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HomeMy WebLinkAbout2009MATTITUCK FIRE DISTRICT FINANCIAL STATEMENTS Year Ended December 31, 2009 TABLE OF CONTENTS Paqe No. INDEPENDENT AUDITORS' REPORT .............................................................................................. 1-2 FINANCIAL STATEMENTS Balance Sheet- Governmental Funds ................................................................................................ 3 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds .......................................................................................... Statement of Assets and Liabilities - Fiduciary Fund .......................................................................... 5 Notes to Financial Statements ............................................................................................................. 6-16 SUPPLEMENTARY INFORMATION General Fund - Schedule 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 ........................................................................................................ 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 GovemmentAuditing Standards .................... Schedule of Findings ............................................................................................................................ 21 22-23 24 -1- CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITORS'REPORT To Board of Fire Commissioners Matfituck Fire Distdct 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, 2009, 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 Amedca 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, New York 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 except for the presentation of the capital reserve funds. The differences between the regulatory basis of accounting and accounting principles generally accepted in the United States of Amedca are also described in Note 2. In our opinion, except for the presentation of cash and equity related to the Capital Reserve Funds, 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, 2009, 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 Apdt 21, 2010, on our consideration of the Mattituck Fire District, New York'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 important for assessing the results of the audit. PERSONAL SERVICE. TRUSTED ADVICE. ALBRECH ¥, VIGGIANO, ZURECK & COMPANYr RC 245 PARK AVENUE, 24TH FLOOR 25 SUFFOLK COURT NEWYORK, NY 10167 HAUPPAUGE, NY11788 3715 T. 2127924075 T:631 4349500 F:631 4349518 -2- 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 faidy stated in all material respects in relation to the basic financial statements taken as a whole. Hauppauge, New York April 21, 2010 -3- MATTITUCK FIRE DISTRICT GOVERNMENTALFUNDS BALANCE SHEET December31,2009 ASSETS Cash Due from other funds Total Assets LIABILITIES Accounts payable Accrued expenses Due to other funds Total Liabilities FUND EQUITY Fund Balances - Reserved: Reserve for encumbrances Capital reserve for buildings and grounds Capital reserve for apparatus Fund Balance - Unreserved: Undesignated: General Fund Total Fund Equity Total Liabilities and Fund Equity General Capital Fund Fund Totals $ 318,664 $ 658,247 $ 976,911 950 950 $ 318,664 $ 659,197 $ 977,861 $ 116,916 $ 116,916 7,143 7,143 950 950 125,009 $ -0- 125,009 5,115 5,115 221,955 221,955 437,242 437,242 188,540 188,540 193,655 659,197 852,852 $ 318,664$ 659,197 $ 977,861 See notes to financial statements. MATTITUCKFIRE DISTRICT GOVERNMENTALFUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGESINFUND BALANCES YearEnded December31,2009 REVENUES Real property taxes Interest and earnings Sale of apparatus and equipment Insurance recoveries and refunds Refund of prior year's expenses Miscellaneous income Total Revenues EXPENDITURES Personal services Equipment and capital outlay Fire protection Employee benefits Debt service Bond issuance costs Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES AND (USES) Operating transfers in Operating transfers out Long-term debt issued Total Other Financing Sources and (Uses) General Capital Fund Fund Totals 1,881,870 $ 1,881,870 6,341 $ 3,990 10,331 6,470 6,470 1,193 1,193 183 183 55 55 1,896,112 3,990 1,900,102 167,177 167,177 164,129 449,992 614,121 529,500 529,500 484,970 484,970 225,076 225,076 7,626 7,626 1,570,852 457,618 2,028,470 325,260 (453,628) (128,368) (407,000) 407,000 407,000 (407,000) 180,000 180,000 (407,000) 587,000 180,000 Net Change in Fund Balance Fund Balance at Beginning of Year Fund Balance at End of Year (81,740) 133,372 51,632 275,395 525,825 801,220 $ 193,655 $ 659,197 $ 852,852 See notes to financial statements, -5- MATTITUCK FIRE DISTRICT FIDUCIARY FUND STATEMENT OF ASSETS AND LIABILITIES December 31, 2009 ASSETS Service award program assets LIABILITIES Service awards Total Assets Total Liabilities Trust Fund $ 1,782,714 $ 1,782,714 $ 1,782,714 $ 1,782,714 See notes to financial statements. MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2009 Note I - 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 ail 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 exemise responsibility. No other governmental organizations have been included or excluded fi.om 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 Distdct prepares these finaecial 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 following fund types: Governmental Funds - Governmental funds are those through which most govemmental 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 which 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 bends, 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. Aisc 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 fi.om these funds are subject to permissive referendum. Additionally, the District reports the following fiduciary fund: 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 Accountin¢l 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 pedod in which they are available and measurable, and expenditures wilt generally be recognized in the accounting pedod in which the liability is actually incurred. This basis of accounting differs from accounting principles generally accepted in the United States of America for governments as promulgated by the Govemment Accounting Standards Board. -7- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2009 Note 2 - Summary of Significant Accounting Policies (continued) Basis of Accounting (continued) Encumbrance accounting, under which pumhase orders, contracts and other commitments are recorded for budgetary control purposes in order to reserve that portion 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 pedod 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. Use of Estimates The preparation of financial statements in conformity with 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 Amedca requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates. Note 3 - Assets, Liabilities and Fund Equity Receivables Receivables are recorded and revenues recognized as earned or as specific program expenditures are incurred. Interfund Receivables and Payables Dudng 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 are 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 yearn 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 note 8 to the financial statements. -8- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2009 Note 3 - Assets, Liabilities and Fund Equity (continued) Fund Equity 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, Note 4 - Revenues and Expenditures Property Taxes Property taxes are collected by the Town of Southold on behalf of the District. Payments from the Town ara normally raceived at vadous intervals dudng the year. Interfund Transactions Interfund transfers raprasent payments by the General Fund to the Capital Fund to fund various expenditures and capital raserves established by the District. Total Columns on the Financial Statements The total columns in the combined financial statements ara prasented only to facilitate financial analysis. Data in these columns do not present the financial position, rasults 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. Interfund eliminations have not been made in the aggragation of this data. Note 5 - Stewardship, Compliance and Accountability Budgetary Proceduras The Distdct prepares an annual budget for the General Fund, which is approved by the Board of Fira 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 referandum. Any ravisions to the annual budget ara adopted by rasolution of the Board of Fira Commissioners. Overdrawn Appropriations - General Fund Equipment and capital outlay expenditures for the year ended December 31, 2009 exceeded appropriations by $6,863. In accordance with District policy, the Board of Fire Commissioners approved the underlying expenditures but did not formally amend the budget which would have eliminated this variance. Operating transfers to the Capital Reserves for the year ended December 31,2009, exceeded appropriations by $70,000. In accordance with Distdct policy, the Board of Fire Commissioners authorized the additional interfund transfer but did not formally amend the budget which would have eliminated this variance. Excess of Expendituras Over Appropriations For the year ended December 31, 2009, expenditures exceeded appropriations in the District's General Fund by $17,512. These excess expendituras wera funded by available fund balance. -9- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2009 Note 6 - Cash Custodial Credit Risk - Deposits - Custodial credit risk for deposits exists when, in the event of the failure of a depository financial institution, a govemment 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 Distdct has its own investment policy. Distdct 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 United States treasury and United States agencies, and obligations of New York State or its localities. Collateral is required for demand and time deposits at 105% of all deposits not covered by federal deposit insurance. Obligations that may be pledged as collateral are obligations of the United States and its agencies and obligations of the State or its municipalities. Governmental Accounting Standards Board Statement #40 directs that deposits be disclosed as exposed to custodial credit dsk if they are not covered by depository insurance, and the deposits are either: oUncollateralized; °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, 2009, the District's bank balances were $978,412. Of the District's bank balances, $263,877 was covered by federal deposit insurance and $714,535 was secured by collateral held by the District's agent, a third party financial institution, in the District's name. The Distdct does not typically purchase investments for long enough duration to cause it to believe that it is exposed to any material interest rate risk. The Distdct does not typically purchase investments dominated in a foreign currency, and is not exposed to foreign currency dsk. Note 7 - Interfund Receivables, Payables and Transfers At December 31, 2009, individual fund inter[und receivable and payable balances were as follows: Amount Amount Receivable Payable General Fund $ 950 Capital Fund $ 950 Total $ 950 $ 950 The District anticipates liquidating this interfund receivable/payable by transferring the actual cash during the year ending December 31, 2010. At December 31, 2009, individual fund interfund transfer balances were as follows: Transfer Transfer In Out General Fund Capital Fund: Capital Projects Fund Buildings and Grounds Reserve Fund Apparatus Reserve Fund 163,821 167,000 170,000 407,000 93,821 Total $ 500~821 $ 500.821 -10- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2009 Note 7 - Inter[und Receivables, Payables and Transfers (continued) The interfund transfers of $407,000 from the General Fund to the Capital Fund includes the following: °$237,000 of funding from the adopted budget which was allocated to the Buildings and Grounds Reserve Fund in the amount of $67,000 and the Apparatus Reserve Fund in the amount of $170,000. o$100,000 of additional funding for the Building and Grounds Reserve Fund authorized by a budget adjustment and transfer approved by the Board. ,,$70,000 transfer to the Capital Projects Fund which was approved by the Board however the budget was not formally amended. The Interfund transfer of $93,821 from the Buildings and Grounds Reserve Fund to the Capital Projects Fund was in accordance with a permissive referendum to pay for part of the cost of a purchase of property adjacent to the District's headquarters. The $93,821 transfer has been eliminated in the Statement of Revenues, Expenditures, and Changes in Fund Balances. Note 8 - Capital Assets Capital assets consist of the following at December 31, 2009: 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 Total depreciation expense Balance Balance 01/01/09 Additions Deletions 12/31/09 $ 16,000 $ 370,000 $ 386,000 29,069 $ 29,069 -0- 45,069 370,000 29,069 386,000 2,556,998 2,556,998 437,750 437,750 3,807,220 188,909 114,179 3,881,950 598,410 84,247 682,657 7,400,378 273,156 114,179 7,559,355 613,843 66,702 680,545 257,143 10,944 268,087 1,590,540 227,573 82,078 1,736,035 256,425 57,879 314,304 $ 2,717,951 $ 363,098 $ 82,078 2,998,971 4,560,384 $ 4~946~384 $ 363,098 The Distdct evaluates prominent events or changes in circumstances 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 Distdct determines that the carrying amount of the asset will not be recoverable. At December 31, 2009, the Distdct has not recorded any such impairment losses, -11- MATI'ITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31,2009 Note 9 - Retirement System General Information The District participates in the New York State and Local Employees' Retirement System (the "System"). This is a cost-sharing multiple employer public employee retirement system. The System offers a wide range of plans and benefits, which are related to years of service and final average salary, vesting of retirement benefits, death and disability. Provisions and Administration The System provides retirement benefits as well as death and disability benefits. New York State Retirement and Social Security Law governs obligations of employers and employees to contribute and benefits to employees. The System issues a publicly available financial report that contains financial statements and required supplementary information. The report may be obtained by writing New York State Retirement System, Governor Alfred E. Smith State Office Building, Albany, NY 12244. Funding Policies The System is noncontributory for the employee, except for those who joined the System after July 27, 1976, who contribute 3% of their salary, except that employees in the System more than ten years are no longer required to contribute. The Comptroller certifies the rates expressed as proportions of members' payroll annually, which are used in computing the contributions required to be made by employers to the pension accumulation fund. The District is required to contribute at a rate determined actuarially by the System. The District's contribution made to the System was equal to 100% of the contribution required for each year. Required contributions for the current year and two preceding years were: Percent Contribution of Covered Year Amount Payroll 2009 $ 14,934 6.90% 2008 $ 15,807 7.90% 2007 $ 12,536 8.80% NoW 10-LengthofService Awards Program The District's Length of Service Award Program (the"Plan")financialstatements are forthe yearended December31, 2009. 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 certain 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 fireflghter on January 1, 1992 and must have earned a year of service credit under the Point System during 1992. -12- MATTrrUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2009 Note 10 - Length of Service Awards Program (continued) Plan Description (continued) 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 ("FA") 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 firefighter 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 Firefighters' Benefit Law, the flrefighter 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. Fiduciary Investment and Control Service credit is determined based on information certified to the Board of Fire Commissioners by the Chief of each fire company having members who participate 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. As of December 2009, the Board of Fire Commissioners transferred all Custodian responsibilities and Plan assets to Nationwide Life Insurance. 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. -13- MATI'ITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2009 Note 10 - Length of Service Awards Program (continued) Plan Financial Condition As of and for the year ended December 31,2009 Funded Status of the Plan Actuarial present value of benefits Less: total assets available for benefits $ 3,187,062 1,782,714 Unfunded actuarial present value of benefits $ 1.404.348 Funded ratio 55.94% Assets Available for Benefits Cash and cash alternatives Fixed income Equities International / Global equities 176,767 967,809 549,751 88,387 Total assets available for benefits $ 1.782.714 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 $ 1,281,936 315,000 138 304,090 (23,570) (94,880) Plan assets, end of year $ 1.782.71~44 An additional contribution of $60,609 was made from the District's 2009 budget but not deposited into the trust account until January 2010. This additional contribution when included in the total assets available for benefits increases the funded ratio to 57.84%. 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, 2009 report was $296,794. The amount of the District's actual contribution was $339,000. The District made the 2009 contribution on March 17, 2010. Administration Fees Fees paid to designated Plan administrator/actuary: $5,368 Fees paid to trustee: $24,967 -14- MATFITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2009 Note 10 - Length of Service Awards Program (continued) Funding Methodology and Actuarial Assumptions Nom~al Costs The actuarial valuation methodology used by the actuary to determine the Disthct'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 alter the attainment of the E.A, 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 pedod for liability for service after EA, Retre - 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 Note 11 - Indebtedness Long-Term Debt The follovYlng is a summary of changes in long-term debt transactions for the year ended December 31, 2009: Balance Balance 1/1/09 Increases Reductions 12/31/09 $ 1,003,045 $ 80,045 $ 923,000 $ -0- 42,069 180,000 8,341 213,728 $ 1,045,114 $ 180,000 $ 88,386 $1,136,728 General obligation sedal bonds Statutory installment bond Capital lease obligations General Obliqation 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 sedal bonds bear interest at 3.70% and 4.20% and have final maturity dates through 2019. -15- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2009 Note 11 - Indebtedness (continued) Long-Term Debt (continued) The following is a summary of matudty of general obligation serial bonds: Final Interest Outstanding Issue Date Maturity Rate 12/31/09 2004 2019 3.70% $ 730,000 2005 2019 4.20% 193,000 $ 923,000 Future principal and interest payments to maturity are as follows: Year Principal Interest Total 2010 $ 76,000 $ 34,006 $ 110,006 2011 82,000 31,022 113,022 2012 82,000 27,903 109,903 2013 88,000 24,691 112,691 2014 89,000 21,345 110,345 2015-2019 506,000 51,432 557,432 $ 923,000 $ 190,399 $ 1,113,399 Statutory Installment Bond - The District borrowed money in order to acquire land through the issuance of an $180,000 statutory installment bond. This enables the cost of this acquisition to be bome by present and future taxpayers. This long- term liability is full faith and credit debt of the District. The provision to be made in future budgets represents the amount, exclusive of interest, authorized to be collected in future years from taxpayers and others for liquidation of the long-term liabilities. The statutory installment bond beam interest at 3.20% and has a final maturity date of 2014. The following is a summary of matudty of the statutory installment bond: Year Principal Interest Total 2010 $ 36,000 $ 5,760 $ 41,760 2011 36,000 4,608 40,608 2012 36,000 3,456 39,456 2013 36,000 2,304 38,304 2014 36,000 1,152 37,152 $ 180,000 $ 17,280 $ 197,280 Capital Lease ObliRations 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. The Distdct 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 undeHying equipment is $46,946. -16- MA'R'ITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2009 Note 11 - Indebtedness (continued) Long-Te~n Debt (continued) Capital Lease Obli,qations (continued) Future principal and interest payments to matudty ara as follows: Year Principal Interast Total 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 2013 85,300 14,212 99,512 2014-2016 182,406 16,619 199,025 $ 604,932 $ 133,117 $ 738,049 The actual allocation of principal and interest for the District's capital lease obligations may be different due to the leasing company recalculating the interast on a daily basis as opposed to a monthly basis as presented here. Management believes any differences as a result of this presentation ara not significant. Note '12 - Commitments Risk Manaqement The District is exposed to vadous dsks of loss related to torts, theft of, damage to, and destruction of assets; injudes to employees, errors and omissions; natural disasters, etc. These dsks are covered by commemial insurance pumhased from independent third parties. Settled claims from these risks have not exceeded commemial insurance coverage for the past two years. Management believes that all claims currently pending ara either adequately covered by insurance or will not materially affect the financial position or rasults of operations of the District. Lease Aqreements The Distdct leases training space in Mattituck, New York under an operating lease agreement which commenced June 1, 2005 and was amended on September 27, 2006. The amended lease agreement expires May 31, 2031. The District has the option to renew this lease for one (1) additional twenty-five (25) year pedod. The lease payments are $200 per month payable annually on the anniversary date of the initial lease term and increases to $800 per month on the renewal date. Expenditures under this operating lease for the year ended December 31, 2009 were $2,400. The District leases communication tower space in Sag Harbor, New York for a radio signal repeater under an operating lease agreement which commenced May 27, 2009. The term of the lease agreement is for a five (5) year pedod with 4 automatic renewal terms for an additional five (5) year pedod. The lease payments are $500 per month increased on the anniversary of the commencement date by an annual escalator of three (3) pement. In addition, thera is an annual site inspection fee of $500 increased on the anniversary of the commencement date by the three (3) percent annual escalator. Expenditures under this operating lease for the year ended December 31, 2009 were $5,580. Minimum annual commitments under the operating leases described above are as follows: Yearended December31, 2010 $ 8,505 2011 8,685 2012 8,872 2013 9,064 2014 9,263 2015-2019 49,508 2020- 2024 55,493 2025- 2029 62,428 2030-2033 42,374 $ 254,192 SUPPLEMENTARY INFORMATION -17- MATFITUCK FIRE DISTRICT GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2009 REVENUES Real property taxes Interest and earnings Sale of apparatus and equipment Insurance recoveries and refunds Refund of prior year's expenses Miscellaneous income Originat Final Budget Bud.~et Actual Encumbrances $ 1,881,870 $ 1,881,870 $ 1,881,870 6,341 6,470 1,193 183 55 Positive (Negative/ $ -0- 6,341 6,470 1,193 183 55 EXPENDITURES Personal services Equipment and capital outlay Fire protection Employee benefits Debt service TotaIRevenues 1,881,870 1,881,870 1,896,112 14,242 155,625 167,625 167,177 448 140,000 158,585 164,129 $ 1,319 (6,863) 681,622 580,513 529,500 3,796 47,217 439,038 493,147 484,970 8,177 228,585 228,585 225,076 3,509 Total Expendifures Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING USES Operating transfers out Net Change in Fund Balance $ 1,644,870 1,628,455 1,570,852 5,115 52,488 237,000 253,415 325,260 (5,115) 66,730 Fund Balance at Beginning of Year Fund Balance at End of Year (237,000) (337,000/ (407,000) (70,000) 43- $ (83,585) (81,740) $ (5,115) $ (3,270) 275,395. $ 193,655 -18- MATTITUCK FIRE DISTRICT GENERAL FUND SCHEDULE OF DETAILED EXPENDITURES AND APPROPRIATIONS Year Ended December 31, 2009 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 Fire§ghters 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) $ 155,625 $ 167,625 $ 167,177 $ 448 140,000 158,585 164,129 $ 1,319 (6,863) 17,000 22,000 22,396 1,796 (2,192) 1,825 1,825 575 1,250 93,924 60,924 57,349 3,575 7,750 11,750 11,210 540 -0- -0- 280 (280) 120,499 96,499 91,810 1,796 2,893 67,172 63,172 52,951 10,221 12,400 12,400 10,111 2,289 25,600 25,600 24,884 716 105,172 101,172 87,946 -0- 13,226 32,000 7,000 6,799 201 32,500 35,000 38,048 (3,048) 20,000 20,000 20,884 (884) 84,500 62,000 65,731 -0- (3,731) 22,000 7,000 5,491 1,509 112,500 76,891 70,212 6,679 112,500 76,891 70,212 -0- 6,679 2,500 2,500 -0- 2,500 26,136 26,136 18,211 7,925 115,000 134,000 128,574 2,000 3,426 35,000 22,000 16,676 5,324 178,636 184,636 163,461 2,000 19,175 58,315 52,315 44,849 7,466 58,315 52,315 44,849 -0- 7,466 681,622 580,513 529,500 3,796 47,217 (continued) -19- MA'DrlTUCK FIRE DISTRICT GENERAL FUND SCHEDULE OF DETAILED EXPENDITURES AND APPROPRIATIONS Year Ended December 31, 2009 Vadance Original Final Positive Budget Budget Actual Encumbrances (Negative) Employee Benefits Social security 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 11,905 11,905 12,756 (851) 15,960 15,960 14,934 1,026 320,445 381,054 380,125 929 43,769 29,769 28,946 823 3,759 3,759 779 2,980 15,600 15,600 12,393 3,207 27,600 35,100 35,037 63 439,038 493,147 484,970 -0- 8,177 150,535 150,535 152,443 (1,908) 78,050 78,050 72,633 5,417 228,585 228,585 225,076 -0- 3,509 $ 1,644,870 $ 1,628,455 $ 1,570,852 $ 5,115 $ 52,488 -20- MATTITUCK FIRE DISTRICT CAPITAL FUNDS COMBINING BALANCE SHEET December 31, 2009 ASSETS Cash Due from other funds Capital Reserves Building and Grounds Apparatus FUND EQUITY Reserve for capital projects Total $ 221,005 $ 437,242 $ 658,247 950 950 Total Assets $ 221,955 $ 437,242 $ 659,197 $ 221,955 $ 437,242 $ 659,197 Total Fund Equity 221,955 437,242 659,197 Total Liabilities and Fund Equity $ 221,955 $ 437,242 $ 659,197 -21- MATTITUCK FIRE DISTRICT CAPITAL FUNDS COMBINING SCHEDULE OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCE Year Ended December 31, 2009 REVENUES Interest and eamings Total Revenues EXPENDITURES Equipment and capital outlay Bond issuance costs Total Expenditures Deficiency of Revenues Under Expenditures OTHER FINANCING SOURCES Operating transfers in Operating transfers out Long-term debt issued Total other Financing Sources Net Change in Fund Balance Fund Balance at Beginning of Year Fund Balance at End of Year Capital Reserves Buildings Capital and Projects Grounds Apparatus Total $ 1,046 $ 2,944 $ 3,990 1,046 2,944 3,990 $ 336,195 11,550 102,247 449,992 7,626 7,626 343,821 11,550 102,247 457,618 (343,821) (10,504) (99,303) (453,628) 163,821 167,000 170,000 500,821 (93,821) (93,821) 180,000 180,000 343,821 73,179 170,000 587,000 -0- 62.675 70,697 133,372 -0- 159.280 366,545 525,825 $ -0- $ 221.955 $ 437,242 $ 659,197 OTHER REPORTS CERTIFIED PUBLIC ACCOUNTANTS -22- 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 Mattituck, New York We have audited the financial statements of the governmental activities and the fiduciary fund information of the Mattituck Firs District, New York, as of December 31, 2009, and for the year then ended, as listed in the table of contents and have issued our report thereon dated April 21, 2010. 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 Reportinq In planning and performing our audit, we considersd the Mattituck Fire District's internal control over financial rsporting as a basis for designing our auditing procedurss for the purpose of exprsssing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Mattituck Firs District's internal control over financial reporting. Accordingly, we do not exprsss an opinion on the effectiveness of the Mattituck Fire District's internal control over financial reporting. A deficiency in internal control exists 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 and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a rsasonable possibility that a material misstatement of the enfity's financial statements will not be prsvented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be matedal weaknesses, as defined above. However, we identified a deficiency in internal control over financial reporting, described in the accompanying schedule of findings as item 2009-01 that we consider to be a significant deficiency in internat control over financial reporting. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to medt attention by those charged with governance. PERSONAL SERVICE.TRUSTED ADVICE, ALBRECHT, VIGGIANO, ZURECK & COMPANY, PC. 245 PARK AVENUE, 24TH FLOOR 25 SUFFOLK COURT NEWYORK, NY 10167 HAUPPAUGE, NY 11788-3715 T: 212 7q2 4075 T:631.434.9500 F: 631.434 9518 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 April 21, 2010. 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 April 21, 2010 -24~ MA'I-FITUCK FIRE DISTRICT SCHEDULE OF FINDINGS December 31, 2009 FINDINGS - FINANCIAL STATEMENTS AUDIT 2009-01 ACCOUNTING FOR CAPITAL RESERVES Cdteria The Office of the State Comptroller (OSC) has compiled a "Fire District Accounting and Reporting Manual" as a comprehensive accounting and reporting guide for fire district officials and others interested in accounting and financial reporting by fire districts in New York State. The manual provides an overview of accounting and financial reporting principles to be used by fire districts to account for and report their financial activities, in accordance with this manual and other OSC guidance, capital reserves should be accounted for in the fund that is providing the financing. Once an actual capital project is authorized reserve fund moneys should be transferred to the Capital Projects Fund as needed to finance the project. In prior years, the District had the option to account for capital reserves in either the General Fund or the Capital Projects Fund. Condition The Distdct accounts for Capital Reserve Funds in the Capital Fund. Recommendation The District, in order to be in conformity with the Fire District Accounting and Reporting Manual, should consider changing its current accounting for Capital Reserve funds.