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Home My WebLink About2006 . . . . Cutchogue Fire District ANNUAL FINANCIAL REPORT UPDATE DOCUMENT . December 31, 2006 . . . . . . - & COMPANY . . . . TABLE OF CONTENTS PAGE . INDEPENDENT AUDITORS' REPORT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A ANNUAL FINANCIAL REPORT UPDATE DOCUMENT. . . . . . . . . . . . . . . . . . . . . . . I NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT. . . .. . . . .. .. . 31 . . . . . . ~ & COMPANY . 230 Park Avenue. 23rd Floor. New York, NY 10169 . 212.962.4470 Sheehan 165 Orinoco Drive, Brighlwalers. NY 11718 631.665.7040. Fax; 631.665.7014 & COMPANY 180 Main StTl"et, Pon Washington. NY 11050 5]6.883.5510. Fax: 516.767.7438 . A PROFESSIONAL CORPORATlON OF CERTIFIED PUBLIC ACCOUNTANTS www.sheehancpa.com INDEPENDENT AUDITORS' REPORT . To the Board of Fire Commissioners Cutchogue, New York . We have audited the accompanying Annual Financial Report Update Document of Cutchogue Fire District, as of and for the year ended December 31, 2006, as listed in the table of contents. These financial statements are the responsibility of Cutchogue Fire District's management. Our responsibility is to express opinions on these financial statements based on our audit. . We conducted our audit in accordance with auditing standards generally accepted in the United States of America 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 financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 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 opinions. . . As described more fully in Note I, the Cutchogue Fire District prepares its financial statements and Annual Financial Report Update Document using accounting practices prescribed or permitted by the New York State Office of the State Comptroller, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. The effects on the financial statements of the variances between these regulatory accounting practices and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. . In our opinion, the Annual Financial Report Update Document referred to above presents fairly, in all material respects, the assets, liabilities and fund balances of Cutchogue Fire District, as of December 31,2006, and the revenues it received and expenditures made for the year then ended in conformity with the basis of accounting described in Note I. . In accordance with Government Auditing Standards, we have also issued our report dated February 28, 2007, on our consideration of the Cutchogue Fire District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. . . An Independent Member of the BDO Seidman Alliance . . This report is intended solely for the information and use of the Board of Fire Commissioners, management, others within the organization, and the New York State Office of the State Comptroller and is not intended to be and should not be used by anyone other than these specified parties. . ~ te k ? tk1)p-u:i (1,) ~ It!., February 28, 2007 . . . . . . . . ~ & COMPANY . . All Numbers in This Report Have Been Rounded To The Nearest nnll;::lr ANNUAL FINANCIAL REPORT . UPDATE DOCUMENT For The . FIRE DISTRICT of Cutchogue County of Suffolk For the Fiscal Year Ended 12/31/2006 . . ************************************************************************************************************************************* AUTHORIZATION ARTICLE 3, SECTION 30 of the GENERAL MUNICPAL LAW: . 1. """Every Municipal Corporation """ shall annually make a report of its financial condition to the Comptroller. Such report shall be made by the Chief Fiscal Officer of such Municipal Corporation """ . 5. All reports shall be certified by the officer making the same and shall be filed with the Comptroller within sixty days after the ciose of the fiscal year of such Municipal Corporation """ It shall be the duty of the incumbent officer at the time such reports are required to be filed with the Comptroller to file such report """ . State of NEW YORK Office of The State Comptroller Division of Local Government Services and Economic Development Albany, New York 12236 . Page 1 . . FIRE DISTRICT OF Cutchogue ... FINANCIAL SECTION ... . Financial Information for the following funds and account groups are Included In the Annual Financial Report filed by your government for the fiscal year ended 2005 and has been used by the OSC as the basis for preparing this update document for the fiscal year ended 2006: . (A) GENERAL (K) GENERAL FIXED ASSETS (R) Reserve (TA) AGENCY (W) GENERAL LONG-TERM DEBT All amounts included in this update document for 2005 represent data filed by your government with OSC as reviewed and adjusted where necessary. . ... SUPPLEMENTAL SECTION ... The Supplemental Section includes the following sections: . 1) Statement of Indebtedness 2) Schedule of Securities for Collateralization 3) Schedule ofTime Deposits and Investments 4) Investment Certification 5) Bank Reconciliation 6) Local Government Questionnaire All numbers in this report will be rounded to the nearest dollar. . . . . . Page 2 . . Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2006 . (Al GENERAL Balance Sheet . Assets Cash m:rAI.:~h State & Federal, Other A200 1.473,199 ;1,473,199 1,000 A410 . . . . . . . See notes to Annual Financial Report Update Document Page 3 OSC Municipality Code 471179002500 . . Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2006 . (A) GENERAL Balance Sheet Non~Current Government Assets Accounts Payable A600 41.687 411681 15.991 . . . . . . . . See notes to Annual Financial Report Page 4 Update Document OSC Municipality Code 471179002500 . . Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2006 . (AI GENERAL Results of Operation Detail Revenues And Other Sources Real Property Taxes 1.481,810 A1001 1.411,609 "11411';609 2,983 A2401 94,093 A2410 1.500 95;593 2.553 A2701 17.590 A2706 1,000 141 A2770 2,471 21;061 . Interest And Earnings Rental of Real Property Refunds of Prior Year's Expenditures Grants From Local Governments . Unclassified (specify) . . . . . . See notes to Annual Financial Report Update Document Page 5 OSC Municipality Code 471179002500 . . Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2006 . (A) GENERAL Results of Operation R,~;~<;J;ma5;,;::;J~I0D"EIIPQode"}II" "20"06 n "I . Detail Expenditures And Other Uses Fire, Pers Serv Fire, Equip & Cap Outlay Fire, ContT Expend 122274 194}46 342}50 A34101 A341 02 A34104 . State Retirement System Local Pension Fund, Empl Bnfts Social Security, Employer Cant Worker's Compensation, Empl Bnfts Unemployment Insurance, Empl Bnfts Disability Insurance, Empl Bnfts Hospital & Medical (dental) Ins, Empl Bnft 8,806 A90108 121.655 A90258 18.822 A9030B 26,738 A90408 A90508 619 A90558 4.082 A90608 . Debt Principal, Serial Bonds A97106 TOTAL:Oebt'Prlnclpal ..... .. ..... Debt Interest, Serial Bonds A97107 . Transfers, Other Funds 500.000 A99019 . . . . 155,883 1,112,160 420}51 ~j~~;!g4. 8.215 191,760 11,724 47.408 1,945 585 3,895 265,532 See notes to Annual Financial Report Update Document Page 6 OSC Municipality Code 471179002500 . . . (AI GENERAL Changes in Fund Equity Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2006 . ANALYSIS OF CHANGES IN FUND EQUITY Fund Equity-Beginning of Year Prior Period AdHncrease To Fund Equity Prior Period Adj - Decrease In Fund Equity Restated Fund Equity - Beg of Year ADD - REVENUES AND OTHER SOURCES DEDUCT - EXPENDITURES AND OTHER USES Fund Equity-End of Year . . . . . . . 28,514 A8021 154,856 A8012 1,712,786 20,843 A8015 24,868 7,671 A8022 1,842,584 1,487,487 1,528.263 1,340,492 1,954.326 154,666 A8029 1,416,521 See notes to Annual Financial Report Update Document . Page 7 OSC Municipality Code 471179002500 Estimated Revenues And Other Sources Est Rev - Real Property Taxes Est Rev - Use of Money And Property . ";""",,,,:':"."-":"i' "',:''''.':'>,'',," ;;:~~,~;ri~~~~mi~.~~, ~lrt1at~~t:jRev:en:~.e!'t;: . . (A) GENERAL Budget Summary . . . . . . . . . Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2006 A1049N A2499N 1,411,100 1,400 See notes to Annual Financial Report Update Document Page 8 OSC Municipality Code 471179002500 . Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2006 . (AI GENERAL . Appropriations And Other Uses App - Public Safety App - Employee Benefits A3999N A9199N A9999N 855,000 334,100 1,189,100 223.400 223,400' ''1!Ji112;5fJO, App - lnterfund Transfer . . . . . . . See notes to Annual FinaIj5}g'l,lg Report UpdatedS~lllClPality Code 471179002500 . . Cutchogue FIRE DISTRICT Annual Update Document F or the Fiscal Year Ending 2006 . (K) GENERAL FIXED ASSETS Balance Sheet . Assets Land Buildings Machinery & Equipment K101 K102 K104 o . . . . . . . See notes to Annual Financial Report Update Document Page 10 OSC Municipality Code 471179002500 . . Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2006 . (K) GENERAL FIXED ASSETS Balance Sheet . K159 . . . . . . . See notes to Annual Financial Report Update Document Page 11 OSC Municipality Code 471179002500 . . Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2006 . (R) Reserve Results of Operation Detail Expendh:ures And Other Uses Fire. Equipment Outlay 132,812 R34102 . . . . . . . . See notes to Annual Financial Report Update Document Page 15 OSC Municipality Code 471179002500 . . . (R) Reserve Changes in Fund Equity ANALYSIS OF Fund Equity ~ Beginning of Year . Prior Period Ad] - Dee To Fund Equity Restated Fund Equity w Beg of Year ADD - REVENUES AND OTHER SOURCES DEDUCT - EXPENDITURES AND OTHER USES Fund Equity - End of Year . . . . . . . Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2006 See notes to Annual Financial Report Page 16 . 1,383,486 R8021 1,712,786 54,446 R8D15 1,712,786 1,329,040 R8022 516,558 132,812 1,712,786 R8029 Update Document OSC Municipality Code 471179002500 . . (TAl AGENCY Balance Sheet Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2006 Assets Service Award Program Assets . . . . . . . . . 471,535 TA461 See notes to Annual Financial Report Update Document 549.988 '649,988 '649,988 Page 17 OSC Municipality Code 471179002500 . Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2006 . (TA) AGENCY Balance Sheet Non-Current Government Assets Service Awards 471,535 TA13 549,988 . . . . . . . . See notes to Annual Financial Report Update Document Page 18 asc Municipality Code 471179002500 . . Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2006 . Balance Sheet . . . . . . . . See notes to Annual Financial Report Update Document Page 19 . . Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2006 . Balance Sheet . . . . . . . . See notes to Annual Financial Report Update Document Page 20 . . Cutchogue FIRE DISTRICT Financial Comments For the Fiscal Year Ending 2006 . fA) GENERAL Adiustment Reason Account Code A8012 To combine the Reserve Fund and General Fund as per the new reporting requirements of the double entry modified accrual method of accounting. Account Code A8015 To convert fund balance to the double entry modified accrual method of accounting. Section Comment . Current Year Refunds (R) Reserve Adiustment Reason Account Code R8015 To combine the Reserve Fund and General Fund as per the new reporting requirements of the double-entry modified accrual method of accounting. . . . . . . . See notes to Annual Financial Report Update Document Page 21 OSC Municipality Code 47 . . Cutchogue FIRE DISTRICT Statement of Indebtedness For the Fiscal Year Ending 2006 . . . . . . . . . See notes to Annual Financial Re~ort Update Document Page 22 . . Cutchogue FIRE DISTRICT Maturity Schedule For the Fiscal Year Ending 2006 . . . . . . . . . See notes to Annual Financial Report Update Document Page 23 . . . Cutchogue FIRE DISTRICT Schedule of Securities for Collateralization For the Fiscal Year Ending 2006 General Municipal Law, Section 10 as amended by chapter 708 Laws of 1992 lists the types of securities which may be pledged for collateralization. Please click in the response box nex1 to the type(s) of securities used by banks as collateral for your deposits. . Yes 1. Obligations issued by the United States of America, an agency thereof or a United States sponsored corporation or obligations fully insured or guaranteed as to the payment of principal and interest by the United States of America, an agency thereof or a United States government sponsored 2. . 3. Yes 4. . Yes 5. 6. . Yes 7. . . . . . Obligations issued or fully guaranteed by the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank and the African Development Obligations partially insured or fully guaranteed by any agency of the United States of America, at a proportion of the market value of the obligation that represents the amount of the insurance or Obligations issued or fully insured or guaranteed by this state, obligations by a municipal corporation, school district or district corporation of this state or obligations of any public benefit corporation which under a specific state statute may be accepted as security for deposit of public moneys. Obligations issued by states (other than this state) of the United States rated in one of the three highest rating categories by at least one nationally recognized statistical rating organization. Obligations of Puerto Rico rated in one of three highest rating categories by at least one nationally recognized statistical rating organization. Obligations of counties, cities, and other governmental entities of another state having the power to levy taxes that are backed by the full faith and credit of such governmental entity and rated in one of the three highest rating categories by at least one nationaliy recognized statistical rating organization. 8. Obligations of domestic corporations rated in one of the two highest rating categories by at least one nationally recognized statistical rating organization. 9. Any mortgage related securities, as defined in the Securities Exchange Act of 1934, as amended, which may be purchased by banks under the limitations established by federal bank regulatory agencies. 10. Commercial paper and bankers' acceptances issued by a bank (other than the bank with which the money is being deposited or invested) rated in the highest short-term category by at least one nationally recognized statistical rating organization and having maturities of not longer than sixty days from the date they are pledged. 11. Zero-coupon obligations of the United States government marketed as "Treasury Strips". 12. Letters of Credit. 13. Surety bonds. See notes to Annual Financial Report Update Document Page 24 OSC Municipality Code 471179002500 . Cutchogue FIRE DISTRICT Investment Certification For the Fiscal Year Ending 2006 . DEFINITIONS Repurchase Agreement - A generic term for an agreement in which a government entity (buyer-lender) transfers cash to a broker-dealer or financial institution (seller-borrower); the broker-dealer or financial institution transfers securities to the entity and promises to repay the cash plus interest in exchange for the same securities or for different securities. Reverse Repurchase Agreement - An agreement in which a broker-dealer or financial institution (buyer-lender) transfers cash to a government entity (seller-borrower); the entity transfers securities to the broker-dealer of financial institution and promises ro repay the cash plus interest in exchange for the same securities or different securities. . . 1) Has your Local Government adopted an investment policy as required by General Municipal Law, Section 39? 2) The following investments are permitted by your investment policy. . Obligations of the UNITED STATES . Obligations of the U.S. Government Agencies, guaranteed by the UNITED STATES Government . Obligations of the STATE of NEW YORK . Obligations of other NEW YORK STATE Local Governments . Other . . 3) 4) Do you engage in reverse repurchase agreements? Are Repurchase Agreements authorized by your investment policy? Name: Peter J. Zwerlein . Title: Treasurer Phone Number: (631) 734-6907 RESPONSE Yes Yes Yes Yes Yes No No . . . See notes to Annual Financial Report Update Document Page 26 )SC Municipality Code 471179002500 . . . . . Bank Account Number 1124002534, Gen F_ur 1124002609, Gen Fur 1124002617, Bldg. R, 1130033846, Bldg. R, 1130034067. Bldg. R, 1224002591, Equip. F . . . . . . . Cutchogue FIRE DISTRICT Bank Reconciliation For the Fiscal Year Ending 2006 Include All Checking, Savings and CD. Accounts Bank Balance Add: Deposit In Transit . _~32,663 $28,948 $561,271 $119,476 $517,844 ____~230,201 $0 -.---------.-- $0 $0 $0 $0 $0 Total Adjusted Bank Balance E'etty Cash Adjustments Total Cash Total Cash Balance All Funds . Must be equal Less: Outstanding Checks $17.204 -_._-~_._.'---'- -- $0 $0 $0 $0 $0 9ZCASH 9ZCASHB Adjusted Bank Balance __ __~15,459 $28,948 $561,271 $119,476 $517,844 . _____ $230,201 $1,473,199 $.00 ---.------ $.00 $1,473,199 ____ _$1,473,199 See notes to Annual Financial Report Update Document Page 27 OSC Municipality Code 471179002500 . Cutchogue FIRE DISTRICT Fire District Questionnaire For the Fiscal Year Ending 2006 . 1) Has your district adopted a written procurement prolicy and is it complied with? 2) Has your district contracted to have an independent audit of its financial statements' If not, has the Board of Fire Commissioners performed an internal audit of the Treasurer's records and reports? Response Y Y . 3) Does your district have a written travel policy and is it complied with? 4) Are monthly bank reconciliations performed? 5) What is your district's FYE 2007 statutory spending limitation margin (amount)? 6) Does your fire district have a Length of Service Award Program (LOSAP) for volunteer firefighters? N Y $983,617 . Y If so, how are the LOSAP funds invested? Marketable Securities . Annuities Life Insurance N Y Y Other (describe) . . . . . See notes to Annual Financial Report Update Document Page 28 OSC Municipality Code 47117900250C . . CERTIFICATION OF CHIEF FISCAL OFFICER . financial report of the , hereby certify that I am the Chief Fiscal Officer of , and that the information provided in the annual , for the fiscal year ended 12/31/2006 I, Peter J. Zwerlein the . , is TRUE and correct to the best of my knowledge and belief. By entering the personal indentification number assigned by the Office of the State Comptroller to me as the Chief Fiscal Officer of the , and adopted by me as . my signature for use in conjunction with the filing of the '5 annual financial report, I am evidencing my express intent to authenticate my certification of the annual financial report for the fiscal year ended 12/31/2006 and filed by means of electronic data transmission. . Name of Report Preparer if different than Chief Fiscal Officer Peter J. Zwerlein Name . ( ) - Telephone Number Treasurer Title . 260. New Suffolk Road Official Address DO/DO/DODO Date of Certification (631) 734-6907 Official Telephone Number . . . See notes to Annual Financial Report Update Page 29 Municipality Code 471179002500 . . Cutchogue FIRE DISTRICT Supplemental Section Comments For the Fiscal Year Ending 2006 . . . . . . . . . See notes to Annual Financial Report Update Document Page 30 . . . . . . . . . . . . Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 1. Summarv of siguificant accounting policies: The Annual Financial Report Update Document of the Cutchogue Fire District (the "District"), as of and for the year ended December 31, 2006 has been prepared in conformity with the modified accrual regulatory basis of accounting as prescribed by the State Comptroller's Office, which is a comprehensive basis of accounting other than U.S. generally accepted accounting principles. Financial reporting entity: The District is a governmental entity that provides fire protection to the local community. The District receives most of its funding from property taxes. The District is governed by laws of the State of New York. The Board of Fire Commissioners is the legislative body responsible for the overall operation of the District. All activities and functions performed for the District are its direct responsibility. The Treasurer serves as chief fiscal officer of the District. Basis of presentation: The Annual Financial Report Update Document provides information about the District's funds, including fiduciary funds. The accounts of the District are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. The following fund types are used: Governmental: General Fund The General Fund is the principal operating fund of the District and is used to account for all financial resources except those required to be accounted for in another fund. Debt service is also accounted for in the General Fund. Equipment Reserve Fund The Equipment Reserve Fund is used to account for and report financial resources to be used for the acquisition of equipment needed by the District. Building Reserve Fund The Building Reserve Fund is used to account for and report financial resources to be used for the acquisition, construction, or renovation of major capital facilities. -31- - & COMPANY . . . . . . . . . . . Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 1. Summarv of sil.!nificant accounting Ilolicies (continued): Fiduciarv Fund Fiduciary funds are used to account for assets held by the District in a trustee or custodial capacity. The District utilizes the following fund: Agencv Fund The Agency Fund is used to account for and report assets held by the District in the capacity of trustee, custodian or agent for individuals. Agency funds are custodial in nature and do not involve measurement of results of operations. Basis of accounting: The accompanying Annual Financial Report Update Document has been prepared on the modified accrual regulatory basis of accounting using the current financial resources measurement focus. Revenues are recognized when measurable and available. "Available" means collectible within the current period or within 60 days after year-end. Expenditures are generally recognized under the modified accrual regulatory basis of accounting when the related liability is incurred. The exception to this general rule is that principal and interest on general obligation long-term debt, if any, is recognized when due. Due to new legislation, effective January 1, 2006, the District changed from the cash basis of accounting to the modified accrual regulatory basis of accounting. The effect of this change was to decrease the fund balance at January I, 2006 by $24,868. The fund balance has been adjusted for the effect of retroactive application of the new basis of accounting. Total fund balance at January 1, 2006, as previously reported Adjustment for change from cash basis to modified accrual Total fund balance at January 1, 2006, as restated $1,867,452 _(24.868) $1.842.584 Cash and cash equivalents: Cash and cash equivalents include demand deposits and temporary investments with original maturities of twelve months or less from the date of acquisition. Interfund transfers: The operations of the District give rise to certain transactions between funds, including transfers of expenditures and revenues to provide services and construct assets. This is either by budget, Board resolution or permissive referendum. -32- ~ & COMPANY . . . . . . . . . . . Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 1. Summarv of significant accounting policies (continued): Fund balance - reserves and designations: Portions of fund balance are reserved or designated to either satisfy legal restrictions or to plan for future expenditures. The following is a description of the reserves utilized by the District: Reserve for equipment - used for the acquisition of equipment. Reserve for building - used for the acquisition, construction or renovation of major capital facilities. Real property taxes: All real property assessments are made by the Town of Southold. Real property tax payments are due in two equal installments; the first half payable on December I (lien and levy date) preceding the year for which the same is levied and the second half payable May 10, with the first half payable without penalty to January 10 and the second half payable without penalty to May 31. After May 31, all taxes must be paid to Suffolk County Treasurer with a 5% penalty charge and interest at the rate of I % per month from February I. The Town of Southold Receiver of Taxes collects all real estate taxes for the District. The Town of Southold Receiver of Taxes distributes the tax collections to the District. All payments made to the District are made in the year for which the tax has been levied. The Town of Southold Receiver of Taxes turns over uncollected items to the Suffolk County Treasurer who continues the collection of these items. Responsibility for the collection of unpaid taxes rests with Suffolk County. Budgetarv data: The District prepares an operating budget for the General Fund each year. The budget is adopted by the Board of Fire Commissioners as its final budget for the coming year. The budget is not subject to referendum. All budget appropriations lapse at the end of each year. Use of estimates: The preparation of the Annual Financial Report Update Document in conformity with the modified accrual regulatory basis of accounting requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. -33- ~ & COMPANY . Cutchogue Fire District . NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 2. Deposits with financial institutions and investments: . The District's investment policies are governed by state statutes and District policy. Resources must be deposited in Federal Deposit Insurance Corporation (FDIC) insured commercial banks or trust companies located within the state. Permissible investments include special time deposit accounts, certificates of deposit, obligations of the United States of America, obligations guaranteed by agencies of the United States of America where the payment and interest are guaranteed by the United States of America, and obligations of the State of New York. Collateral is required for demand and time deposits and certificates of deposit not covered by FDIC insurance. . . Custodial credit risk is the risk that in the event of a bank failure, the District's deposits may not be returned to it. The District's risk exposure can be categorized as follows: . 1. Insured by FDIC insurance. 2. Collateralized by securities held by the pledging financial institution's trust department or agent, but not in the District's name. 3. Collateralized by securities held by the pledging financial institution, but not in the District's name. 4. Uncollateralized. . The District's deposits held by the banks are categorized, based on the above criteria, as follows: Cate!!:orv Amount 1. $ 100,000 2. . 3. 1,390,403 4. Total $1.490.403 . The District did not have any investments at year-end or during the year. Consequently, the District was not exposed to any material interest rate risk. 3. Pension Plan: . Plan description: The District participates in the New York State and Local Employees' Retirement System (ERS). This is a cost-sharing, multiple-employer retirement system. The System provides retirement benefits as well as death and disability benefits. Obligations of employers and employees to contribute and benefits to employees are . -34- ~ & COMPANY . . . . . . . . . . . Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 3. Pension Plan (continued): Plan description (continued): 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 System. The Comptroller shall adopt and may amend rules and regulations for the administration and transaction of the business of the System and for the custody and control of their funds. The System issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to the New York State and Local Employees' Retirement Systems, 110 State Street, Albany, New York 12244. FundiD!! policv: The System is non-contributory except for employees who joined the ERS 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 required contributions for the current year and two preceding years were: Year EndiD!! December 31. Amount 2006 2005 2004 $8,215 $8,806 $3,732 The District's contributions made to the System were equal to 100% of the contributions required. Since 1989, the System's 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 System's 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 District elected to make full payment in 1989. -35- ~ & COMPANY . . . . . . . . . . . Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 3. Pension Plan (continued): Fundin!! policy (continued): Chapter 49 of the Laws of 2003 of the State of New York was enacted, which made the following changes to the System: Requires minimum contributions by employers of 4.50% of payroll every year, including years in which the investment performance would make a lower contribution possible. Changes the cycle of annual billing, such that the contribution for a given fiscal year will be based on the value of the pension fund on the prior April 1st. Chapter 260 of the Laws of2004 of the State of New York was enacted that allows local employers to bond or amortize a portion of their retirement bill for up to 10 years in accordance with the following schedule: For State Fiscal Year (SFY) 2004-05, the amount in excess of 7.00% of employees' covered pensionable salaries, with the first payment of those pension costs not due until the fiscal year succeeding that fiscal year in which the bonding/amortization was instituted. For SFY 2005-06, the amount in excess of 9.50% of employees' covered pensionable salaries. For SFY 2006-07, the amount in excess of 10.50% of employees' covered pension salaries. This law requires participating employers to make payments on a current basis, while bonding or amortizing existing unpaid amounts relating to the System's fiscal years ending March 31, 2005 through 2007. Chan!!e in pavment due date: Chapter 260 of the Laws of New York State changed the annual payment due date for employers who participate in the New York State and Local Employees' Retirement System and the New York State and Local Police and Fire Retirement System. The December 15 payment due date changed to February I. The covered salary period (April I - March 31) will not change for the calculation. -36- ~ & COMPANY . . . . . . . . . . . Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 4. Len!!th of Service Award Pro!!ram: On March I, 1993 the District approved the adoption of the Length of Service Award Program for volunteer firefighters, to be effective the same date. This program is authorized under Article II-A of the General Municipal Law of New York State. The program provides District funded pension-like benefits to facilitate the recruitment and retention of volunteer firefighters. Plan description: The Service Award Program has no mmlmum months of service requirement for participation in the plan. All members who are credited with "Service Awards Points" are eligible. The minimum age of a participant is 18. Completion of one year of participation in the plan is required to collect benefits. Participants are fully vested in the fifth year of the plan. Benefits begin on the armiversary date following attainment of age 65. Benefits: The benefits provided to members of the program are established by the plan. The benefit at entitlement date is $20 per month multiplied by the total years of service. . Total years of service carmot exceed 30 years and service prior to March I, 1993 is limited to five years. The maximum monthly benefit is $600. The normal form of the benefit is in monthly payments for life (with payments guaranteed for at least 10 years). The death benefit is equal to the present value of accrued benefits. The accrued benefit is equal to $20 per month multiplied by the total years of credited service as of the determination date, and is payable beginning at the entitlement date. Termination benefits are not vested until the completion of the participant's fifth year of service. District information: During the year ended December 31, 2006, the District's contribution to the Length of Service Award Program totaled $191,760, which is reported in the General Fund. The assets held by the program administrator for the District for the year ended December 31,2006 were $549,988. Contribution requirements: The District contributes to the plan based on a group funding calculation. The assumptions for determining the contributions and present value of accrued benefits are as follows: Pre-retirement - interest rate: Post-retirement - annuity factors: 4.85% compounded armually 4.85% compounded armually -37- ~ & COMPANY . . . . . . . . . . . Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 5. Commitments and contin2encies: The District is exposed to various risks of loss related to torts; theft of; damage to; and destruction of assets; injuries to employees; errors and omissions; natural disasters, etc. These risks are covered by commercial insurance purchased from independent third parties. Settled claims from these risks have not exceeded commercial insurance coverage. -38- ~ & COMPANY