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HomeMy WebLinkAbout2008 RECEIVED JUN 1 0 200g ~oulhold Town Clerl~ MATTITUCK FIRE DISTRICT FINANCIAL STATEMENTS Year ended December 31, 2008 TABLE OF CONTENTS Paf:le No. INDEPENDENT AUDITORS'REPORT .............................................................................................. 1-2 FINANCIAL STATEMENTS Balance Sheet - Governmental Funds ................................................................................................ 3 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds .......................................................................................... 4 Statement of Assets and Liabilities - Fiduciary Fund .......................................................................... 5 Notes to Financial Statements ............................................................................................................. 6-16 SUPPLEMENTARY INFORMATION General Fund - Schedute of Revenues, Expenditures and Changes in Fund Balance Budget and Actual ................................................................................ 17 General Fund - Schedule of Detailed Expenditures and Appropriations .................................................................................................................................. Capital Funds - Combining Balance Sheet ......................................................................................... 18-19 20 Capital Funds - Combining Schedule of Revenues, Expenditures and Changes in Fund Balance ........................................................................................................ 21 OTHER REPORTS Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and other Matters Based on an Audit of Financial Statements Performed In Accordance with Government Auditing Standards ..................... 22-23 Schedule of Findings and Responses ................................................................................................. 24 -1- CERTIFIED PUBLIC ACCOUNTANTS, BUSINESS ADVISORS AND CONSULTANTS 25 Suffolk Court, Hauppauge, New York 11788 631.434.9500 · Fax 631.434.9518 INDEPENDENTAUDITORS'REPORT To Board of Fire Commissioners Mattituck Fire District Town of Southold Mattituck, New York We have audited the accompanying financial statements of the governmental activities and the fiduciary fund information of the Mattituck Fire District, New York, as of and for the year ended December 31, 2008, as listed in the table of contents. These financial statements are the responsibility of the Mattituck Fire District's management. Our responsibility is to express an opinion 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 opinion. As described in Note 1, the Mattituck Fire District prepares its financial statements on a prescribed basis of accounting that demonstrates compliance with the regulatory basis of accounting and budget laws of the State of New York, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. The differences between the regulatory basis of accounting and accounting principles generally accepted in the United States of America are also described in Note 2. in our opinion the financial statements referred to in the first paragraph present faidy, in all material respects, the financial position of the governmental activities and the fiduciary fund information of the Mattituck Fire District, New York, as of December 31, 2008, and its changes in financial position in conformity with the New York State regulatory basis of accounting for fire districts that approximates the modified accrual basis of accounting as described in Note 2. In accordance with Government Auditing Standards, we have also issued our report dated May 26, 2009, on our consideration of the Mattituck Fire District, New York's internal control over financial repodJng 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 repod is an integral part of an audit performed in accordance with Government Auditing Standards and important for assessing the results of the audit. ALBRECHT, VIGGIANO, ZURECK ~ COMPANY, P.C. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying financial information listed as supplementary information in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements of the Mattituck Fire District, New York. Such information has been subjected to the auditing procedures applied in the audit and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. Hauppauge, New York May 26, 2009 -3- MA'FI'ITUCK FIRE DISTRICT GOVERNMENTAL FUNDS BALANCE SHEET December 31, 2008 ASSETS Cash Due from other funds Total Assets LIABILITIES Accounts payable Accrued expenses Due to other funds Total Liabilities FUND EQUITY Reserve for encumbrances Reserve for capital projects Unreserved - undesignated Total Fund Equity Total Liabilities and Fund Equity General Capital Fund Fund To~Is $ 327,981 $ 525,221 $ 853,202 950 1,554 2,504 $ 328,931 $ 526,775 $ 855,706 $ 44,982 $ 44,982 7,000 7,000 1,554 $ 950 2,504 53,536 950 54,486 83,585 83,585 525,825 525,825 191,810 191,810 275,395 525,825 801,220 $ 328,931 $ 526,775 $ 855,706 See notes tofinancialstatemen~. -4- MATTITUCK FIRE DISTRICT GOVERNMENTALFUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGESINFUND BALANCES Yearended December31,2008 REVENUES Real property taxes Interest and earnings Insurance recoveries and refunds Miscellaneous income Total Revenues EXPENDITURES Personal services Equipment and capital outlay Fire protection Employee benefits Debt service Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES AND (USES) Operating transfers in (out) Capitalized leases Total other Financing Sources and (Uses) General Capital Fund Fund Totals $ 1,978,770 $ 1,978,770 17,365 $ 11,985 29,350 20,387 20,387 35 35 2,016,557 11,985 2,028,542 164,610 164,610 70,454 168,453 238,907 641,077 641,077 428,138 428,138 218,155 218,155 1,522,434 168,453 1,690,887 494,123 (156,468) 337,655 (333,902) 333,902 -0- 53,934 53,934 (333,902) 387,836 53,934 Net Change in Fund Balance Fund Balance at Beginning of Year Fund Balance at End of Year 160,221 231,368 391,589 115,174 294,457 409,631 $ 275,395 $ 525,825 $ 801,220 See notes to financial statements. -5- MA'I-FITUCK FIRE DISTRICT FIDUCIARY FUND STATEMENT OF ASSETS AND LIABILITIES December 31, 2008 ASSETS Service award program assets LIABILITIES Service awards Total Assets Total Liabilities Trust Fund $ 1,281,936 $ 1,281,936 $ 1,281,936 $ 1,281,936 See notes to financial statements. MAI-rlTUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 1 - Reporting Entity The Mattituck Fire District (the "District") was incorporated under New York State town law in 1905. The governing body of the District is the Board of Fire Commissioners which consists of five commissioners all of whom are elected to five year terms. The District provides fire protection service and education for fire prevention to its residents. The financial reporting entity includes all functions and activities over which the elected officials exercise responsibility. No other governmental organizations have been included or excluded from the reporting entity. The financial statements of the District have not been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The District prepares its financial statements on a prescribed basis of accounting that demonstrates compliance with the regulatory basis of accounting and budget laws of the State of New York, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. Note 2 - Summary of Significant Accounting Policies Fund Financial Statements 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 accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund balances, revenues, and expenditures, 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 presented by type in the fund financial statements. Accordingly, the District maintains the foIlowiog fund types: Governmental Funds - Governmental funds are those through which most governmental functions are financed. The acquisition, use and balances 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 District reports the following governmental funds: General Fund - the principal operating fund of the District and includes all receipts and disbursements not required to be included in other funds. Capital Fund - used to account for capital expenditures financed from the proceeds of bonds, bond anticipation notes and capital notes. This fund is also used to account for construction projects financed, in whole or in part, from General Fund monies. Also included in the Capital Fund is: Capital Reserves - established in accordance with the provisions of general municipal law (Section 6g). Capital expenditures may be made only for the purpose of which the fund was established. The principal soumes of revenue for these funds are budgetary appropriations transferred from the General Fund. Expenditures from these funds are subject to permissive referendum. Additionally, the District reports the following fiduciary funds: Fiduciary Fund - the Fiduciary Fund is used to account for assets held by the District in a trustee capacity or as an agent for individuals, private organizations, and other governments. Basis of Accountinq The District follows the accounting principles as described in the Fire District Accounting and Reporting Manual issued by the Office of the New York State Comptroller. Under this system the District utilizes the modified accrual basis of accounting, whereby revenues are recognized in the accounting period in which they are available and measurable, and expenditures will generally be recognized in the accounting period in which the liability is actually incurred. This basis of accounting differs from accounting principles generally accepted in the United States of Amedca for governments as promulgated by the Government Accounting Standards Board. -7- MA'n'ITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31,2008 Note 2 - Summary of Significant Accounting Policies (continued) Basis of Accountinq (continued) Encumbrance accounting, under which purchase orders, contracts and other commitments are recorded for budgetary control purposes in order to reserve that podion of the applicable appropriation, is employed in the governmental funds. Appropriations for all governmental funds except the Capital Projects Fund lapse at year-end. However, encumbrances reserved against fund balances are re-appropriated in the ensuing year. Encumbrances are reported as reservations of fund balances since they do not constitute expenditures or liabilities. Expenditures for such commitments are recorded in the period in which the liability is incurred. Capital Reserve Funds Although the New York State Accounting and Reporting Manual, issued by the New York State Comptrollers Office, requires capital reserve type funds to be accounted for as a reservation of fund balance in the General Fund, management has elected to account for these funds in a Capital Fund in order to better demonstrate compliance with New York State laws and regulations. Note 3 - Assets, Liabilities and Fund Equity Interfund Receivables and Payables During the course of operations, numerous transactions occur between individual funds that may result in amounts owed between funds. Those transactions are classified as "due to and from other funds." Capital Assets All fixed assets with an original cost of $500 or more am valued at historical cost or estimated historical costs if actual is unavailable, except for donated fixed assets which are recorded at their estimated fair value at the date of donation. Depreciation is provided over the assets' estimated useful lives using the straight-line method of depreciation. The range of estimated useful lives by type of asset is as follows: Buildings Infrastructure Vehicles and related equipment Equipment 20-50 years 40 years 5-20 years 5-20 years In accordance with the Accounting and Reporting Manual for the Fire Districts, issued by the Office of the New York State Comptroller, depreciation expense is not recorded the District's governmental funds and instead it is disclosed in the notes to the financial statements along with the District's changes in fixed assets. Additional information related to fixed assets is disclosed in these notes to the financial statements. Fund Classifications In the fund financial statements, governmental fund equity is classified as fund balance. Fund balance is further classified as reserved and unreserved, with unreserved further split between designated and undesignated. Portions of fund equity are segregated for future use and therefore not available for future appropriation or expenditure. Amounts reserved for encumbrances and capital represent portions of fund equity which are required to be segregated in accordance with state law or accounting principles generally accepted in the United States of America. Designations of fund balances in governmental funds indicated the utilization of these resources in the ensuing year's budget or tentative plans for future use. -8- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31,2008 Note 4 - Revenues and Expenditures Property Taxes Property taxes are collected by the Town of Southeld on behalf of the District. Payments from the Town are normally received at various intervals during the year. Interfund Transactions Interfund transfers represent payments by the General Fund to the Capital Fund to fund various capital reserves established by the District. Total Columns on the Financial Statements The total columns in the combined financial statements are presented only to facilitate financial analysis. Data in these columns do not present the financial position, results of operations or changes in financial position in conformity with accounting principles generally accepted in the United States of America, nor is such data comparable to a consolidation. Inter-fund eliminations have not been made in the aggregation of this data. Note 5 - Stewardship, Compliance and Accountability Budqetary Procedures The District prepares an annual budget for the General Fund, which is approved by the Board of Fire Commissioners. The budget is then submitted to the Town of Southold for inclusion in the Town Budget and a public hearing is held thereon. The budget is not subject to referendum. Any revisions to the annual budget are adopted by resolution of the Board of Fire Commissioners. Note 6 - Cash and Investments Custodial Credit Risk - Deposits - Custodial credit risk for deposits exists when, in the event of the failure of a depository financial institution, a government may be unable to recover deposits, or recover collateral securities that are in possession of an outside agency. The District's investment policies are governed by State statutes. In addition, the District has its own investment policy. District monies must be deposited in FDiC-insured commercial banks or trust companies located within the State. The Treasurer is authorized to use demand accounts and certificates of deposit. Permissible investments include obligations of the U.S. treasury and U.S. agencies, and obligations of New York State or its localities. Collateral is required for demand and time deposits at 105% of alt 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 or its municipalities. Governmental Accounting Standards Board Statement #-40 directs that deposits be disclosed as exposed to custodial credit risk if they are not covered by depository insurance, and the deposits are either: .Uncollateralized; · Collateralized with securities held by the pledging financial institution in the District's name; or · Collateralized with securities held by the pledging financial institution's trust department or agent, but not in the District's name. At December 31, 2008, the District's bank balances were $860,782. Of the District's bank balances, $260,484 was covered by federal deposit insurance and $600,298 was secured by collateral held by the District's agent, a third party financial institution, in the District's name. The District does not typically purchase investments for long enough duration to cause it to believe that it is exposed to any material interest rate risk. -9- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 6 - Cash and Investments (continued) The District does not typically purchase investments dominated in a foreign currency, and is not exposed to foreign currency risk. Note 7 - Interfund Receivables, Payables and Transfers At December 31, 2008, individual fund interfund receivable and payable balances which will be reimbursed subsequent to year end were as follows: General Fund $ 950 Capital Fund 1,554 Total ~ 2.504 Amount Amount Receivable Payable $ 1,554 95O At December 31, 2008, individual fund interfund transfer balances were as follows: General Fund Capital Fund Total Note 8 - Capital Assets Capital assets consist of the following at December 31, 2008: Balance 01/01/08 $ 2.504 Tran~er Transfer In Out $ 333,902 $ 3331902 $ 333.902 $ 333.902 Balance Additions Deletions 12/31/08 $ 16,000 $ 16,000 $ 29,069 29,069 16,000 29,069 $ -0- 45,069 2,551,998 5,000 2,556,998 425,300 12,450 437,750 3,704,945 102,275 3,807,220 555,635 42,775 598,410 7,237,878 162,500 -0- 7,400,378 547,266 66,577 613,843 246,354 10,789 257,143 1,361,815 228,725 1,590,540 202,398 54,027 256,425 $ 2,3571833 $ 360,118 $ -0- 2,717,951 4,682,427 Capital assets, not being depreciated: Land Construction in progress Total capital assets, not being depreciated Capital assets, being depreciated: Buildings Infrastructure Vehicles and related equipment Equipment Total capital assets, being depreciated Less accumulated depreciation for: Buildings Infrastructure Vehicles and related equipment Equipment Total accumulated depreciation Total capital assets, being depreciated, net Total capital assets, net $ 4~727~496 Total depreciation expense $ 360,118 -10- MA'n'ITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 8 - Capital Assets (continued) The District evaluates prominent events or changes in cimumstances affecting capital assets to determine whether impairment of a capital asset has occurred. The District's policy is to record an impairment loss in the period when the District determines that the carrying amount of the asset will not be recoverable. At December 31, 2008, the District has not recorded any such impairment losses. Note 9 - Retirement System Plan Description The District participates in the New York State and Local Employees' Retirement System (ERS) (the "System"). This is a cost-sharing multiple public employer retirement system. The System provides retirement benefits as well as death and disability benefits. A publicly available annual report containing financial statements and required supplemental information for this retirement system may be obtained by writing to the following address: New York State Retirement Systems Governor Smith State Building Albany, NY 12244 Obligations of employers and employees to contribute and benefits provided 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 (the "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. Payments and Funding Status The System is noncontributory except for employees who joined the New York State and Local Employees' Retirement System after July 27, 1976, and who have less than ten years of membership and less than ten years of credited service with a retirement system under the provisions of article fourteen or fifteen of the NYSRSSL, 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 District is required to contribute at an actuarially determined rate. The actual contributions were equal to 100% of the actuarially required amounts, adjusted by modifications made by the ERS to prior years' contributions. The required contributions, for the primary government, for the current year and two preceding years were: Percent Contribution of Covered Year Amount Payroll 2008 $ 15,807 7.90% 2007 $ 12,536 8.80% 2006 $ 19,099 9.70% -11- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 10 - Length of Service Awards Program The District's Length of Service Award Program (the "Plan") financial statements are for the year ended December 31, 2008. The District established a defined benefit Plan for the active volunteer firefighters. The Plan took effect on January 1, 1992. The Plan was established pursuant to Article 11-A of New York State General Municipal Law. The Plan provides municipally-funded pensionlike benefits to facilitate the recruitment and retention of active volunteer firefighters. The District is the sponsor of the Plan. Plan Description Participation, Vesting and Service Credit Active volunteer firefighters who have reached the age of 18 and who have completed one year of firefighting service are eligible to participate in the Plan. Participants acquire a nonforfeitable right to a service award after being credited with one year of firefighting service or upon attaining the Plan's entitlement age. The Plan's entitlement age is age 62. In general, an active volunteer firefighter is credited with a year of firefighting service for each calendar year after the establishment of the Plan in which he or she accumulates fifty points. Points are granted for the performance of cedain activities in accordance with a system ("Point System") established by the District on the basis of a statutory list of activities and point values. A Participant may also receive credit for service prior to January 1, 1991 (called "Prior Service") for years of firefighting service rendered prior to the establishment of the Plan. In order to receive Prior Service credit, a Participant must have been an active volunteer fire fighter on January 1, 1992 and must have earned a year of service credit under the Point System during 1992. Benefits A Participant's benefit under the Plan is the actuarial equivalent of a monthly payment for life equal to $20 multiplied by the Participant's total number of years of firefighting service. The number of years of firefighting service used to compute the benefit cannot exceed forty. Effective January 1, 2003, except in the case of disability or death, benefits are not payable until a Participant reaches the Entitlement Age ("EA") of 62 or the Participant's age on December 31 of the first calendar year after 1990 during which the Participant earns a year of service credit under the Point System. The Plan provides statutorily mandated death and disability benefits. The Plan also provides optional line of duty disability benefits. Should a volunteer flreflghter of the District become totally and temporarily disabled, or partially and permanently disabled, as certified by the Workers' Compensation Board or other competent authority approved by the Board of Fire Commissioners, and the disability occurs during the course of service as a volunteer, while actively engaged in providing line of duty services, as defined in subdivision one of section five of the Volunteer Firefighter' Benefit Law, the firefighter shall receive five points for each complete calendar month of such disability under the Point System up to the earlier of the date such volunteer is no longer totally and temporarily or partially and permanently disabled or attains the EA. However, if such disability becomes a permanent and total disability and a Mattituck Fire District Service Award Program Total and Permanent Disability is awarded on account of such disablement, then no future points shall be credited under this special line of duty disability benefit provision after the date of the awarding of such Total and Permanent Disability by the Board of Fire Commissioners. If a Participant is awarded a Total and Permanent Service Award Program Disability by the Board of Fire Commissioners before attaining the EA for a disability commencing after December 31, 1991, the Participant is entitled to receive an amount equal to the Participant's Accrued Service Award earned as of the date such disability payment is awarded by the Board of Fire Commissioners and payable on the first day of every month for the lifetime of the Participant or for ten years, whichever is greater. Once a Participant is awarded a Total and Permanent Service Award Program Disability under the Plan provisions, such Participant shall no longer be eligible to participate in the District's Plan. If a Participant dies before attaining the EA, a lump-sum shall be paid to the Participant's designated beneficiary equal to the discounted actuarial present value of the Participant's Accrued Service Award earned as of the date of death. If the Participant was an active volunteer firefighter of the District as of the date of death, the minimum death benefit payable to the Participant's designated beneficiary shall be $20,000. -12- MA'I-FITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 10 - Length of Service Awards Program (continued) Fiduciary Investment and Control Service credit is determined based on information certified to the Board of Fire Commissioners by each fire company having members who padicipate in the Plan. Each fire company must maintain all required records on forms prescribed by the Board of Fire Commissioners. The Board of Fire Commissioners of the District has retained and designated Penflex, Inc. to assist in the administration of the Plan. The designated Plan administrator's functions include calculating the amount to be contributed at the end of each year based upon the criteria set forth in the Plan Document. Disbursements of Plan assets for the payment of benefits or administrative expenses must be approved by the Board of Fire Commissioners and delivered to the Custodian through a Payment Schedule. The Board of Fire Commissioners of the District has retained and designated Wachovia Bank (formerly AG Edwards Trust Company FSB) as the Custodian of the Plan's assets. Wachovia Bank shall make payments to Plan Participants and their beneficiaries in accordance with the Payment Schedule. Plan assets are required to be held in trust by Length of Service Award Program legislation, for the exclusive purpose of providing benefits to Participants and their beneficiaries or for the purpose of defraying the reasonable expenses of the operation and administration of the Plan. The trust agreement is dated January 1, 1992 as amended, and the trustees are the Board of Fire Commissioners of the District. Authority to invest Plan assets is vested in the Board of Fire Commissioners of the District. Subject to restrictions in the Plan document, Plan assets are invested in accordance with a statutory "prudent person" rule. The Plan document restricts the Trustee from investing in securities or obligations issued by the Mattituck Fire District, other than a de minimis amount held in common investment vehicles in which the Trustee invests. The District is required to retain an actuary to determine the amount of the District's contributions to the plan. The actuary retained by the District for this purpose is Edward Holohan, President and ASA and Tom Fiorillo, ASA of Penflex, Inc. Portions of the following information are derived from a report prepared by the actuary dated March 2009. Plan Financial Condition As of and for the year ended December 31, 2008 Funded Status of the Plan Actuarial present value of benefits Less: total assets available for benefits $ 2,977,376 1,281,936 Unfunded actuarial present value of benefits Funded ratio .695.440 43.06% Assets Available for Benefits Cash and cash alternatives Fixed income Equities Other assets 43,976 784,974 399,453 53,533 Total assets available for benefits $ 1.281.936 Receipts and Disbursements Plan assets, beginning of year Changes during the year: Plan contributions Investment income earned Changes in fair market value of investments Investment expense Plan benefit withdrawals $ 1,447,780 324,388 429 (404,568) (16,873) (69,220) Plan asse~, end of year $ 1,281,936 MA'n'ITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 10 - Length of Service Awards Program (continued) Prior Service Costs There are no prior service costs associated with the Plan. Contributions The amount of the District's contribution recommended by the actuary based in the December 31, 2008 report was $325,609. The amount of the District's actual contribution was $315,000. The District made the 2008 contribution on February 10, 2009. Administration Fees Fees paid to designated Plan administrator / actuary: $4,490 Fees paid to trustee: $16,873 Funding Methodology and Actuarial Assumptions Normal Costs The actuarial valuation methodology used by the actuary to determine the District's contribution is the "Attained Age Normal Frozen Initial Liability". Under this cost method, there are two components to the annual cost each year. The first component, the "normal cost", is equal to the level annual payment required to fund the current Participant's projected benefits based on their service credit earned after the effective date of the Plan and before the EA. The second component, the annual amortization cost, equals the level annual payments required to fund over the amortization period(s), the Participant's benefits, if any based on (1) either service credit earned before the effective date of the Plan or service credit earned after the attainment of the EA, or (2) Plan amendments that create an immediate unfunded liability and are required to be amortized. Amortization period for liability for service after EA - 5 years Amortization period for liability for service after EA, Retro - 5 years Under the Attained Age Normal Frozen Initial Liability cost method, actuarial gains and losses are amortized over the future years of firefighting service before the EA for the group of firefighters participating in the Plan on the valuation date. Higher than expected investment income, for example, in any one particular year will reduce the normal cost in that year and in each of the future years based upon the ages of the current firefighters participating in the program on the valuation date. Likewise, losses to the Plan's Trust Fund will result in an increase in the future annual normal cost. The assumptions used by the actuary to determine the District's contribution and the actuarial present value of benefits are: Assumed rate of return on investment 6% Mortality Tables used for: Withdrawal: Disability: Retirement: Death (Active}: Death (Inactive): None Assumed 1.5% load of vested terminations and active Participants present value of projected benefits 100% at Entitlement Age None Assumed 1994 Unisex Pensioner Male Mortality Table projected with scale AA to 2007 -14- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 11 - Indebtedness Long-Term Debt The following is a summary of changes in long-term debt transactions for the year ended December 31, 2008: Balance Balance 1/1/08 Increases Reductions 12/31/08 $ 1,068,000 $ -0o $ 70,000 $ 998,000 698,851 53,934 70,410 682,375 $ 1,766,851 $ 53,934 $ 140,410 $ 1,680,375 General obligation serial bonds Capital lease obligations General Obligation Serial Bonds - The District borrows money in order to acquire land, equipment, construct buildings or make 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 are full faith and credit debt of the District. 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. General obligation serial bonds of the District will be repaid from tax revenues. General obligation serial bonds bear interest at 3.70% and 4.20% and have final maturity dates through 2019. The following is a summary of maturity of general obligation serial bonds: Final Interest Outstanding Issue Date Maturity Rate 12/31/08 2004 2019 3.70% $ 790,000 2005 2019 4.20% 208,000 $ 998,000 Future principal and interest payments to maturity are as follows: Year Principal Interest Total 2009 $ 75,000 $ 34,006 $ 109,006 2010 76,000 31,022 107,022 2011 82,000 27,903 109,903 2012 82,000 24,691 106,691 2013 88,000 70,239 158,239 2013-2017 487,000 70,239 557,239 2017-2019 108,000 2,539 110,539 $ 998,000 $ 260,639 $ 1,258,639 Capital Lease Obligations The District entered into a contract to acquire a 95 Foot Aerial Platform fire truck under a capital lease agreement. The liability for this obligation is payable annually and matures in May 2016. Interest rate is 5.15%. The cost for the underlying equipment was $764,478. -15- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 11 - Indebtedness (continued) Long-Term Debt (continued) Capital Lease Obliqations (continued) The District has also entered into contracts to acquire government mandated ZOLL defibrillators. The liability for these obligations are payable on a monthly basis and mature in April 2011 and June 2013. Interest rates range from 7.54% to 8.76%. The cost of the underlying equipment is $46,946. Future principal and interest payments to maturity are as follows: Year Principal Interest Total 2009 $ 76,439 $ 36,780 $ 113,219 2010 80,762 32,458 113,220 2011 83,422 27,939 111,361 2012 87,422 23,319 110,741 2013 85,620 18,570 104,190 2014-2016 268,710 29,827 298,537 $ 682,375 $ 168,893 $ 851,268 The actual allocation of principal and interest for the District's capital lease obligations may be different due to the leasing company recalculating the interest on a daily basis as opposed to a monthly basis as presented here. Management believes any differences as a result of this presentation are not significant. Note 12 - Commitments Risk Manaqement 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 dsks have not exceeded commercial insurance coverage for the past two years. Management believes that all claims currently pending are either adequately covered by insurance or will not materially affect the financial position or results of operations of the District. Lease Aqreament The District leases training space in Mattituck, New York under an operating lease agreement which commenced June 1, 2005 and expires in May 2010. The District has the option to renew this lease for two (2) additional five (5) year periods. The Lease payments are $200 per month payable annually on anniversary date of the initial lease term. The District leases equipment under operating lease agreements which commenced June 1,2006 and expires on April 1, 2011. Lease payments in the amount of approximately $207 are payable monthly. Expenditures under all operating lease agreements for the year ended December 31,2008 was approximately $4,879. Minimum annual commitments under the operating leases described above are as follows: Yearended December 31, 2009 $ 4,879 2010 3,479 2011 825 $ 9,183 -16- MA'FI'ITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31,2008 Note 13 - Subsequent Events On April 1, 2009, the District issued $180,000 of statutory installment bonds at an interest rate of 3.2%, which will mature in 2014 for the purchase of property adjacent to the District which will be used as an additional parking facility. SUPPLEMENTARY INFORMATION -17- MATTITUCK FIRE DISTRICT GENERAL FUND SCHEDULE OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year ended December 31, 2008 REVENUES Real property taxes Interest and earnings Insurance recoveries and refunds Miscellaneous income Original Final Budget Budget $ 1,978.770 $ 1.978,770 Actual Encumbrances $ 1,978,770 17,365 20,387 35 Total Revenues 1,978,770 1,978,770 2,016,557 EXPENDITURES Personal services Equipment and capital outlay Fire protection Employee benefits Debt service Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING USES Operating transfers out Net Change in Fund Balance Fund Balance at Beginning of Year Fund Balance at End of Year Variance Positive (Negative) $ -0- 17,365 20,387 35 37,787 150,000 156,000 164~610 140,000 140,000 70,454 697,757 738,805 641,077 444,567 444,567 428,138 212,544 212,544 218,155 58,585 25.000 (8.610) 10.961 72,728 16.429 (5.611) 1,644,868 1,691,916 1,522,434 83,585 85,897 333,902 286,854 494,123 (83,585) 123,684 (333,902) (333,902) (333,902) -0- $ -0- $ (47,048) 160,221 $ (83,585) $ 123,684 115,174 $ 275,395 -18- MATTITUCK FIRE DISTRICT GENERAL FUND SCHEDULE OF DETAILED EXPENDITURES AND APPROPRIATIONS Year ended December 31, 2008 Personal Services Equipment and Capital Outlay Fire Protection Services Administrative Expenses Office supplies Association dues Legal and audit fees Publications Election expense Total Administrative Expenses Utility and Water Expenses Gas and electric Telephone Hydrant rental Total Utility and Water Expenses Firefighters Expense Uniforms Medical exams Inspection dinner Total Firefightem Expense Travel and Convention Expenses Building Costs Building repairs Total Building Costs Fire Equipment and Alarm Fire alarm service Gas and diesel Repairs and maintenance Medical supplies Total Fire Equipment and Alarm Insurance Costs Vehicle and property Total Insurance Costs Total Fire Protection Services Variance Original Final Positive Budget Budget Actual Encumbrances (Negative) $ 150,000 $ 156,000 $ 164,610 $ (8,610) 140,000 140,000 70,454 58,585 10,961 30,408 30,408 21,191 9,217 1,825 1,625 1,006 819 82,424 103,424 100,885 2,539 6,750 6,750 1,868 4,882 -0- -0- 240 (240) 121,407 142,407 125,190 -0- 17,217 73,810 73,810 63,122 10,688 20,000 14,000 13,070 930 24,000 24,000 23,193 807 117,810 111,810 99,385 -0- 12,425 26,000 26,320 23,306 3,014 35,000 35,000 45,984 (10,984) 35,200 35,200 30,210 4,990 96,200 96,520 99,500 -0- (2,980) 22,703 11,703 11,851 {148) 115,000 106,000 51,897 25,000 29,103 115,000 106,000 51,897 25,000 29,103 2,500 2,500 755 1,745 21,780 32,780 35,138 (2,358) 115,000 149,728 154,058 (4,330) 30,000 30,000 18,073 11,927 169,280 215,008 208,024 -0- 6,984 55,357 55,357 45,230 10,127 55,357 55,357 45,230 -0- 10,127 697,757 738,805 641,077 25,000 72,728 (continued) -19- MATTITUCK FIRE DISTRICT GENERAL FUND SCHEDULE OF DETAILED EXPENDITURES AND APPROPRIATIONS Year ended December 31,2008 Variance Odginal Final Positive Budget Budget Actual Encumbrances (Negative) Employee Benefits Social secudty State retirement system Service award program Workers' compensation insurance Unemployment insurance Life insurance Medical and accident insurance Total Employee Benefits Debt Service Principal Interest Total Debt Service Totals 14,429 14,429 12,574 1,855 12,657 12,657 15,807 (3,150) 328,138 328,138 328,138 -0- 43,759 43,759 28,705 15,054 3,584 3,584 349 3,235 14,400 14,400 12,617 1,783 27,600 27,600 29,948 (2,348) 444,567 444,567 428,138 -0- 16,429 135,075 135,075 140,411 (5,336) 77,469 77,469 77,744 (275) 212,544 212,544 218,155 -0- (5,611) $ 1,644,868 $ 1,691,916 $ 1,522,434 $ 83,585 $ 85,897 -20- MATTITUCK FIRE DISTRICT CAPITAL FUNDS COMBINING BALANCE SHEET December 31, 2008 ASSETS Cash Due from other funds Total Assets LIABILITIES Due to other funds Total Liabilities FUND EQUITY Reserve for capital projects Total Fund Equity Total Liabilities and Fund Equity Capital Reserves Building and Grounds Apparatus Total $ 160,230 $ 364,991 $ 525,221 1,554 1,554 $ 160,230 $ 366,545 $ 526,775 $ 950 $ 950 950 $ -0- 950 159,280 366,545 525,825 159,280 366,545 525,825 $ 160,230 $ 366,545 $ 526,775 -21- MATTITUCK FIRE DISTRICT CAPITAL FUNDS COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE Year ended December 31,2008 REVENUES Interest and earnings Total Revenues EXPENDITURES Equipment and capital outlay Total Expenditures Deficiency of Revenues Under Expenditures OTHER FINANCING SOURCES Operating transfers in Capitalized leases Capital Reserves Buildings Capital and Projects Grounds Apparatus Total $ 3,741 $ 8,244 $ 11,985 3,741 8,244 11,985 $ 53,934 50,450 64,069 168,453 53,934 50,450 64,069 168,453 (53,934) (46,709) (55,825) (156,468) 163,902 170,000 333,902 53,934 53,934 53,934 163,902 170,000 387,836 Total other Financing Sources Net Change in Fund Balance Fund Balance at Beginning of Year Fund Balance at End of Year -0- 117,193 114,175 231,368 -0- 42,087 252,370 294,457 $ -0- $ 159,280 $ 366,545 $ 525,825 OTHER REPORTS -22- CERTIFIED PUBLIC ACCOUNTANTS, BUSINESS ADVISORS AND CONSULTANTS 25 Suffolk Court, Hauppauge, New York 11788 631.434.9500 ° Fax 631.434.9518 INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To Board of Fire Commissioners Mattituck Fire District Town of Southold Mattituck, New York We have audited the financial statements of the governmental activities and the fiduciary fund information of the Mattituck Fire District, New York, as of December 31, 2008, and for the year then ended, as listed in the table of contents and have issued our report thereon dated May 26, 2009. 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. Internal Control Over Financial Reporting In planning and performing our audit, we considered the Mattituck Fire District's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Mattituck Fire District's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Mattituck Fire District's internal control over financial reporting. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified certain deficiencies in internal control over financial reporting that we consider to be significant deficiencies. A control deficiency exits when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Mattituck Fire District's ability to initiate, authorize, record, process, or report financial data reliably in accordance with accounting principles generally accepted in the United States of America such that there is more than a remote likelihood that a misstatement of the Mattituck Fire District's financial statements that is more than inconsequential will not be prevented or detected by the Mattituck Fire District's internal control. We consider the deficiency described in the accompanying schedule of findings and responses as item 07-01 to be a significant deficiency in internal control over financial reporting. A material weakness is a significant deficiency, or a combination of significant deficiencies that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the Mattituck Fire District's internal control. Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies and accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, we believe that none of the significant deficiencies described above is a material weakness. ALBRECHT, VI(~GIANO, ZURI~CK ~ COMI~ANY, ~.C. -23- Compliance and Other Matters As part of obtaining reasonable assurance about whether the Mattituck Fire District's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matter that is required to be reported under Government Auditing Standards. We also noted certain matters that we reported to management of the Mattituck Fire District, in a separate letter dated May 26, 2009. The Mattituck Fire District's response to the findings identified in our audit is described in the accompanying schedule of findings and responses. We did not audit the Mattituck Fire District's response and accordingly, we express no opinion on it This report is intended solely for the information and use of the Board of Fire Commissioners, management, and federal or state awarding agencies and is not intended to be and should not be used by anyone other than specified parties. Hauppauge, New York May 26, 2009 -24- MA'FI'ITUCK FIRE DISTRICT SCHEDULE OF FINDINGS AND RESPONSES December 31,2008 FINDINGS - FINANCIAL STATEMENTS AUDIT 07-01 FINANCIAL STATEMENT PREPARATION Condition Starting in 2006, all fire district audits conducted in New York State are subject to Government Auditing Standards, issued by the Comptroller General of the United States. The independence standards contained in Government Auditing Standards and recent Statements on Auditing Standards issued by the AICPA require an evaluation on whether or not an entity has the ability to prepare its financial statements and related note disclosures acceptable under current standards or in the case of your District, in conformity with the New York State regulatory basis of accounting for fire districts that approximates the modified accrual basis of accounting Criteria District employees involved in maintaining the books and records and financial statement preparation lack the qualifications and training to fulfill their assigned functions related to financial accounting and reporting related to preventing, detecting, and correcting a potential misstatement or omission to the financial statements and related note disclosures. Recommendation We recommend that the District look into additional training to ensure that the books and records are maintained in accordance with New York State requirements. Further, the District's Treasurer should be preparing the schedules necessary to complete the notes to the financial statements after performing the year end close of the books and records. Under the Independence rules contained in Government Auditing Standards, issued by the Comptroller General of the United States, independent auditors are prohibited from becoming part of a client's internal control.