 1987. In addition, we have examined the accompanying Schedule of Federal Grant Activity. Our examination was made in accordance with generally accepted auditing standards, the provisions of _S_taDd_ards fo__r Audit of Governmental OrganizationsI Pr_o~_r-am__sI Activities _aDd [U_Dc_tio-D_s, promulgated by the Comptroller General, which pertain to financial and compliance audits; the Office of Management and Budget's (OMB)~ _M_ajo_r_ Co-_mPii_an_c_e- Fe__atur_e_s of approved compliance supplement); the provisions of OMB's Circular A-128, _Au_dit__s o-_f _S_t_a_t_e _a_nd L_oc__ai _Go_v_eE_n_m_ent_s; and the _G_uid_e_ii_n_e_s _fo_[ Fi_n_a_n_c!_ai _a_nd C_o__mPi!_a.n.c__e _A_udi_t_s of and accordingly, included such tests of the accounting records and other auditing procedures as we considered necessary i~'l the circumstances. Circular A-128 requires that the examination include a determination of whether the Federal financial reports (including financial status reports, cash reports, and claims for advances and reimbursements) prepared by the Town of Southold contain accurate and reliable financial data. We Report on Grant Activities Page Two have been informed the OMB interprets the phrase "accurate and reliable financial data" to mean that the Federal financial reports present the underlying financial data of the grants within limits that are reasonable and practicable to attain under the circumstances. In our opinion, for the tested operations and records~ the Town of Southold complied with the material terms and conditions of its Federal grants~ contracts and agreements~ and the Schedule of Federal Grant Activity presents the underlying financial data of the grants within the limits described in the preceding paragraph. Further~ based upon our examination and procedures referred to above, nothing came to our attention to indicate that the Town of Southold had not complied with the compliance matters referred to above~ or that the Federal financial reports do not present the underlying financial data of the grants within the limits described in the preceding paragraph. This report is intended solely for the use of the Town of Southold, the cognizant agency and other Federal audit agencies and should not be used for any other purpose. This restriction is not intended to limit the distribution of this report, which, upon acceptance by the Town of Southold~ is a matter of public record. Very truly yours, E. F. Kaldor, P. C. Certified Public Accountant EFK/vemc -2]- TO~',?< OF SOUTflOLD SCHEDULE OF VEDER~L GR&\'F ^CIIVITY J.~X13PJ~y 1 - DECemBER 51, 1986 Project Title Nutrition Program Conlnunity Development General Revenue Sharing FAA Study Storm Nelson Wastewater Treatment Waterfront Revitali- zation Identification Federal Award Direct/ Pass Through Federal Nt~nber Agency Indirect Grantor Funding 5054100 (378) B 36-0102 333052010 FAEA2385 PA10369463 C-361120 NA-82-AA-D-CZ068 Health & Human Services Housing & Urban Development Treasury Dept. Department of Transportation Federal ~lnergency Management Agency Environmental Protection Agency C~merce Dept. IndSrect Indirect Direct Ind ~ rect Direct Direct Indirect Suffolk County Office for the Aging Suffolk County Office of C~n. Development N/A NYS Dept. of Transportation N/A N/A NYS Dept. of State $ 88,775 225,259 115,664 13,356 108,149 598,604 15,000 ~ TO FINANCIAL ST~ ARE AN INTEGRAL PART C~ THIS -24- TOWN OF SOUTHOLD NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 19Sa I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. 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. Ail 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. 1. Included in the Reporting Entity The financial reporting entity includes organizations, functions and activities over which elected officials exercise oversight responsibility. Oversight responsibility is determined on the basis of financial interdependency, selection of governing authority, designation of management, ability to significantly influence operations and accountability for fiscal matters. Excluded From the Reporting Entity Exclusions No B. BASIS OF PRESENTATION The accounts of the Town are organized on the basis of funds or account groups, each of which is considered a separate accounting entity. The operations of each of which i~ considered a separate accounting entity. The operations of each fund are accounted for within a separate set of self-balancing accounts that comprise its assets, liabilities~ fund balance/retained earnings~ revenues and expenditures/expenses which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. The various funds are summarized by type in the financial statements. (Certain funds of the local government are utilized to account for resources derived from, and/or expenditures applicable to an area less than the entire local government). The following fund types and account groups are used: 1. 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. General Fund - the principal operating fund and includes all operations not required to be recorded in other funds. Special Revenue Funds - used to account for the proceeds of specific revenue sources (other than those financed by special assessment funds, and trust funds). 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 held by the local government in a custodial capacity: for assets trustee or Trust and Agency Funds - used to account for assets held by a governmental unit in a trustee capacity or as an agent for individuals, private organizations, other governmental units, and/or other funds. -26- These include expendable trust funds, non- expendable trust funds, pension trust funds~ and agency funds. 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 lands buildings~ improvements other than buildings~ and equipment utilized for general governmental 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. C. BASIS OF ACCOUNTING The basis of accounting promulgated by the Uniform System of Accounts relative to the recording of transactions in the respective funds of the Town are as follows: Governmental Fund revenues and expenditures are recognized on the modified accrual basis. Revenues are recognized in the accounting period in which they become available and measurable. Expenditures are recognized in the accounting period in which the fund liability is incurred~ if measurable. FIDUCIARY FUND - Trust and Agency Fund assets and liabilities are accounted for on the modified accrual basis. TRANSFERS are recognized in the accounting period in which the interfund receivable and payable arise. D. PROPERTY TAXES County real property taxes are levied annually and become a lien on December 1. Taxes are collected during the period December 1 to May 31. Taxes for purposes apportioned to the area of the county outside 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 Town (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 relevied as county taxes in the subsequent year. E. BUDGETARY DATA BUDGET POLICIES - The budget policies are as follows: No later than October 1, the budget officer submits a tentative budget to the Town Board for the fiscal year. The tentative budget includes proposed expenditures and the proposed means of financing for all funds. After public hearings are conducted to obtain taxpayer comments, no later than November 20, the governing board adopts the budget. ENCUMBRANCES Encumbrances outstanding in the amount of $162500.00 have been reserved in fund balance account. Such encumbrances have not been recognized as current year expenditures. 3. 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 the special revenue funds are established in accordance with the applicable grant agreement which covers a period other than the Town's fiscal year. Budgets have been adjusted to reflect the Town's fiscal year. F. CHANGES IN ACCOUNTING POLICIES There have been no changes in accounting policies. DEPARTURES FROM GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) -28- There are no departures from generally accepted accounting principles (GAAP). H. PROPERTY~ PLANT AND EQUIPMENT - 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 1978) 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. I. 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. J. VACATION AND SICK LEAVE AND 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 obligation account group. Payment of vacation and sick leave recorded in the general long-term obligations account group is dependent upon many factors, therefore, timing of future payments is not readily determinable. -29- However, management believes that sufficient resources will be made available for the payments vacation and sick leave and compensatory absences when such payment becomes due. of 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 this data. II. STEWARDSHIP, COMPLIANCE, ACCOUNTABILITY There are no material violations of finance related provisions. The Home Aide Special Revenue Fund had a deficit fund balance at December 31~ 1986 of $1,380.00. The principle factors which caused the deficit were: 1> Departmental Income Estimated in excess of amount realized of $153.00 and 2> Governmental Aid estimated in excess of amount realized of $21,107.00. Departmental income should increase to provide the necessary cash and appropriations in 1987. Co There are no overdrawn appropriations. III. DETAIL NOTES ON ALL FUNDS AND ACCOUNT GROUPS Ao ASSETS 1. CASH AND INVESTMENTS The Town investment policies are governed by state statutes. 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, and obligations of New York State or its localities. Collateral is required for demand deposits and certificates of deposit at 105 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. Deposits at year end were entirely covered by federal depository insurance or by collateral held by the Town's banking institutions in the Town's name. Banks are currently providing listings of ali collateral held in the Town's name. CHANGES IN FIXED ASSETS Fixed assets increased from $5,9BB,647. to $8,568,8?7. B. LIABILITIES PENSION PLANS The Town participates in the New York State Employees' Retirement System (and the New York State Policemen's and Firemen's Retirement System). Generally, all employees, except certain part-time employees, participate in the Systems. The Systems are noncontributory for employees who joined the retirement system on or before July 2?, 1976. Those who joined after July 2?, 1976 contribute 3 percent of their salary. Contributions are billed on the basis of of salaries paid during the Systems' year ending March 31. The amount billed by the Systems in the 1986 year totaled $338,051. and related to the salaries paid from April l, l~8A to March 31~ 1985. The contributions are paid in accordance with funding requirements determined by the Systems' actuary. The Systems offer a wide range of plans and benefits which are related to years of service and final average salary, vesting of retirement benefits, death and disability benefits and optional methods of benefit payments. Governmental Funds it is the policy of the Town to fund pension costs as billed by the System. (Unbilled amounts reflecting contribution incurred from April l, 1986 to December 31, 1986 aggregated $380,010. Such amounts are recognized in the General Long- Term Debt Account Group). The current portion of the pension liability~ that is~ the amount due and payable within one year subsequent to the balance sheet dater is recorded in the governmental funds (the noncurrent portion of the retirement liability chargeable to governmental funds estimated at $380,010. is recorded in the General Long-Term Debt Account Group). The actuarial present value (APV) of credited projected benefits is a standardized disclosure measure of the accrued pension benefit obligation. It is the discounted amount of benefits estimated to be payable in the future as a result of employee service through the balance amount including the effects of projected salary increase and step-rate benefits to each year of credited and expected future employee service· Data concerning the actuarial present value of the accumulated plan benefits, vested plan benefits and net assets available for budgets of these plans which are relevant to the Town are not available since such determinations are made on a statewide basis and not for individual participating units· SHORT-TERM DEBT Liabilities for bond anticipation notes (BAN's) are generally accounted for in the capital projects funds and the enterprise fund. Principal payments on BAN's must be made annually. State law requires that BAN's issued for capital purposes be converted to long-term obligations within five years after the original issue date. The following is an analysis of BAN's outstanding at December 31, 1986. DESCRIPTION AMOUNT INTEREST RATE TO BE REDEEMED 1987 BUDGET APPROPRIATION Boat Launching Ramp $ 54,000 5.83 $ 18,000 Parking Lot 19,000 5.00 19,000 Equipment ll~qO0 q.50 11,400 Sewer lO0,O00 4.65 50~000 Sewer 850,000 4.18 850~000 Equipment 63,200 4.65 15,800 Equipment 54,A00 4.84 13,600 Equipment 81,600 4.50 80~400 Building and Equipment 840,000 4.84 180~000 Landfill Property 81~000 4.17 21,000 Equipment 30~000 5.00 6,000 Building Repairs 40~000 A.45 8,000 TOTAL $96q,600 $553,200 3. LONG-TERM DEBT At December 31, 1986 the total outstanding indebtedness of the Town aggregated $8,559,600. 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. Other Long-Term Debt - In addition to the above long-term debt the local government had the following noncurrent liabilities: Due to Employees' Retirement System. Represents the unbilled and noncurrent portion of the liability to various State Retirement Systems. LIABILITY Serial Bonds Total BOnds 2. Compensated Absences. Represents the value of earned and unused portion of the liability for compensated absences. Summary Long-Term Debt - The following is a summary of long-term liabilities outstanding at December 31, 1986 by fund type and account group: GENERAL LONG-TERM DEBT ACCOUNT GROUP $1,595,000 $1,5951000 Unbilled Retirement Compensated Absences TOTAL LONG-TERM DEBT $ 380,010 k88,0~ Details of Indebtedness are shown on the attached schedule· C. INTERFUND RECEIVABLES AND PAYABLES Interfund receivables and payables 31, 1986 are shown on the combined balance sheets. at December individual D. FUND EQUITY 1. RESERVES The capital projects fund equity include 16 capital reserve funds established for varying purposes. E. DEr. ERRED COMPENSATION PLAN No employees have elected to participate in a deferred compensation plan. F. LEASE COMMITMENTS AND LEASED ASSETS The Town leases several photocopy machines under~ operating leases. Total rental expenditures on this leased equipment for the fiscal year ended December 31, i986 were approximately $6,800.00. VI. CONTINGENCIES VII . VIII. IX. The local government has received grants which are subject to audit by agencies of the State and Federal governments. Such audits may ~result in disallowances and a request for a return of funds to the federal and state governments. Based on past audits, the local government administration believes disallowances, if any, will be immaterial. The accounting department is currently fully staffed and the new department head has made great progress in updating the records and in bringing them into current status. It is anticipated that under his guidance the Town records will continue to be maintained in an orderly and efficient manner. He is to be commended for his dedicated and diligent effort in accomplishing a smooth transition from a retiring administration to a Caseloads handled by Justice Court have greatly increased in volume during the past few years. However, staff increases have not been commensurate with workload increases. The reconciliation of accounts will be more timely with the hiring of additional personnel. Checks that have been outstanding over one year are currently being investigated by the accounting department. Any checks issued to payees who cannot be located will be written off.