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HomeMy WebLinkAbout2007• • • • • • • • • • Cutchogue Fire District ANNUAL FINANCIAL REPORT UPDATE DOCUMENT December 31, 2007 f~rnn~roenrv C • • TABLE OF CONTENTS PAGE • INDEPENDENT AUDITORS' REPORT ..................................... A ANNUAL FINANCIAL REPORT UPDATE DOCUMENT ...................... I • • • • • NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT ............. 31 • F'~rnnnPaniv ~O~L"11V 1 230 Park Avenue, 23rd Floor, New York, NY 10169 • 212.962.4470 165 Orinoco Drive, Hrightwaters, NY 11718 631.6657090 • Fax: 63L666.7014 180 Main SUeet, Port Washington, NY 11050 516.883.5510 • Fax: 5167677436 • A PROFESSIONAL CORPORATION OF CERTIFIED PUBLIC ACCOUNTANTS wwwsheehancpa.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 yeaz ended December 31, 2007, as listed in the table of contents. These financial statements aze 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 standazds generally accepted in the United • States of America and the standazds applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standazds 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 1, the Cutchogue Fire District prepazes its 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 Annual Financial Report Update Document 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, 2007, and the revenues it received and expenditures made for the yeaz then ended in conformity with the basis of accounting described in Note 1. • In accordance with Government Auditing Standards, we have also issued our report dated April 15, 2008, 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. C; An Independent Member of the BDO Seidman Alliance • To the Board of Fire Commissioners Cutchogue, New York 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. 1 ~ April 15, 2008 • • • • E C rl~yidQ-Ll c/, ~ ~ ~~ T G. , COMPANY • C~ w All Numbers in This Report Have Been Rounded To The Nearest Dollar ANNUAL FINANCIAL REPORT UPDATE DOCUMENT For The FIRE DISTRICT of Cutchogue County of Suffolk For the Fiscal Year Ended 12/31/2007 lflfRlf RHRf 1ff HRRRRRRRHIIRRRRRRIRHRRRRRRRRRfRRRRRRRR'IYRRRYi Rf kfRHf RRHH11f RRRRRRRRR*kfllYHf 1f#HHRR1flHfflff fff i#HHRf 11f1f AUTHORIZATION ~ ARTICLE 3, SECTION 30 of the GENERAL MUNICPAL LAW: 1. Y11Every 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 f*' ~ 5. All reports shall be certiFed by the officer making the same and shall be filed with the Comptroller within sixty days after the close of the fiscal year of such Municipal Corporation `RR 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 "f 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 far the following funds and account groups are included in the Annual Financial Report filed by your government for the fiscal year ended 2006 and has been used by the OSC as the basis for preparing this update document for the fiscal year ended 2007: (A) GENERAL (K) GENERAL FIXED ASSETS (R) Reserve (TA) AGENCY (VV) GENERAL LONG-TERM DEBT All amounts included in this update document for 2006 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 of Time 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 2007 (A) GENER4L Balance Sheet Ud6~6eSa11}~idrr '.,-` :; .. ,:, ~ ~~ ~ ~ "' . ,. ~ 2DD6~ r . W EA~pCo~e'~ .:. ,,20D7 e_r._L_ Assets Cash 1,473.199 A200 1,821,943 TOTAL dash 1,473,199 '1,821,843-:: State 8 Federal, Other 1,000 A410 150 TOTAL State And Fatleral Aitl Recelvablas ,1,000 150: TOTAL Assets 1,474,199 1,822,093. _ . _... 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 2007 (A) GENERAL Balance Sheet Liabilities And Fund Equity • Accounts Payable 41,687 A600 170,898 TOTAL Accounts Payable ;41,887 170;898: Accrued Liabilities 15,991 A601 23,654 TOTAL Accrued Liabitities :18,991 23,654 TOTAL Lfabllifres :57,678 184,552. • Capital Reserve 1.428792 A878 1,618,702 TOTAL Speclaf Reserves 1;428,792 1,Bt9,702 Unreserved Fund Balance Appropriated -12 271 A910 8,839 See notes to Annual Financial Report Update Document ~ Page 4 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2007 (A) GENERAL Results of Operation Detail Revenues And Other Sources Real Property Taxes 1,411,609 A1001 1,411,116 TOTAL Real Property Taxes 7,411;609 p1;411,116. Interest And Earnings 94,093 A2401 127,160 Rental of Real Property 1,500 A2410 3,900 TOTAL Use of Money Anit'Praperty; 95;593 ; 131,060 . Sales of Real Property A2660 4,100 TOTAL Saie of Property And Compensation For: Loss ', 0 4,100' Refunds of Prior Year's ExpendRUres 17,590 A2701 630 Grants From Local Governments 1,000 A2706 Unclassifed (specify) 2,471 A2770 TOTAL MisceTlaneaus total Sources 21;Q61 530:" TSTTAL Revenues 1,528,263 t;548808- TOTAL Detai112evenui~s Attd OtherSources 1,528,263 "1,546;905 ~~ 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 2007 (A) GENERAL Results of Operation ade,G)esY~pL6tt v _ _,..,,.,,~.,...,.,> » ~ .-~.,~. 20D6 i; ° ~~ =EdpCr~e s j~,. - .2G4~~ ~" `: Detail Expenditures And Other Uses Fire, Pers Serv 155,883 A34101 157,578 Fire, Equip & Cap Outlay 1,112,160 A34102 553,396 Fire, Contr Expend 420,751 A34104 366,905 iOTAI. Fare 1,683;794 1,077,679' TOTAL piebliF Safety '; 11688;794 9,077,879 Slate Retirement System 8,215 A90108 20,985 Local Pension Funtl, Empl Bnfts 191 760 A90258 176,802 Social Security, Employer Cont 11.724 A90308 12,054 Worker's Compensation, Empl Bnfts 47,408 A90408 41,935 Unemployment Insurance, Empl Bnfts 1.945 A90508 815 Disability insurance, Empl Bnfts 585 A90558 540 Hospital & Medical (dental) Ins, Empl Bnft 3,895 A90608 4,876 TOTAL Empioyem fienefits 233;532 . 268,067: TOTAL Elpatlldetures ", 7'984;326 1,336;886` TOTAL DefaO Expenditures And Otkier ilses ~ 'f,95;,326 1,338;886 See notes to Annual Financial Report Update Document Page 6 OSC Municipality Code 471179002500 • Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2007 (A) GENERAL Changes in Fund Equity be=~7ees~.~l~ .-. _,.-,m,w-, ~,... .. _..u.,~_~ .~. .,n. _...~L ,~,.r 20D6'•; ~~ .~ilpCade : ~~2007 .,:_ .I ANALYSIS OF CHANGES IN FUND EUUIN Fund Equity-Beginning of Year 154,666 A8021 1,416,521 Prior Period Adj-Increase To Fund Equity 1,712,786 A8012 Prior Period Adj -Decrease In Fund Equity 24,868 A8015 Restated Fund Equity -Beg of Year 1,842,584 A8022 1,416,521 ADD -REVENUES AND OTHER SOURCES 1,528,263 1,546,906 DEDUCT- EXPENDITURES AND OTHER USES 1,954,326 1,335,886 . Fund Equi[y-End of Year 1,416,521 A8029 1,627,541 See notes to Annual Financial Report Update Document ~ Page 7 OSC Municipality Code 471179002500 • Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2007 (A) GENERAL Budget Summary ~God+ DSSCOpfioti _ ,' ' ~_~-...._,_~~~.~, 2007 ~ EdpCotle ~ , m~ .:_ 2~08~° ~ _ Estimated Revenues Antl Other Sources Est Rev-Real Property Taxes 1,411,100 A1049N 1,392,000 Est Rev -Use of Money And Property 1,400 A2499N 20.000 TOTAL Estimated Revenues - 1,d12,500 ' 1,412x000. - TOTAL. Estimated Revenues And Other Sources. 1,412,500 - 1,412;000 , 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 2007 (A)GENERAL Budget Summary de 6espTpBor} ~, ,. :._<, .~ ,i.: 4'p;: 2007 :_ ..._.. - .:_~dp~de L ~i .. 2009 .:' .; ':'. : Appropriations And Other Uses _ _. ______.._ ..... App -Public Safety 855,000 A3999N 724,100 App-Employee Benefis 334,100 A9199N 263.200 App -Debt Service A9899N 246,750 TOTAL Appropriations 1,189,100 1,234;050 App - Intertund Transfer 223,400 A9999N 777,950 TOTAGOther Uses 223,400 177;950 TOTAL Appropriations And Ocher Uses 1,412,500 ' 1,412;000 ~~ See notes to Annual Financial Report Update Document ~ Page 9 OSC Municipality Code 471179002500 • Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2007 Balance Sheet ade;Desc~han ~~ " ~ -~ ...~' ... ~- ~-':,,~' ~:: .~',,~~.._2Ua&: ~ EapGode g z0a7 1I A See notes to Annual Financial Report Update Document ~ Page 10 • Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2007 Balance Sheet ade~Descnpi7on ,,.. _ .: . - , .; ...... ~ .- ...: i. .., ~ ":' : 206F~, .. ~~ ~~~Ed Cede ~ . .~""..~._..2n1i7. .~- ,:,. ~_~~ - See notes to Annual Financial Report Update Document ~ Page 11 • Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2007 Balance Sheet 6d0 C)BSC~At[ocl . :'~ ' ~: ~ '. ~ :. .,:; :.: g .. .. ' :e! (`...' 30HS +; ~ :' , EtlpCaig ~ 2e6~ s~ ~ c. L See notes to Annual Financial Report Update Document ~ Page 12 • Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2007 • • • • A • • Balance Sheet ode LS~5glpfwA °;~ '~ ""'~. _....,. .. _ ..* , See notes to Annual Financial Report Update Document ~ Page 13 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2007 (R) Reserve Results of Operation Detail Revenues And Other Sources • Interest & Earnings R2401 TOTAL Use of Money And Property; D 0 TOTAL Revenues '. 0 0 Intertund Transfers R5031 TOTAL interfund Transfers > D D. TOTAL Other Sources;' ' ` 0 ;0 TOTAL Detail Revenues And Other.5ources 0 0 See notes to Annual Financial Report Update Document Page 14 OSC Municipality Code 471179002500 • Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2007 Results of Operation ode%aescri; fiUOx~ r ~ ` .~____ J~~~ ?D06 ' -. ,~ ~~EdpC'vde ~~ LL2©07~ ~ ~. A • • • See notes to Annual Financial Report Update Document ~ Page 15 • Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2007 • (R) Reserve Changes in Fund Equity ode;l~esegptton ~~~... _.w_ -..~._ ._?u~^~!, _._ 2QD&~'EdpCOde'~F 2Wi.._. ,1 ANALYSIS OF CHANGES IN FUND EOUIN Fund Equity-Beginning of Year 1,712,786 R8021 Prior Period Adj -Dec To Fund Equity 1,712,786 R8015 Restatetl Fund Equity -Beg of Year R8022 ADD -REVENUES AND OTHER SOURCES Fund EquiTy -End of Year R8029 ~i See notes to Annual Financial Report Update Document ~ Page 16 OSC Municipality Code 471179002500 • Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2007 (TA) AGENCY Balance Sheet ode:-Desenptlbn ,.: .,., ' 2U96~'~ ~.~ Ed Gone': _.. ZW? ' y.... ~~E~?J Assets Service Award Program Assets 549,988 TA461 659,859 TOTgI Investments 549,986 659,859 TOTAL Assets 549,986 659,669.' r r See notes to Annual Financial Report Update Document ~ Page 17 OSC Municipality Code 471179002500 • Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2007 C~ See notes to Annual Financial Report Update Document ~ Page 18 OSC Municipality Code 471179002500 • Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2D07 Balance Sheet ~OdepescnPi~on_._ y ....._ -;~~ap6"~ ~cipGadB ~D07 See notes to Annual Financial Report Update Document ~ Page 19 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2007 Balance Sheet 'orla Dssenp>.an .,; -'---, ~ .. > .. .: :''T~f~ . ~; 206'6 , '''~~dpCwfe ~ I ~ 2no7 , .. ;; n u • See notes to Annual Fina~dteport Update Document • Cutchogue FIRE DISTRICT Financial Comments For the Fiscal Year Ending 2007 See notes to Annual Financial Report Update Document Page 21 • Cutchogue FIRE DISTRICT Statement of Indebtedness For the Fiscal Year Ending 2007 C7 See notes to Annual Financial Report Update Document ~ Page 22 • Cutchogue FIRE DISTRICT Maturity Schedule For the Fiscal Year Ending 2007 r See notes to Annual Financial Report Update Document ~ Page 23 • Cutchogue FIRE DISTRICT Schedule of Securities for Collateralization For the Fiscal Year Ending 2007 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 next 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 corporation. ~ 2. 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 3. 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 Yes 4. 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. Yes 5. 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. • 6. Obligations of Puerto Rico rated in one of three highest rating categories by at least one nationally recognized statistical rating organization. Yes 7. 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 nationally 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. C] 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 2007 DEFINITIONS: Repurchase Agreement - A generic term for an agreement in which a government entity (buyer-lender) transfers cash to abroker-dealer or financial institution (seller-borrower); the broker-dealer or fnancial 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 abroker-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. ~ RESPONSE -_ 1) Has your Local Government adopted an investment policy as Yes required by General Municipal Law, Section 39? 2) The following investments are permitted by your investment policy. `Obligations of the UNITED STATES Yes • "Obligations of the U.S. Government Agencies, guaranteed by Yes the UNITED STATES Government * Obligations of the STATE of NEW YORK Yes ' Obligations of other NEW YORK STATE Local Governments Yes Other 3) Do you engage in reverse repurchase agreements? No ' q) Are Repurchase Agreements authorized by your investment No policy? Name: Peter J. Zwerlein - _ Title: Treasurer -- Phone Number: (631) 734-6907 See notes to Annual Financial Report Update Document ~ Page 26 )SC Municipality Code 471179002500 • • Cutchogue FIRE DISTRICT Bank Reconciliation For the Fiscal Year Ending 2007 Include All Checking, Savings and C.D. Accounts Bank Add: Less: Adjusted Account Bank Deposit Outstanding Bank Number Balance In Transit Checks Balance 1124002534 $41,527 $0 _ _ $3,621 $37,906 • __ 1124002591 __ _ $221,079 -- --- $0 $0 $221,079 1124002609 $165,335 $0 $0 _ __ $165,335 1124002617 $687,623 $0 $0 $687,623 1130033846 $710,000 $0 $0 _ $710,000 Total Adjusted Bank Balance $1,821,943 Petty Cash $.00 Adjustments $.00 Total Cash 9ZCASH _ _ __ _ $1,821,943 ~ Total Cash Balance All Funds 9ZCASHB $1,821,943 'Must be equal 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 2007 E~ 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 f nancial statements? If not, has the Board of Fire Commissioners performed an internal audit of the Treasurer's records and reports? 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 f re district have a Length of Service Award Program (LOSAP) for volunteer firefighters? If so, how are the LOSAP funds invested? Marketable Securities Annuities Life Insurance Other (describe) Response __ Y _ Y _. N Y $983,617 Y N Y Y See notes to Annual Financial Report Update Document Page 28 OSC Municipality Code 471179002500 • CERTIFICATION OF CHIEF FISCAL OFFICER I, Peter J. Zwerlein ,hereby certify that I am the Chief Fiscal Officer of the _ Cutchogue_Fre District __ - ,and that the information provided in the annual fnancial report of the Cutchogue Fire District ,for the fscal year ended 12/31/2007 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 Cutchogue Fire District_ _ __, and adopted by me as ~ my signature for use in conjunction with the fling of the_ Cutchogue Fire District _ ___ 's annual financial report, I am evidencing my express intent to authenticate my certification of the r r Cutchogue Fire_ District _ __ annual financial report for the fscal year ended 12/31!2007 and filed by means of electronic data transmission. Sheehan & Company, C.P.A., P. C. Name of Report Preparer if different than Chief Fiscal Officer Peter J. Zwerlein Name t`6~_1} 665-7040 _ Telephone Number Aprl1 15~ _2008 _ Date of Certification Treasurer Title 260 New Suffolk Road -- __ _ Offcial Address 6( 31) 734-6907 __ _ _ Offcial Telephone Number See notes to Annual Financial Report Update Document Page 29 Municipality Code 471179002500 • Cutchogue FIRE DISTRICT Supplemental Section Comments • For the Fiscal Year Ending 2007 r i • See notes to Annual Financial Report Update Document « Page 30 • Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT • 1. Summary of significant accounting policies: ~ The Annual Financial Report Update Document of the Cutchogue Fire District (the "District"), as of and for the year ended December 31, 2007 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 aze 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 sepazate accounting entity. The operations of each fund aze 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- 1" ?~.5rnnennnrv • Cutchogue fire District • NOTES TO ANNUAL FINANCIAL REPORT UPDATF. DOCUMENT 1. Summary of significant accounting policies (continued): • Fiduciary 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: • Agency 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. • 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. 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. -32- • Cutchogue Fire District • NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 1. Summary of significant accounting policies (continued): ~ 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 1 (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 1% per month from February 1. 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. • Budgetary 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 ]apse 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. • 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, certif cafes 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. • • -33- F? rnn en n nrv • Cutchogue Fire District • NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 2. Deposits with financial institutions and investments (continued): • 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: Cateeorv Amount • I. $ 100,000 2. - 3. 1,725,564 4. Total 1 825 564 ~ 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 acost-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 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 rcport 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, I10 State Street, Albany, New York 12244. • -34- ..1. ~~,,,,,~,..n, • Cutchogue Fire District • NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 3. Pension Plan (continued): • Plan description (continued): Funding policy: 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 Ending December 31, Amount 2007 $20,98 2006 $ 8,215 2005 $ 8,806 • 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 can-ent 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. • 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 yeazs 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. • • -3>- r'2 rnn.mn niv • Cutchogue Fire District NOTF,S TO ANNUAL FINANCIAL REPORT UPllATE DOCUMENT • 3. Pension Plan (continued): ~ Funding policy (continued): Chapter 260 of the Laws of 2004 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. Change in payment 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 1. The covered salazy period (April 1 -March 31) will not change for the calculation. 4. Length of Service Award Program (LOSAP): • The Cutchogue Fire District's Annual Financial Report Update Document is for the year ended December 3I, 2007. However, the information contained in this note is based on information for the Length of Service Award Program for the plan year ending on Februazy 29, 2008, which is the most recent plan year for which complete information is ~ available. The funding detail is for the period March 1, 2006 through February 28, 2007. The Cutchogue Fire District established a defined benefit LOSAP for the active volunteer firefighters of the District. The program took effect on March 1, 1993. The program was established pursuant to Article 11-A of the General Municipal Law. The ~ program provides municipally funded pension-like benefits to facilitate the recruitment and retention of active volunteer firefighters. The Cutchogue Fire District is the sponsor of the program. -36- 1"I• ~~+rnMnenN • Cutchogue Fire District [7 NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 4. Length of Service Award Program (LOSAP) (continued): • Program description: Participation, vesting and service credit: Active volunteer firefighters who have reached the age of 18 and who have completed their probationary period are eligible to participate in the program. Participants acquire a nonforfeitable right to a service award • after being credited with five years of firefighting service or upon attaining the program's entitlement age. The program's entitlement age is age 65. In general, an active volunteer firefighter is credited with a year of firefighting service for each calendar year after the establishment of the program in which he or she accumulates 50 points. Points are granted for the performance of certain activities in accordance with a system established ~ by the sponsor on the basis of a statutory list of activities and point values. A participant may also receive credit for five years of firefighting service rendered prior to the establishment of the program. Benefts: A participant's benefit under the program is the actuarial equivalent of a • monthly payment for life equal to $20 multiplied by the person's total number of years of firefighting service. The number of years of firefighting service used to compute the benefit cannot exceed thirty. Benefits are not payable until the first day of the month coincident with or following the attainment of age 65 and completion of one year of plan participation. Except in the case of disability or death, benefits are payable when a participant reaches entitlement age. The program provides statutorily mandated death and • disability benefits. Fiduciary investment and control: Service credit is determined by the governing board of the sponsor, based on information certified to the governing board by each fire company having members who participate in the program. Each fire company must ~ maintain all required records on forms prescribed by the governing board. The governing board of the sponsor has retained and designated Volunteers Firemen's Insurance Services, Ina (VFIS) to assist in the administration of the program. The designated program administrator's functions include providing basic annual • administration services as follows: • _;7_ • COMPANY L Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT • 4. Length of Service Award Program (LOSAP) (continued): ~ Fiduciary investment and control (continuedl: a) b) • c) d) e) g) • h) providing participant enrollment forms providing an annual reminder letter with a review list for the current anniversary date preparation of Explanation of Plan Benefits calculation of Schedule of Benefits and costs annually participants' benefit calculation at time of severance or retirement Auxiliary Fund valuation and suggested deposit summary of required annual contribution annual actuarial review and recommended benefit enhancements Disbursements of program assets for the payment of benefits or administrative expenses must be approved. The following is an explanation of the process for approving disbursements: • Payment of benefits: 1. Entitlement benefits - VFIS prepares and submits to the Plan Sponsor a Verification of Benefits statement and an Annuity enrollment form for • participants active at entitlement age and for vested participants upon termination from the Plan. Following review for accuracy, the Plan Sponsor signs and returns the paperwork to VFIS authorizing VFIS to disburse entitlement benefits. 2. Death benefits -Upon notification from the Plan Sponsor of a participant's death, VFIS prepares a Verification of Benefits statement and a Lump Sum Death • Benefit form. Following review for accuracy, the Plan Sponsor signs and retums the paperwork accompanied by a death certificate to VFIS authorizing VFIS to disburse a death benefit. 3. Disability benefits -Upon notification from the Plan Sponsor of a participant total • and permanent disability, VFIS prepares a Verification of Benefits statement. a Physician Statement form and a Lump Sum Disability Benefit form. Following review for accuracy, the Plan Sponsor signs and returns the paperwork authorizing VFIS to disburse a disability benefit. • _;g_ • Fl?rnnnvanrv • • Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 4. Length of Service Award Program (LOSAP) (continued): ~ Payment of administrative expenses: 1. Per the executed Service Fee Agreement, the Plan Sponsor agrees to payment as contracted. ~ Authority to invest program assets is vested in The Hartford Life Insurance Company. Subject to restrictions in the program document, program assets are invested in accordance with a statutory "prudent person" rule. The sponsor invested plan funds in a Group Annuity Contract with guarantees of both principal and interest. ~ The sponsor is required to retain an actuary to determine the amount of sponsor's contributions to the plan. The actuary retained by the sponsor for this purpose is Gerald R. Shea, Pencert, Ltd. Portions of the following information are derived from a report prepared by the actuary dated November 1, 2007. • Program Snancial condition: Assets and Liabilities % of Total ~ Actuarial present value of accrued benefits at February 28, 2007: Vested $1,090,365 Non-vested 17,107 1,107,472 ~ Less assets available for benefits: Group Annuity Fixed Funds 100% $552,673 Total net assets available for benefits 552,673 Total unfunded benefits 554 799 ~ Prior service cost: The unfunded liability is associated with the frozen initial liability that was established at March 1, 1993 for prior service costs. The initial liability was $731,556, of which $557,967 is still unpaid at this time. The prior service costs are being amortized over 30 years at a discount rate of 6.5%. • -39- ~~'CONIPANY • Cutchogue Fire District ~ NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 4. Length of Service Award Program (LOSAP) (continued): ~ Program financial condition (continued): Receipts and Disbursements Plan net assets, beginning of year $473,577 ~ Changes during the year: Death claim $ 10,032 Plan contributions 175,920 Investment income earned 27,059 Change in fair market value of investments 5,313 • Plan benefit withdrawals (I 19,400) Administrative and other fees/charges (3,212) Life insurance premium 16,616 Plan net assets, end of year X552.673 • Contributions Amount of sponsor's contribution recommended by actuary 173 549 Amount of sponsor's actual contribution 175 920 • Administration Fees Fees paid to designated program administrator 3 212 • Funding methodology and actuarial assumptions: Normal costs• The actuarial valuation methodology used by the actuary to determine the sponsor's contribution is Entry Age Normal Frozen Initial Liability. The assumptions used by the • actuary to determine the sponsor's contribution and the actuarial present value of benefits are: Assumed rate of return on investment 6.50% ~ Mortality tables used for: Pre-retirement U8400 Post-retirement U8400 -40- ~ "I, e~COMPANY • Cutchogue Fire District • NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 5. Commitments and contingencies: • 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. • • • • • • • -41- • "1. COMPANY