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Home My WebLink About2009Craig, Fitzsimmons & Michaels, LLP Certified Public Accountants, Management and IT Consultants May15,2010 The Board of Fire Commissioners East Marion Fire District PO Box 131 9245 Main Road East Marion, NY 11939 Dear Fire Commissioners: We have audited the financial statements of the East Marion Fire District (the District) for the year ended December 31, 2009 and have issued our report thereon dated May 15, 2010. Professional standards require that we provide you with the following information related to our audit. Our Responsibility under Auditinq Standards Generally Accepted in the United States of America As stated in our engagement letter dated November 10, 2009 our responsibilities, as described by professional standards, is to plan and perform our audit to obtain reasonable, but not absolute, assurance about whether the financial statements are free of material misstatement and are fairly presented in accordance with the modified accrual basis of accounting. The modified accrual basis is a statutory basis of accounting, prescribed by the Office of the New York State Comptroller, and is not a presentation in conformity with generally accepted accounting principles. You are responsible for the fair presentation of your financial information, as well establishing and maintaining internal control over financial reporting and for your compliance with laws, regulations, contracts and agreements. Our audit of your financial statements does not relieve you or your management of your oversight responsibilities. 1. Our responsibility is to plan and perform our audit to obtain reasonable, but not absolute, assurance about whether the financial statements are free of material misstatement. 2. As part of our audit, we considered the internal control of the District. Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. We are responsible for communicating significant matters related to the audit that ara, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures specifically to identify such matters. As part of our obtaining reasonable assurance about whether your financial statements are free of material misstatement, we performed tests on your compliance with certain provisions of laws, regulations, contracts and grant agreements. However, our work in this regard was not designed to provide an opinion on your compliance with such provisions. Because an audit is designed to provide reasonable, but not absolute assurance, and because we did not perform a detailed examination of all transactions, there is a risk that a material misstatement may exist and not have been detected by us. Planned Scope and Timinc of the Audit We performed our audit according to the planned scope and timing previously communicated to you in our audit-planning memorandum. Our work for 2009 included other additional preceduras related to your LOSAP as required by current NYS legislation. This increased the time it took to perform the audit procedures and financial statement disclosures. 20 Manor Road, Smithtown, New York 11787 Phone (631) 360-1400 ,- (877) NPO-CPAS ~ Fax (631) 360-7314 -, www. cfmllp.com Board of Fire Commissioners May 15, 2010 Page 2 of 4 Other Information in Documents Containing Audited Financial Statements Our responsibility for other information in documents containing the District's audited financial statements does not extend beyond the financial information identified in our report and we have no professional obligation to perform procedures to corroborate such other information. In the event the financial statements are incorporated into a printed document, please forward a printer's proof for our approval before final production. Sianificant Accountina Policies Management is responsible for the selection and use of appropriate accounting policies. In accordance with the terms of our engagement letter, we advise management about the appropriateness of accounting policies and their application. No new accounting policies were adopted during 2009, nor did the application of existing policies change during the year. The significant accounting policies used by the District are described Note 1 to the financial statements. We noted no transactions entered into by the District during the year for which there is a lack of authoritative guidance or consensus. There are no significant transactions that have been recognized in the financial statements in a different period than when the transaction occurred. We noted no transactions entered into by the District during the year that were both significant and unusual, and of which, under professional standards, we are required to inform you, or transactions for which there is lack of authoritative guidance or consensus. Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. There were no particularly sensitive accounting estimates affecting your 2009 financial statements. Audit Adjustments For the purpose of this letter, professional standards define an audit adjustment as a proposed correction of the financial statements that, in our judgment, may not have been detected except through our auditing procedures. An audit adjustment may or may not indicate matters that could have a significant effect on the District's financial reporting process (that is, cause future financial statements to be materially misstated). In our judgment, none of the audit adjustments we proposed, whether recorded or unrecorded by the District, individually or taken together, indicate matters that could have a significant effect on the District's financial reporting process. The adjustments we presented were typical "yearend adjustments" to take the District's records from the "cash basis" of accounting to the "modified accrual basis" of accounting required to be followed under the direction of the New York Office of State Comptroller. Management has reviewed all the adjusting journal entries we proposed and is in agreement with the presentation of these adjustments in the audited financial statements. Management Representations We have requested certain written representations from management. These are included in the management representation letter provided to us dated May 15, 2010. Disagreements with Manaoement For the purpose of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting or auditing matter that could be significant to the financial statements of the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Board of Fire Commissioners May 15, 2010 Page 3 of 4 Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the District's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Issues Discussed Prior to Retention of Independent Auditors We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the District's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Difficulties Encountered in Performinc the Audit We encountered no significant difficulties in dealing with management in performing our audit. Deficiencies and Other Matters In planning and performing our audit of the financial statements of the District for the year ended December 31, 2009, we considered your internal control structures in order to help us determine the nature, timing and extent of our audit procedures. These procedures were designed to allow us to formulate an expression of our audit opinion as to the fairness of your financial statement presentation and disclosures in accordance with the modified accrual basis as outlined in the Uniform System of Accounts. Our work in this regard was not designed for, nor intended to provide you with assurances on your internal controls. However, during the course of our audit we did note certain matters involving your control framework and its operation in addition to those mentioned above that we recommend be addressed. Enclosed with this letter we have detailed certain recommendations related to financial controls we believe will help to strengthen your overall control environment. We strongly suggest the District review these findings and implement corrective actions during the current year. Management is responsible for establishing and maintaining internal controls, such controls should include the ability to prepare financial statements and related disclosures. East Marion Fire District does not have a system of internal controls that would enable management to conclude the financial statements and related disclosures are complete and presented in accordance with the modified accrual basis of accounting without our assistance in our capacity as your independent auditors. Management requested us to prepare a draft of the financial statements, including the related footnote disclosures. The outsourcing of these services is typical in government organizations of your size and is a service that we have historically provided. Typically this would be considered a material weakness, however since you have designated your treasurer to oversee these services, and because of his technical experience has the competencies to oversee this work we do not consider our assistance as an indication of a material weakness under the new standards. Conclusion We would like to take this opportunity to re-emphasize the conditions noted herein that were considered in the nature, timing and extent of our audit testing and would not necessarily disclose all matters involving internal control that might be control deficiencies. Accordingly, our work would not necessarily disclose all significant deficiencies that are considered material weaknesses as defined by the AICPA. Also of significance to note is that any internal control system is subject to inherent limitations in its design and operation, this means that non-compliance, errors or frauds could occur and not be detected by such controls. Board of Fire Commissioners May 15, 2010 Page 4 of 4 Conclusion - continued This information is intended solely for the use of the Board of Fire Commissioners of the District, Management, others within the District and the Office of the Comptroller of the State of New York. It is not intended to be, and should not be used by anyone other than these specified parties. Very truly yours, Craig, Fitzsimmons & Michaels, LLP May 15, 2010 Craig, Fitzsimmons & Michaels, LLP Certified Public Accountants, Management and IT Consultants The Board of Fire Commissioners East Marion Fire District PO Box 131 9245 Main Road East Marion, NY 11939 Dear Fire Commissioners: In planning and performing our audit of the East Marion Fire District (the District) as of and for the year ended December 31, 2009, in accordance with audit standards generally accepted in United States of America, we considered the District's internal controls over financial reporting (internal control) as a basis for designing our audit procedures for the purpose of expressing our opinion on the District's financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District's internal controls. A control deficiency 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 misstatements on a timely basis. A control deficiency may be either a deficiency in design or a deficiency in operation. A deficiency in design exists when a control necessary to meet the control objectives is missing or an existing control is not properly designed so that even if the control operates as designed the control objective would not be met. A deficiency in operation exists when a properly designed control does not operate as designed or the person performing the control does not possess the necessary authority or competence to perform the control properly. A significant deficiency is a deficiency or combination of deficiencies in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. A material weakness is a deficiency or combination of deficiencies in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, detected and corrected on a timely basis. Our consideration of internal control was for the limited purpose described in the first paragraph and would not necessarily disclose all deficiencies in internal control that might be significant deficiencies or material weaknesses as defined above. During our audit we reviewed the status of previous year's recommendations; we also became aware of certain issues that present opportunities for strengthening controls as well as better complying with laws and regulations or meeting organizational objectives. The following paragraphs summarize our observations and our suggestions concerning those matters. Prior Year Comments We found that the Board of Commissioners and the District's management team adequately addressed the following prior year recommendations: Annual Installation Dinner Federal Unemployment Tax Fixed Asset Controls Fuel Reconciliations There is one recommendation from our 2008 audit we believe was not properly addressed and should be revisited by the Board of Commissioners. This relates to conference expenses for the District's attorney paid by the Fire District, and is again included with our 2009 audit comments. 20 Manor Road, Smithtown, New York 11787 Phone (631) 360-1400 -. (877) NPO-CPAS ,.. Fax (631) 360-7314 o www. cfmllp.com Board of Fire Commissioners May 15, 2010 Page 2 of 4 Conference Expenses Paid for Attorney by the Fire District (originally issued in 2008) During our audit we noted the District reimbursed its attorney a proportionate share of expenses for the attorney to attend a conference on behalf of the District. Under Office of State Comptreller directives the Board of Fire Commissioners should not expend district funds for persons other than fire distdct officers and employees to attend training seminars and conferences. Furthermore, the Board of Fire Commissioners should determine if the fire district is due a refund for any excess mileage reimbursement and any expenses that may have been personal in nature. It is our recommendation that the District review and revise its contract with legal counsel so that the District is not billed for his attendance at conferences. We have noted that the Board of Fire Commissioners has retained different legal counsel for 2010 and we do not anticipate this being a concern moving forward. Whistleblower Protections The Sarbanes Oxley Act amended the federal criminal code to make it illegal to retaliate against whistleblowers. This amendment to the federal criminal code requires local governments, including fire districts to take action by adopting policies so that the organization can properly comply with these federal laws. During the course of our audit we found no evidence that the District has adopted Whistleblower Protections that would enable it to effectively comply with federal regulations. We recommend the District refer to the New York Fire District Officers' Guide for a sample of a Whistleblower Policy or consult with legal counsel to develop, adopt and implement a Whistleblower Policy that would be appropriate for the East Marion Fire District. Record Retention and Other District Policies The Sarbanes-Oxley Act amends portions of the federal criminal code to make it a crime to destroy records under certain circumstances. The law also requires the intentional document destruction to become a process that must be carefully monitored. Fire Districts are required to have written, mandatory document retention and periodic destruction policies. Such policies help to eliminate the accidental or innocent destruction of critical records. In addition, a well crafted Record Retention and Document Destruction Policy will provide district personnel with appropriate information on the length of time records should be retained to be in compliance with the Sarbanes Oxley Act and New York State Law. During the course of our audit we found no evidence that the District has adopted Record Retention and Document Destruction Policies that would enable it to effectively comply with federal regulations. The policy should provide for the record retention responsibilities of the staff, volunteers, board members and outsiders for maintenance of documentation storage and when the destruction of the organizations records is appropriate. The policy should establish standards for document integrity, retention and destruction, and the handling of electronic files and backup procedures. Under the local government records law, the Fire District Secretary is automatically designated as the Fire District Records Management Officer. The Records Management Officer oversees the records management program and coordinates its development. It is the responsibility of the Board of Fire Commissioners to maintain and retain the fire district records for as long as those records are needed for official fire distdct business. It is their responsibility to protect these records and to cooperate with the Records Management Officer as well as to pass on active official records to their successors in office. It is our understanding that the District has adopted the guidance embodied in the "MU-1 Retention Schedule and Authorization for Record Access/Management Officer~' to for the control over and destruction of records. The MU-1 Records Retention and Disposition Schedule indicates the minimum length of time that officials of Cities, Towns, Villages and Fire Districts must retain their records before they may be disposed of legally. The schedule was originally issued in 1988, and revised since then. It has been prepared and issued by the State Amhives and Records Administration (SARA), State Education Department, pursuant to Section 57.25 of the Arts and Cultural Affairs Law, and Part 185, Title 8 of the Official Compilation of Codes, Rules and Regulations of the State of New York. Board of Fire Commissioners May 15, 2010 Page 3 of 4 Record Retention and Other District Policies - continued The purposes of this Schedule are to: 1. ensure that records are retained as long as needed for administrative, legal and fiscal purposes; 2. ensure that state and federal record retention requirements are met; 3. ensure that record series with enduring historical and other research value are identified and retained permanently; and 4. encourage and facilitate the systematic disposal of unneeded records. Further guidance can be found by accessing the state website at: http:llwww.archives.nysed.govlalrecordslmr_pub_mul .shtml We are concerned because management could not locate a copy of the District's Record Retention Policy in the Districts "Policy Book." We also noted that during the Annual Re-Organization meeting a reference is made that all the District's policies will remain in force, but the specific policies were not listed or identified. It is our suggestion that the District's Policy Book be updated to include a copy of the District's Record Retention Policy and that during the annual Re- organization meeting the Board of Fire Commissioners make a resolution to re-adopt and affirm the specific District policies regarding items such as: · Purchasing · Cash Management · Fixed Assets · Investment · Credit Cards · Travel and Training · Cell Phone · Substance Abuse · Sexual Harassment · Code of Conduct · Employee Handbook (Employment Policies) · Whistleblower Protections · Record Retention and Document Destruction · Use of District Property · Refreshment Policy · AnyotherpoliciestheDistrictdeemsnecessary Electronic Payments and Transfers We noticed during the year that on at least one occasion the District utilized electronic banking facilities. More frequently we see fire districts utilizing electronic banking as it can be a faster, easier, and a more efficient substitute for paper transactions. While electronic banking becomes more prevalent, local governments including the East Marion Fire District need to adapt their controls by revising their internal policies and procedures to deal with advancing technologies including electronic banking. We recommend that the District develop a detailed policy covering electronic banking transactions including wire transfers between accounts. The policy should address: · / What types of electronic banking activities are authorized · / Who is authorized Jo initiate electronic banking transactions v' Who is to approve (audit) the electronic banking transaction · / Who will transmit the transaction · " Who records and documents the electronic transaction ,/ Who reviews and reconciles electronic activities Board of Fire Commissioners May 15, 2010 Page 4 of 4 Electronic Payments and Transfers - continued It is important that the Board of Commissioners fully understand the costs, risks, and benefits of engaging in electronic banking and if deemed appropriate, design policies and procedures to properly safeguard the District. We recommend the Board of Fire Commissioners adopt a system of internal controls that aligns with statutory and other legal requirements for complete reporting of all transfers or disbursements of funds made by electronic or wire transfer, this would include providing a proper audit trail of the funds. Concludinu Remarks The conditions noted above were considered in determining the nature, timing and extent of the audit tests applied in our audit of the December 31, 2009 financial statements. This report does not affect our report dated May 15, 2010. We have not considered your internal controls since the date of our report. Additionally, it is important to once again note that our consideration of internal control would not necessarily disclose all matters in internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses as defined above. Also of importance to note is that because of the inherent limitations in any internal control framework, errors or fraud could occur and not be detected by such controls. This information is intended solely for the use of the Board of Fire Commissioners of the District, Management, others within the District and the Office of the Comptroller of the State of New York. It is not intended to be, and should not be used by anyone other than these specified parties. Respecffultysubmitted, Craig, Fitzsimmons & Michaels, LLP I I I I I I I I I I I I I I I I I I I East Marion Fire District Financial Statements December 31, 2009 I I I I I I I I I I I I i I ! I I I EAST MARION FIRE DISTRICT TABLE OF CONTENTS DECEMBER 31. 2009 Independent Auditor's Report Basic Financial Statements Annual Financial Report Update Document Notes to Financial Statements Supplemental Schedule Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund (Modified Accrual Basis) 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 Page(s) Opinion 1-33 34-47 48 49-50 I I I I I I I I I I I I I I I I I I I Craig, Fitzsimmons & Michaels, LLP Certified Public Accountants, Management and IT Consultants 20 Manor Road ~. Smithtown, New York 1 ! 787 INDEPENDENT AUDITOR'S REPORT The Board of Fire Commissioners East Marion Fire District PO Box 131 9245 Main Road East Marion, NY 11939 We have audited the accompanying Annual Financial Report Update Document of the East Marion Fire District, as of and for the year ended December 31, 2009, which are the District's basic financial statements. These financial statements are the responsibility of East Marion Fire District's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. As described in Note 1, these financial statements were prepared in conformity with the accounting practices prescribed by the Office of the New York State Comptroller; this modified accrual basis presentation is a comprehensive statutory basis of accounting other than generally accepted accounting principles for governmental entities in the United States. The effects on the financial statements of the variances between these regulatory accounting practices and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material In our opinion, the financial statements referred to above present fairly, in all material respects, the assets, liabilities and fund balances of each fund of the East Marion Fire District, as of December 31, 2009, and their respective revenues and expenditures for the year then ended, on the basis of accounting described in Note 1. In accordance with Govemment Auditing Standards, we have also issued our report dated May 15, 2010 on our consideration of the East Marion Fire District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Govemment Auditing Standards and should be considered in assessing the results of our audit. 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 supplemental 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 East Marion Fire District. 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. Smithtown, NY May 15, 2010 I I I I I I I I I I I I I I I I I i I All Numbers in This Report Have Been Rounded To The Nearest Dollar ANNUAL FINANCIAL REPORT UPDATE DOCUMENT For The FIRE DISTRICT of East Marion County of Suffolk For the Fiscal Year Ended 12/31/2009 AUTHORIZATION ARTICLE 3, SECTION 30 of the GENERAL MUNICPAL LAW: 1. ***Every Municipal Corporation *** shall annually make a report of its financial condition to the Comptroller. Such report shall be made by the Chief Fiscal Officer of such Municipal Corporation *** 5. All reports shall be certified by the officer making the same and shall be flied with the Comptroller *** it shall be the duty of the incumbent officer at the time such reports are required to be filed with the Comptroller to file such report *** State of NEW YORK Office of The State Comptroller Division of Local Government and School Accountability Albany, New York 12236 Page 1 FIRE DISTRICT OF East Marion *** FINANCIAL SECTION *** Financial Information for the following funds and account groups are included in the Annual Financial Report filed by your government for the fiscal year ended 2008 and has been used by the OSC as the basis for preparing this update document for the fiscal year ended 2009: (A) GENERAL (H) CAPITAL PROJECTS (K) GENERAL FIXED ASSETS (R) Reserve (TA) AGENCY ON) GENERAL LONG-TERM DEBT All amounts included in this update document for 2008 represent data filed by your government with OSC as reviewed and adjusted where necessary. *** ARRA SECTION *** The American Recovery and Reinvestment Act (ARRA) section of your Annual Financial Report is designed to report revenues and expenditures of federal stimulus money for the current fiscal year ended. *** SUPPLEMENTAL SECTION *** The Supplemental Section includes the following sections: 1) Statement of Indebtedness 2) Schedule of Time Deposits and Investments 3) Bank Reconciliation 4) Local Government Questionnaire 5) Schedule of Employee and Retiree Benefits 6) Schedule of Energy Costs and Consumption All numbers in this report will be rounded to the nearest dollar. Page 2 I I I I I I I I I I I I I I I I I I I I I I East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 (A) GENERAL Balance Sheet Assets I Cash 113,184 A200 71,276 113 184, 71 276 Prepaid Expenses 19,958 A480 19,803 Cash, Special Reserves A230 169,653 Cash in Time Deposits, Spec Res A231 101,604 ~ ~ : 0 ~271 267 TOTAI:.(~ ;r ~? ' t3314.~ .~ 362336 I Page 3 OSC Municipality Code 471179003500 (A) GENERAL Balance Sheet Liabilities Accounts Payable Accrued Liabilities Deferred Revenues Reserve For Encumbrances Capital Reserve Miscellaneous Reserve (specify) Additional Description Prepaids Unreserved Fund Balance Unappropriated East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 Page 4 13,048 7,113 79,070 A600 A601 A691 A821 A878 A889 I I I 7,160 20,000 271,258 39,803 33,911 A911 24,115 I I I I I I I I I I I OSC Municipality Code 471179003500 1 I I I East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 (A) GENERAL Balance Sheet Code De_scdption Assets Cash TOTAL Cash Prepaid Expenses TOTAL Prepaid Expenses Cash, Special Reserves Cash in Time Deposits, Spec Res TOTAL Restricted Assets TOTAL Assets Page 3 113,184 A200 71,276 113,184 71,276 19,958 A480 19,803 19,958 19,803 A230 169,653 A231 101,604 0 271,257 133,t42 362,336 OSC Municipality Code 471179003500 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 (A) GENERAL Balance Sheet Code Description Liabilities Accounts Payable TOTAL Accounts Payable Accrued Liabi{ities TOTAL Accrued Liabilities Deferred Revenues TOTAL Deferred Revenues TOTAL Liabilities Reserve For Encumbrances TOTAL Reserve For Encumbrances Capital Reserve Miscellaneous Reserve (specify) Additional Description Prepaids TOTAL Special Reserves Unreserved Fund Balance Unappropriated TOTAL Unreserved Fund Balance - Unappropriated TOTAL Fund Equity TOTAL Liabilities And Fund Equity · 13,048 A600 7,160 · 13,048 7,t60 7,113 A601 7,113 0 I 79,070 A691 79,070 0 99,231 7,160 I A821 20,000 0 20,000 A878 271,258 · A889 39,803 0 311,061 33,911 A911 24,115 33,911 24,115 33,911 356,176 133,142 362,336 Page 4 OSC Municipality Code 471179003500 1 I i I I I I I I ! I I i I i I i I i I East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 (A) GENERAL Results of Operation Code Description Revenues Real Property Taxes 523,180 A1001 520,966 TOTAL Real Property Taxes Interest And Earnings Rentai of Real Properly TOTAL Use of Money And Property Sales of Equipment TOTAL Sale of Property And Compensation For Loss Refunds of Prior Year's Expenditures TOTAL Miscellaneous Local Sources Fed Aid Other Public Safety TOTAL Federal Aid TOTAL Revenues Serial Bonds TOTAL Proceeds of Obligations TOTAL Other Sources TOTAL Detail Revenues And Other Sources 523,180 520,966 6,161 A2401 5,748 25,425 A2410 35,425 31,586 41,173 1,700 A2665 1,544 1,700 1,544 1,778 A2701 102 1,778 102 A4389 0 0 558,244 563,785 A5710 0 0 0 0 55B,244 563,785 Page 5 OSC Municipality Code 471179003500 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 I I (A) GENERAL Results of Operation ~ed~ D~¢ripiio~ -- .... ! ~008 ~EdpCode II 200~ ~ Expenditures Fire, Pers Sen/ Fire, Equip & Cap Outlay Fire, Contr Expend TOTAL Fire TOTAL Public Safety State Retirement System Local Pension Fund, Empl Bnfls Social Security, Employer Cont Worker's Compensation, Empl Bnfts Unemployment Insurance, Empl Bnffs I 31,878 A34101 31,361 I 58,805 A34102 64,405 233,100 A34104 157,004 323,783 252,770 I 323,783 252,770 3,036 A90108 2,757 · 152,692 A90256 136,252 2,439 A90308 2,480 14~693 A90408 11,303 74 A90508 I TOTAL Employee Benefits Debt Principal, Serial Bonds Debt Principal, State Loans 172,934 152,792 63,000 A97106 33,000 A97906 6,024 TOTAL Debt Principal Debt Interest, Serial Bonds Debt Interest, State Loans TOTAL Debt Interest TOTAL Expenditures Transfers, Other Funds 63,000 7,920 7,920 567,637 25,200 A97107 A97907 A99019 39,024 I 4,950 1,688 I 6,638 451,224 i TOTAL Operating Transfers TOTAL Other Uses TOTAL Detail Expenditures And Other Uses 25,200 0 I 25,200 0 592,837 45t ,224 I Page 6 OSC Municipality Code 471179003500 i I I I East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 (A) GENERAL Changes in Fund EquLty Cod~ _Description _ : 2008 I ~.cod. L 2oo9 I I I I I I I I i ! ! i i i I ! ANALYSIS OF CHANGES IN FUND EQUITY Fund Equity-Beginning of Year Prior Period Adj-lncrease To Fund Equity Restated Fund Equity - Beg of Year ADD - REVENUES AND OTHER SOURCES DEDUCT - EXPENDITURES AND OTHER USES Fund Equity-End of Year Page 7 27,155 A8021 33,911 41,349 A8012 208,704 68,504 A8022 242,615 558,244 553,785 592,837 451,224 33,911 A8029 355,176 OSC Municipality Code 471179003500 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 (A) GENERAL Budget Summary Code Description 542,051 A1049N A2499N 542,051 A511N 0 542,051 Estimated Revenues Est Rev - Real Property Taxes Est Rev - Use of Money And Property TOTAL Estimated Revenues Appropriated Reserve TOTAL Estimated Other Sources TOTAL Estimated Revenues And Other Sources 2010 495,841 42,111 537,952 20,000 20,000 557,952 I ! I i I I l l I I I I ! I I l I I Page 8 OSC Municipality Code 471179003500 1 I I I I ! I I I I i I I I I i i i i I (A) GENERAL Budget Summary 'Code Description Appropriations App - Public Safety App - Employee Benefits App - Debt ServJce TOTAL Appropriations App - Interfund Transfer TOTAL Other Uses TOTAL Appropriations And Other Uses East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 2009 [ EdpCode) 489~497 A3999N 52,554 A9199N A9899N 542,051 A9999N 0 542,051 Page 9 20~0 220,256 213,684 44,012 477,952 80,000 80,000 557,952 OSC Municipality Code 471179003500 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 (H) CAPITAL PROJECTS Balance Sheet ~Code Description Assets Cash Cash In Time Deposits TOTAL Cash TOTAL Assets I I I 2008 11 EdpCode [~ _~2p~? ! 108,704 H200 I 100,000 H201 208,704 0 208,704 0 I I I I I i I I ! I I I I I Page 10 OSC Municipality Code 471179003500 1 I i I I I I I I I i I I I I I I i I I East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 (H) CAPITAL PROJECTS Balance Sheet Co~d_e. Descri¢i~n ...... Fund Equity Unreserved Fund Balance Unappropriated TOTAL Unreserved Fund Balance - Unappropriated TOTAL Fund Equity TOTAL Liabilities And Fund Equity 2008 :i Edp~0da I 2009 I Page 11 208,704 H911 208,704 0 208,704 0 208,704 0 OSC Municipality Code 471179003500 (H) CAPITAL PROJECTS Results of Operation Code Description Revenues Interest And Earnings TOTAL Use of Money And Property TOTAL Revenues Interfund Transfers TOTAL Interfund Transfers Serial Bonds TOTAL Proceeds of Obligations TOTAL Other Sources TOTAL Detail Revenues And Other Sources East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 2008 2,158 2,158 2,158 25,200 25,200 67,500 67,500 92,700 94,658 H2401 H5031 H5710 I I I I I I I I I I I i I I I I I I Page 12 OSC Municipality Code 471179003500 1 I I I East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 (H) CAPITAL PROJECTS Results of Operatfon ~od~ Bescription~ ......... I I i I I I I I I I I i I I I I Expenditures Fire, Equip & Cap Outlay TOTAL Fim TOTAL Public Safety TOTAL Expenditures TOTAL Detail Expenditures And Other Uses Page13 34,668 H34102 34,668 0 34,668 0 34,668 0 34,668 0 OSC Municipality Code 471179003500 (H) CAPITAL PROJECTS Changes in Fund Equity Code_ Description ....... ANALYSIS OF CHANGES IN FUND EQUITY Fund Equity - Beginning of Year Prior Period Adj.- Increase in Fund Equity Prior Period Adj - Decrease In Fund Equity Restated Fund Equity - Beg of Year ADD - REVENUES AND OTHER SOURCES DEDUCT - EXPENDITURES AND OTHER USES Fund Equity - End of Year East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 I I I Page14 H8021 208,704 I 191,318 H8012 42,804 H8015 208,704 148,514 H8022 I 94,858 34,668 208,704 H8029 I I I I I I I I I I I I I OSC Municipality Code 4711790035001 I I I (K) GENERAL FIXED ASSETS Balance Sheet (;ode Description Assets ILand Buildings Machinery & Equipment I TOTAL Fixed Assets (net) TOTAL Assets i I i I I I I I i I I I I I East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 ] - -~08 ~1EdpCode i 2009 409,524 K101 61,723 590,811 K102 445,810 1,204,409 K104 1,135,228 2,204,744 1,642,761 2,204,744 1,642,761 Page 15 OSC Municipality Code 471179003500 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 (K) GENERAL FIXED ASSETS Balance Sheet c~-de~escription ' ~[ ' 2~08~ ~V EdpCod~ ii ~009 I Fund Equity Total Non-Current Govt Assets TOTAL Investments in Non-Current Government Assets TOTAL Fund Equity TOTAL Liabilities And Fund Equity 2,204,744 K159 1,642,761 2,204,744 1,642,761 2,204,744 1,642,761 2,204,744 1,642,761 I I ! I I ! I I I I I I I I I I I I Page 16 OSC Municipality Code 471179003500 ! I I I I I I I I I I I I I I I I I (R) Reserve Balance Sheet Cede Description Assets Cash, Special Reserves TOTAL Restricted Assets TOTAL Assets East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 2008 I EdpCode ; 2009 R230 0 0 0 0 Page 17 OSC Municipality Code 471179003500 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 Balance Sheet ~COd e~}~np~,~- .......... ~[ .... 2~0~ ~I EdpCod~!i 2009 Page18 I i I I I ! I I I I I I I I I I I I I I I I Results of Operation Code Des~rip~i0n East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 2608 ! Edpcode ii__ ._~60~ ~ I I I I I I I I I I I I I I i I Page 19 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 Results of Operation ;Code Description 2008 I I I Page 20 I I I I I I I I I I I I I I I I I I I East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 (R) Reserve Changes in Fund Equity Code Description 2008 II Edp~d~ ~ ~0og I I I I I I ! ! I I ! ! I i I I ANALYSIS OF CHANGES IN FUND EQUITY Fund Equity - Beginning of Year Prior Period Adj - Dec To Fund Equity Restated Fund Equity - Beg of Year Fund Equity- End of Year Page 21 191,318 R8021 191,318 R8015 R8022 R8029 OSC Municipality Code 471179003500 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 (TA) AGENCY Balance Sheet Code Description_ .... Service Award Program Assets TOTAL Investments TOTAL Assets 2008 !L ~dpOode [ 200~9 J i I I Page 22 690,484 TA461 731,148 i 690,484 731,t48 690,484 731,148 I I I I I ! I I I ! ! I i ! OSC Municipality Code 471179003500 '1 I I I I ! I I I I I I I I I I I I I i East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 (TA) AGENCY Balance Sheet Code De~cri~ti0n 2008 j:_ EdpCode : 2009 690,484 TA13 731,148 690,484 731,148 690,484 731,148 690,484 731,148 Liabilities Service Awards TOTAL Agency Liabilities TOTAL Liabilities TOTAL Liabilities And Fund Equity Page 23 OSC Municipality Code 471179003500 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 ON) GENERAL LONG-TERM DEBT Balance Sheet ~ode Description 2008 I[ EdpCode ~L ___.2009 J I I I Assets Total Non-Current Govt Liabilities TOTAL Provision To Be Made In Future Budgets TOTAL Assets 166,500 W129 127,476 166,500 127,476 166,500 127,476 Page 24 OSC Municipality Code 471179003500 I I I (W) GENERAL LONG-TERM DEBT Bagance Sheet Code Description East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 2008 ' EdpC0cl~ 2009 I I I I I I I I I I I I I I I I General Long Term Debt State Loans Payable TOTAL Notes Payable Bonds Payable TOTAL Bond And Long Term Liabilities TOTAL Liabilities TOTAL General Long Term Debt Page25 W619 61,476 0 61,476 166,500 W628 66,000 166,500 66,000 166,500 127,476 166,500 127,476 OSC Municipality Code 471179003500 East Marion FIRE DISTRICT Financial Comments For the Fiscal Year Ending 2009 IA) GENERAL Adiustment Reason Account Code A8012 To reclassify H Funds to A Fund in accordance with OSC directives (H) CAPITAL PROJECTS Adiustment Reason Account Code H8015 To reclassify H Funds to A Fund in accordance with OSC instructions Page 26 OSC Municipality Code 47' I I I I I I I I I I I I I ! I I I I I East Marion FIRE DISTRICT Statement of Indebtedness For the Fiscal Year Ending 2009 Indebtedness Not Exempt From Constitutional Debt Limit ~Bond No. 200800000~ EDPCODE Amount ~M0n{h and Year'o~issue ' i/1~/2008 urpose of Issue 'nergency Roof Repair ~rrent !~teres~te 2.5000 ~ts!¢ndin~Beg!nnin~ 0f Year ..... ~ P 1~77~ ..... 67,50~ Prier Year Adjustment -67,500 I Issued During the Fiscal Year (do not include renewals here) 2P18773 0 Paid During the Fiscal Year ~_ (do not include renew~i~ h~re) 2P18775 0 ~)ut~tandin~End of~h~ FiSCal Year 2P18777 _ 0 Final fvla~urity Dat~ ~/18/20!8 EDPCODE Amount 2/12/2002 _adder truck purchase 5.0000 2P18771 99,000 ~P18773 0 2P18775 33,000 2P~8777= = = .~6,000 2/12/2011 Bond No. 2006000002 Month and Year of Issue IP~rP;se of issue ~Current Interest Rate O,tsta in egi ing of Year Pdor Year Adjustment~ Issued During the ~is~al Year (do not include renewals here) IPaid During the Fiscal Year ~(do not include r~newals here Outs~ancling End of th~ Fi~c~ Ye,ar IFinal Maturity Date i(u Otal Bond Amo~n! tstanding Be~gin nin,~ of Yea r .................. 166,~00 Pr~or~ea~ Adjustment _ ~ ..... -67,500 ilssued Dud~ Fiscal Year 0 Paid~uring Fiscal Year 33,000 Outstanding End of Year 66,000 I 0 i Page 27 OSC Municipality Code 471179003500 East Marion FIRE DISTRICT Statement of Indebtedness For the Fiscal Year Ending 2009 Indebtedness Not Exempt From Constitutional Debt Limit state ~ A~thority.Loan. No.~0~9000001 ~DPCODE_ .... Amount ,Month and Year of Issue i, 1/18/2008 iPurpose of Issue Emergency repairs iCurrent Interest Rate 2.5000 :Outstanding Beginning 0fYear Prior Year Adjustment 67,500 ,Issued During the Fiscal Year I (do not include renewals here) !2.P18793 'Paid During the Fiscal Year (do not include renewals ~ere~ 2P18795 6,024 iOutstanding~nd ofth~ Fiscal year 2P18797 61,476 F:!~al Maturi!y Date ~i~ ~ ii 1/18/2018 Total State or Authority Loan Qutstanding Beginning of Year Prior Year Adjustment I_ssued During Fiscal Year iPaid During Fiscal Year !Q~tstanding En~ 0~Year Amount I 0 =~ i .... 67,500 0 6,024 iL 61,476 Total of All Indebtedness Includes Total of Bonds and Notes - Exempt and Not Exempt ~T0tal State or Aut~riiy Loan ~utstanding Beginning of Year Prior Year Adjustment iIssued Dur!~ Fiscal Year iPaid During Fiscal Year iOutstanding End o~ Year Amount 166,500 0 0 39,02~ 127,476 I I I I I I I I I I I I I Page 28 OSC Municipality Code 471179003511 I I I I I I I I I I ! I I I I i I I I East Marion FIRE DISTRICT Schedule of Time Deposits and Investments For the Fiscal Year Ending 2009 CASH: On Hand Demand Deposits Time Deposits Total COLLATERAL: - FDIC Insurance Collateralized with securities held in possession of municipality or its agent Total EDP Code 9Z2001 9Z2011 9Z2021 9Z2014 9Z2014A Amount $0.00 $396,462.00 $0.00 $396,462.00 $351,604.00 $71,015.00 $422,619.00 INVESTMENTS: - Securities (450) Book Value (cost) Market Value at Balance Sheet Date Collateralized with securities held in possession of municipality or its agent 9Z4501 $0.00 9Z4502 $0.00 9Z4504A $0,00 - Repurchase Agreements (451) Book Value (cost) Market Value at Balance Sheet Date Collateralized with securities held in possession of municipality or its agent 9Z4511 $0.00 9Z4512 $0,00 9Z4514A $0.00 Page 29 OSC Municipality Code 471179003500 Bank Account Number ..... -2845 ..... -6088 ..... -2942 ..... -8786 East Marion FIRE DISTRICT Bank Reconciliation For the Fiscal Year Ending 2009 Include All Checking, Savings and C.D. Accounts Bank Balance $101,604 $125,205 $0 $1 O8,859 $0 $60,794 $0 Total Adjusted Bank Balance Petty Cash Adjustments Total Cash Total Cash Balance All Funds * Must be equal Add: Less: Adjusted Deposit Outstanding Bank In Transit Checks Balance $0 $0 $101,604 $53,929 $71,276 $0 $108,859 $0 $6O,794 $342,533 $.00 $.00 9ZCASH * $342,533 9ZCASHB $342,533 Page 30 OSC Municipality Code I I I I I I I I I I ! I I I ! I I I 47117900351 I I East Marion FIRE DISTRICT Fire District Questionnaire For the Fiscal Year Ending 2009 I i I I I I I I ! I 1 I I I I I Has your district adopted a written procurement prolicy and is it complied with? 2) Has your district contracted to have an independent audit of its financial statements? If not, has the Board of Fire Commissioners performed an internal audit of the Treasurer's records and reports? 3) Does your district have a written travel policy and is it complied with? 4) Are monthly bank reconciliations performed? 5) What is your district's statutory spending limitation margin (amount) for the next fisca 6) Does your district have a Length of Service Award Program (L©SAP) for volunteer firefighters? If so, how are the LOSAP funds invested? Marketable Securities Annuities Life Insurance Other (describe) Cash/Money Funds 7) Has your Fire District adopted an investment policy as required by General Municipal Law, Section 39? Page 31 Response Y Y Y Y $452,200 Y Y Y nccou"t~ Code golo~ 9015~ 9025~ 9~30~ Total Fug Time Employees:! Total Part Time Employees: Description State Retirement System Po[ice and Fire Retirement Local Pension Fund East Marion FIRE DISTRICT Employee and Retiree Benefits For the Fiscal Year Ending 2009 90408 Worker's Compensation Insurance 90456 Li~ Insurance Total # of Full # of Part # of Retirees Expenditures I Time Time (All Funds) Employees Employees $2,757.01 3 $136,252,00 3~ $2,480,00 90508 Unemployment Insurance $11,303.0i ~ I I I I 1 ~ I I 90558! Disability Insurance 906081 Hospital and Medical (Dental) Insurance 907081 Union Welfare Benefits I 90858 Supplemental Benefit Payment to I ~ Disabled Fire Fighters 91890~ Other Employee Benefits ! ~0tali ~ $152,792.00 Computed Total From Financial i $152,792.00 .Sec on (compare ve purposes on y) !! Page 32 OSC Municipality 471179003500 I I I =1 I I I I I I I I I I I I I I I I I I I I I I I i I I I East Marion FIRE DISTRICT Energy Costs and Consumption For the Fiscal Year Ending 2009 Energy Type Total Total Volume Units Of Expenditures Measure Gasoline $3,666 1,836 gallons Diesel Fuel $1,309 567 gallons Alternative Units Of Measure Fu~l Oi~ $734 356~ Gallons ~ Natural Gas S3,036 1,125;i cubic feet Therms i Electricity $9,095 42,502!! kilowatts Coal ~ tons Page 33 OSC Municipality 471179003500 I I I I I I I I ! I I I I I I I ! I I EAST MARION FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS DECEMBER 31,2009 Summary of Siqnificant Accountinq Policies The financial statements of the East Marion Fire District (District) as of and for the year ended December 31, 2009 have been prepared using accounting practices prescribed and permitted by the New York State Office of the State Comptroller (OSC), which differs from accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The financial statements of the District have been prepared using the modified accrual basis of accounting. This method differs from GAAP, which requires the accrual basis of accounting to be used. The accrual basis of accountin9 requires the capitalization and depreciation of property and equipment and the recording of long-term liabilities. Under the modified accrual basis of accounting, property and equipment are recorded as an expenditure when purchased and the satisfaction of long-term liabilities are recognized as expenditures when paid. In addition, GAAP requires the financial statements to be prepared in accordance with the Governmental Accounting Standard's Board (GASB) No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Govemments. GASB 34 financial statements require the presentation of government-wide financial statements and management's discussion and analysis. The accounting practices used to prepare these financial statements does not require compliance with GASB 34. The significant accounting policies of the District are described below: a. Financial Reportinq Entity The District is a district corporation and political subdivision of the State of New York, distinct from the municipalities in which it is located. In general, the District is governed by an elected Board of Fire Commissioners (Board) and is required to have a treasurer and secretary. The District has the legal authority to levy taxes on real property and to borrow in its own name. The District is governed by General Municipal Law and other laws of the State of New York and its subdivisions. The scope of activities included in the accompanying financial statements are the transactions which comprise the District's operations and are governed by, or significantly influenced by, the Board of Fire Commissioners. The primary function of the District is to provide fire protection, rescue and emergency services to the community. Services such as firefighting, fire prevention, EMS and public education support this primary function. The financial reporting entity includes all funds, functions and organizations over which the District's Board exercises oversight responsibility. Oversight responsibility is determined on the basis of financial interdependency, selection of governing authority, designation of management, ability to significantly influence operations and accountability for fiscal matters. b. Basis of Presentation Fund Financial Statements The District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to assist management by segregating transactions related to certain government functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. -34- EAST MARION FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009 Summary of Siqnificant Accounting Policies - continued b. Basis of Presentation - continued Fund Financial Statements - continued The District records its transactions in the fund types described below: Governmental Fund Types 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 based upon determination of financial position and changes in financial position. The following are the District's governmental fund types: I. General Fund - the general fund is the principal operating fund of the District. It is used to account for all financial resources except those required to be accounted for in another fund. II. Capital Reserve Fund - the capital reserve fund is used to account for the accumulation of financial resources and the disbursements for the acquisition, construction or renovation of major capital facilities, or equipment. Fiduciary Fund Types Fiduciary Funds are used to account for assets held by the District in a trustee or custodial capacity. I. Aqency Fund - used to account for money (and/or property) received and held in the capacity of trustee, custodian, or agent. Account Groups Account Groups are used to establish accounting control and accountability for the Fire District's general fixed assets and general long-term obligations. The two account groups are not "funds". They are accounting entities, not fiscal entities, and are concerned only with the measurement of financial position, and not with the results of operations. I. General Fixed Assets Account Group - the general fixed assets account group is used to account for land, buildings, improvements and equipment owned by the Fire District. II. General Lonq-Term Debt Account Group - the general long-term debt account group is used to account for all long-term debt and other obligations of the Fire District. Measurement Focus and Basis of Accountinq Basis of accounting refers to when revenues and expenditures and the related assets and liabilities are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus. Measurement focus is the determination of what is measured (i.e., expenditures or expenses). -35- I I I I i I I I I I I I I I I I I I I I I I I I I I I I ! I I I I I I I I I EAST MARION FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009 1. Summary of Siqnificant Accountinq Policies - continued d. Measurement Focus and Basis of Accountinq - continued Modified Accrual Basis - The governmental fund statements are reported on the modified accrual basis of accounting using the current financial resources measurement focus. Under this method, revenues are recognized when measurable and available. The District considers all revenues reported in the governmental funds to be available if the revenues are collected within the current period or soon enough thereafter to be used to pay liabilities of the current period. Revenues are considered to be available if collected within 90 days after the calendar year. Expenditures are recorded when the related fund liability is incurred, except for prepaid expenses are recognized in the period of benefit, principal and interest on general long-term debt are not funded as expenditures until due; unfunded claims and judgments, and unfunded compensated absences, which are recognized as expenditures to the extent they have been paid. General capital asset acquisitions are reported as expenditures in governmental funds. e. Cash and Cash Equivalents/Investments Cash and cash equivalents consist of cash on hand, demand deposits and short-term investments with original maturities of three months or less from date of acquisition. investments are reported at fair value, based on quoted market prices. Certificates of deposit are reported at cost. Property Taxes Real property taxes are levied annually by the District no later than November 1st and become a lien on December 1st. Real property taxes are payable with penalty and interest in two equal installments by January l0th and May 31st. The District's tax levy is collected by the Town of Southold and then remitted to the District. Tax collections are remitted in full to the Fire District in accordance with the Suffolk County Tax Act, hence the County of Suffolk is responsible for all uncollected taxes. g. Accounts Receivable Accounts receivable are recorded according to the contracted terms, which in the opinion of the District is the net realizable value. h. Prepaid Expenditures Prepaid items represent payments made by the District for which benefits extend beyond year-end. These payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in the financial statements. A current asset for the prepaid amounts is recorded at the time of purchase and an expenditure is reported in the year the goods or services are consumed. i. Interfund Transfers The operations of the District give rise to certain transactions between funds, including transfers of expenditures and revenues to provide services and construct assets. Interfund transfers and the related receivables and payables (i.e., due from/to other funds) have been recorded in the funds where applicable. -36- EAST MARION FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009 Summary of Significant Accounting Policies - continued i. Interfund Transfers- continued The amounts reported on the Balance Sheet for due to and due from other funds represents amounts due between different governmental fund types. For the year ended December 31, 2009 East Marion Fire District did not have any amounts due to or from other funds. j. General Fixed Assets The modified accrual basis of accounting requires that general fixed assets purchased in the current year be recorded as an expenditure in the respective governmental funds at the time of purchase. These assets are tracked in the General Fixed Assets Account Group of the Annual Update Document at historical cost. Current year purchases are recorded as additions and assets removed from inventory are deleted at their historical cost. k. Accrued Liabilities and Lonq-Term Debt In the fund financial statements, liabilities are reported only to the extent that they are due for payment during the current year. Long term obligations are accounted for in the General Long Term Debt Account Group. I. Fund Balance - Reserves and Desiqnations Portions of fund balance are reserved or designated to either satisfy legal restrictions or to plan for future expenditures. Interest earned on reserve fund resources becomes part of the respective reserve fund. While a separate bank account is not necessary for each reserve fund, a separate identity for each reserve fund must be maintained. The following is a description of the reserves utilized by the District: Reserve for Encumbrances Reserve for encumbrances represents the amount of outstanding encumbrances at the end of the calendar year. The reserve is accounted for in the general fund. Reserve for Prepaid Reserve for prepaid is used to restrict that portion of fund balance, which is not available for appropriation. The reserve is accounted for in the general fund. Capital Reserve Reserve for capital is used to finance all or part of the cost of construction, reconstruction or acquisition of a specific or type of capital improvement or acquisition of a specific item or items or type of equipment. In accordance with OSC directives, this reserve is accounted for as a Special Reserve within the General "A" fund. This reserve at December 31, 2009 is comprised of: Building Reserve $ 60,794 Apparatus Reserve $108,860 I I I I I I I I I I I I I I I I I i i EAST MARtON FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009 1. Summary of Siqnificant Accountinq Policies - continued m. Use of Estimates The preparation of financial statements on the modified accrual basis requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Estimates and assumptions are made in a variety of areas, including computation of encumbrances, compensated absences, and potential contingent liabilities. 2. Stewardship, Compliance, Accountability a. 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 a referendum. Any revisions to the annual budget are adopted by resolution of the Board of Fire Commissioners. b. Encumbrances Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of monies are recorded for budgetary control purposes to reserve that portion of the applicable appropriations, is employed as a control in preventing over expenditure of established appropriations. Open encumbrances are reported as reservations of fund balances since they do not constitute expenditures or liabilities and will be honored through budget appropriations in the subsequent year. Expenditures for such commitments are recorded in the period in which the liability is incurred. Budqet Bas s of Accountin~q Budgets are adopted annually by the Board in accordance with New York State law. Appropriations authorized for the current year are increased by the amount of encumbrances carried forward from the prior year. 3. Deposits with Financial Institutions and Investments The District's investment policies are governed by state statutes and District policy. Resources must be deposited in Federal Deposit Insurance Corporation (FDIC) insured commercial banks or trust companies located within the state. Permissible investments include obligations of the U.S. Treasury and U.S. Agencies, repurchase agreements and obligations of New York State or its localities. Collateral is required for demand and time deposits and certificates of deposit as provided for by law for all deposits not covered by FDIC insurance. Obligations that may be pledged as collateral are obligations of the United States and its Agencies and obligations of New York State and its municipalities. Investments are stated at fair value. -38- EAST MARION FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009 Deposits with Financial Institutions and Investments - continued Custodial credit risk is the risk that in the event of a bank failure, the District's deposits may not be returned to it. GASB directs that deposits be disclosed as exposed to custodial credit risk if they are not covered by depository insurance and the deposits are either: A. Uncollateralized, B. Collateralized by securities held by the pledging financial institution, or C. Collateralized by securities held by the pledging financial institution's trust department or agent but not in the District's name. None of the District's aggregate bank balances, not covered by depository insurance, were exposed to custodial credit risk as described above at year-end. The District typically does not purchase investments for long enough duration for it to be considered to be exposed to a material interest rate risk. General Fixed Assets As of December 31, 2009, any new additions or deletions are valued at historical cost. Capital asset balances and activity for the year ended December 31, 2009 were as follows: Balance Balance 1/1/2009 Additions Deletions 12/31/2009 Land $ 409,524 $ $(347,801) $ 61,723 Buildings 590,811 (145,001) 445,810 Equipment 1,204,409 (69,181) 1,135,228 $2,204,744 $ $(561,983) $1,642,761 The significant change in the value of the land from January 1, 2009 to the end of the fiscal year December 31, 2009 results from a change in accounting policy. Land is now valued at historical cost, rather then assessed valuation. Interfund Transactions At December 31, 2009, the interfund transfer amounts made were as follows: Interfund Interfund Revenue Expenditures General Fund Apparatus Reserve $ 30,000 Building Reserve 30,000 $ 60,000 $ 60,000 $ 60,000 -39- I I I I I I I I I I I I i I ! I I I I I I I I i I I I I I I I I I I I I I I EAST MARION FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009 5. Interfund Transactions - continued The District transfers from the general fund to the reserve funds in accordance with the general fund budget. The District may also transfer general fund surplus based on Board resolution. 6. Pension Plans New York State and Local Employees' Retirement System Plan Description The District elected to participate in the New York State and Local Employee's Retirement System (ERS). This system is a cost-sharing, multiple-employer, defined benefit pension plan. The system offers retirement and disability benefits, annual cost of living increases, and death benefits to plan members and beneficiaries. The ERS is established pursuant to the New York State Retirement and Social Security Law (NYSRSSL) to provide benefits for the state, local governments, and their employees. As set forth in the NYSRSSL, the Comptroller of the State of New York (Comptroller) serves as sole trustee and administrative head of the system. The Comptroller shall adopt and may amend rules and regulations for the administration and transaction of the business of the system and for the custody and control of their funds. ERS plan benefits are guaranteed by state constitution. The system issues a publicly available financial report that includes financial statements and required supplementary information. These reports may be obtained by writing or calling the system at the following location: NYS and Local Retirement Systems, Gov. Alfred E. Smith State Office Building, 110 State Street, 5th Floor, Albany, NY 12244. Funding Policy The system is noncontributory except for employees who joined the retirement system after July 27, 1976, who contribute 3% of their salary for the first ten years of membership. Regardless of start date, all members may elect to make member contributions. The New York State Comptroller shall certify annually the rates expressed as proportions of the members' payroll, 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 on an annual basis. Contributions are generally made to the ERS on December 15, for the period April 1 to March 31 of the following year based on estimated eligible employees' salaries. Contributions are adjusted in the following year based on actual salaries. The following represents the District's regular pension contribution to the system based on annual covered payroll for the current year and two preceding years are: 2009 2008 2007 District Contributions $2,757 $3,036 $2,753 The District's contribution to the system is actuarially determined and is established and may be amended by the ERS Board of Trustees. EAST MARION FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009 7. Lenqth of ServLce Awards Proqram - LOSAP The Fire District's financial statements are for the year ended December 31, 2009. Likewise, the information contained in this note is based on information for the Length of Service Awards Program for the plan year ending on December 31, 2009. The voters of the Fire District approved a Service Award Program, which is an unqualified deferred compensation plan. Under the State legislation, the Service Award Program was specifically excluded from the State's retirement system. All persons who are active volunteer firefighters of the East Marion Fire District are eligible to participate in the program. All eligible persons shall become participants on the last day of the first calendar year after the Effective Date, during which they meet the following requirements: a) must be 18 years old; and b) must earn a year of service credit during a calendar year. The entitlement age of 62 or the participant's age upon earning one year of service credit after the Effective Date of the Award Program. The monthly benefit is $20 for each year of service credit. The termination benefit is 0% vesting up to five years, and 100% thereafter. The form of benefit payment is ten year certain and continuous monthly payment life annuity only until the Board subsequently approves other actuarially equivalent forms. The market value/annuLty value of the assets is $877,110 which includes $3,827 in accrued interest. The East Marion Fire District established a defined benefit Service Award Program (referred to as a "LOSAP" - length of service award program - under Section 457(e)(11) of the Internal Revenue Code) effective January 1, 1992 for the active volunteer firefighter members of the East Marion Fire Department. The program was established pursuant to ArticLe 11-A of the New York State General Municipal Law. The program provides municipally-funded deferred compensation to volunteer firefighters to facilitate the recruitment and retention of active volunteer firefighters. The East Marion Fire District is the sponsor of the program and the program administrator. Program Description Under the program, participating volunteers begin to be paid a service award upon attainment of the program "entitlement age". The amount of the service award paid to a volunteer is based upon the number of years of service credit the volunteer earned under the program for performing active volunteer flrefighter activities. Participation, Vestinq and Service Credit Active volunteer firefighters who have reached the age of 18 and who have completed 1 year of firefighting service are eligible to participate in the program. Participants acquire a non-forfeitable right to a service award after being credited with five (5) years of firefighting service or upon attaining the program's entitlement age while an active volunteer. The program's entitlement age is age 62. An active volunteer firefighter is credited with a year of firefighting service for each calendar year after the establishment of the program in which he or she accumulates fifty points. Points are granted for the performance of certain firefighter activities in accordance with a system established by the sponsor on the basis of a statutory list of activities and point values. A participant may also receive credit for five (5) years of active volunteer firefighting service rendered prior to the establishment of the program as an active volunteer firefighter member of the East Marion Fire Department. i I I I I I I ! I I I I I I I I ! I I I I I I I I I I I I I I I I ! I ! I I EAST MARION FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS DECEMBER 31,2009 Lenqth of Service Awards Proqram - LOSAP - continued Program Description - continued Benefits A participant's service award benefit is paid as a ten year certain and continuous monthly payment life annuity. The amount payable each month equals $20 multiplied by the total number of years of service credit earned by the volunteer under the point system. The maximum number of years of service credit a participant may earn is 30 years under the program. Currently, there are no other forms of payment of a volunteer's earned service award under the Program. Except in the case of death or total and permanent disablement, service awards commence to be paid when a participant attains the entitlement age. Volunteers who continue to be active after attaining the entitlement age and beginning to be paid a service award continue to have the opportunity to earn program credit and to thereby increase their service award payments. The program provides death and disability benefits equal to the actuarial value of the participant's earned service award at death or disablement. These benefits are self insured by the fund. The program provides additional insurance funded death benefits. The program does not provide extra line of duty death benefits but it does provide extra line of duty self insured disability benefits. For a complete explanation of the program, see the Program Document a copy of which is available from the Fire District Secretary. Fiducian/Investment and Control After the end of each calendar year, the fire department prepares and certifies a list of names of all persons who were active volunteer members of the fire department during the year indicating which volunteers earned fifty points. The certified list is delivered to the Board of Fire Commissioners for the Board's review and approval. The fire department must maintain the point system records to verify each volunteer's points on forms provided and/or approved by the Board of Fire Commissioners. The Board of Fire Commissioners has retained Penflex, Inc to assist in the administration of the program. The services provided by Penflex, Inc are described in the attached agreement between Penflex, Inc and the East Marion Fire District. Based on the certified calendar year volunteer firefighter listings Penflex determines and certifies in writing to the Board of Fire Commissioners the amount of the service award to be paid to a participant or to a participant's designated beneficiary. The person(s) authorized by the Board of Fire Commissioners then authorizes, in writing, the custodian of the East Marion Fire District's SAP trust funds to pay the service award. No service award benefit payment is made without the written certification from Penflex and the written directive from the authorized representative of the Board of Fire Commissioners. Penflex bills the East Marion Fire District for the services it provides. Penflex's invoices are authorized for payment by the Board of Fire Commissioners in the same manner as any other invoice presented to the Fire District for payment. The Fire District pays Penflex invoices from its general fund. Program assets are required to be held in trust by Article 1 l-A, 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 program. The Board of Fire Commissioners created a Service Award Program Trust Fund through the adoption of a Trust Document, a copy of which is available from the Fire District Secretary. The Board of Fire Commissioners is the program trustee. -42- EAST MARION FiRE DISTRICT NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009 7. Lenqth of Service Awards Proqram - LOSAP - continued Program Description - continued Fiduciar,/Investment and Control - continued Authority to invest the program assets is vested in the program trustee. Program assets are invested in accordance with a statutory prudent person rule and in accordance with the attached written investment policy statement adopted by the Board of Fire Commissioners. The Board of Fire Commissioners has retained RBC Wealth Management to provide investment management and custodial services and Comerica Bank to pay benefits to participants. The Board of Fire Commissioners is required to retain an actuary to determine the amount of the Fire District's contributions to the plan. The actuary retained by the Fire District for this purpose is Edward J. Holohan of Penflex, Inc., Mr. Holohan is an Associate of the American Society of Actuaries. Portions of the following information are derived from a report prepared by the actuary dated March 29, 2010. Program Financial Condition Assets and Liabilities Actuarial Present Value of Accrued Service Awards as of 12/31/09 Less: Assets Available for Benefits % of total Money Market 7.7% $ 67,440 Interest & Dividends Receivable 0.4% 3,827 U.S. Equities - Mutual Funds 5.6% 48,961 International Equities - Mutual Funds 5.1% 45,154 Fixed Income - Bank CD's, Mutual Funds 51.7% 452,584 Mixed Assets - Mutual Funds 11.6% 102,082 Standard Security Annuity 15.7% 137,754 Other Assets 1.7% 14,928 Less: Liabilities Plus: Advance Payments $ 1,138,345 Total Unfunded Liability for Prior Service Total Unfunded Liability for Separately Amortized Costs 0.5% 4,380 877,110 $ 261,235 $ 273,694 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I EAST MARION FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS DECEMBE~ 2009 Lenqth of Service Awards Proqram - LOSAP - continued Program Financial Condition - continued Receipts and Disbursements Plan Net Assets - Beginning of Year Changes during the year: + Plan contributions (year) + Investment income earned (+/-) Changes in fair market value of investments - Investment expenses - Plan benefit withdrawals - Administrative and other fees/charges Plan Net Assets, end of year $ 690,483 131,654 32,167 80,070 (4,589) (52,000) (875) $ 877,110 Separately Amortized Costs As of January 1, 2008, the Board of Fire Commissioners elected to fund the difference between the net assets available for benefits and the actuarial present value of accrued benefits over ten years @ 5.5%. In addition, the Board of Fire Commissioners retroactively eliminated the purported age discrimination in the program by retroactively paying all post entitlement age participants all additional service award payments they may have earned for service credit earned after attaining the entitlement age and beginning to be paid a service award. The unfunded liability resulting from those additional retroactive payments (and service credit) is being amortized over five years at 5.5%. The unfunded liability for additional service awards earned by post entitlement age active volunteers for years after 2004 is being amortized over five years at 5.5%. Contributions Amount of sponsor's contribution recommended by actuary: $116,654 Amount of sponsor's actual contribution $131,654 Administration Fees Fees paid to adminstrative/actuarial services provider $ 3,818 Fees paid to investment management $ 4,589 Other administration fees $ 679 Normal Costs The actuarial valuation methodology used by the actuary to determine the sponsor's contribution is [the Attained Age Normal Frozen Initial Liability method. The assumptions used by the actuary to determine the sponsor's contribution and the actuarial present value of benefits are: Assumed rate of return on program investments 5.5%. -44 - EAST MARION FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009 Lenqth of Service Awards Proqram - LOSAP - continued Program Financial Condition - continued Normal Costs - continued Tables used for: Post Entitlement Age mortality: *Pre Entitlement Age mortality: *Pre Entitlement Age disability: *Pre Entitlement Age withdrawal: *Pre Entitlement Age service credit accruals: 100% 1994 Unisex Pensioner Male Mortality Table projected with scale AA to 2009 None None None * For program cost calculation purposes, all pre-entitlement age active volunteer firefighter participants are assumed to: survive to the entitlement age; remain active and earn 50 points each year; and, begin to be paid service awards upon attainment of the entitlement age. Lonq-Term Liabilities Long-term liability balances and activity for the year are summarized below: Amounts Balance Balance Due Within 1/1/2009. Additions Reductions 12/31/2009 One Year $108,900 $ $ (37,950) $ 70,950 $ 36,300 77,120 (7,712) 69,408 7,712 Long-term debt: Serial Bonds (Truck Bond) Emergency Services Loan Total $108,900 $77,120 $ (45,662) $ 140,358 $ 44,012 The general fund has typically been used to liquidate long-term liabilities. Serial Bonds The Fire District borrows money in order to acquire or construct buildings, improvements and apparatus. This enables the cost of these capital assets to be borne by the present and future taxpayers receiving the benefit of capital assets. The provision to be made in future budgets for capital indebtedness represents the amount exclusive of interest, authorized to be collected in the future years from taxpayers and others for liquidation of the long-term liabilities. -45- I i I I I I I I I I I I I I I I I I I I I I I I ! I I I I I I I I I I I I I 8. Lonq-Term Liabilities - continued EAST MARION FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS DECEMBER 31,2009 I. Maturity of Lonq Term Indebtedness Serial Bonds (Truck Bond) The following is a summary of future debt service requirements: Year Principal Interest Payment 2010 $33,000 $3,300 $ 36,300 2011 33,000 1,650 34,650 Total $66,000 $4,950 $ 70,950 II. Maturity of Lonq Term Indebtedness Emergency Services Revolving Loan Fund On January 18, 2009 the district was awarded a loan for a major roof repair. The East Marion Fire District borrowed $67,500 under a New York State Emergency Services Loan Agreement. This is to be repaid over ten years at an annual interest rate of 2.5%, Annual payments of $7,712 covering principa3851 and interest are first due January 18, 2009 and end January 18, 2018. Ill. Maturity of Lonq Term Indebtedness The following is a summary of future debt service requirements: Year Principal Principal Interest Total Balance Payment Payment Payment 2010 $61,476 $ 6,175 $ 1,537 $ 7,712 2011 55,301 6,329 1,383 7,712 2012 48,972 6,488 1,224 7,712 2013 42,484 6,650 1,062 7,712 2014 35,834 6,816 896 7,712 2015 29,018 6,987 725 7,712 2016 22,031 7,161 551 7,712 2017 14,870 7,340 372 7,712 2018 7,530 7,530 182 7,712 Total $61,476 $ 7,932 $69,408 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 risks did not exceed commercial insurance coverage for the past year. -46- EAST MARION FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS DECEMBER 31,2009 10. Related Party Transaction The District's deputy treasurer is a principal at the insurance company that the District utilizes. 11, Spending Limitation The District did not exceed the statutory spending limitation mandated by New York State Law for the year ended December 31, 2009. -47- I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I EAST MARION FIRE DISTRICT STATEMENT OF REVENUE1 EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - GENERAL FUND - MODIFIED ACCRUAL BASIS FOR THE YEAR ENDED DECEMBER 31,2009 REVENUES Real property taxes interest and earnings Building rental Sale of equipment Cell tower rental contracts Refund of prior year expenditures Total revenues Original Final Budget Budget Variance to Final Budget Favorable Actual (Unfavorable) $ 520,966 $ 520,966 $ 520,966 $ 1,500 1,500 3,194 1,694 500 500 (500) 1,544 1,544 61,844 35,425 (26,419) 18,750 18,750 102 (18,648) $ 541,716 $ 603,560 $ 561,231 $ (42,329) EXPENDtTURES Personal services Equipment Contractual State retirement Service award Social security Workers compensation Interest on bonds Interest on notes Redemption of bonds Redemption of notes Contingency fund Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES AND (USES) Operating transfers (out) Total other financing sources and (uses) Net Change in Fund Balance Fund Balance - Beginning of Year Fund Balance - End of Year $ 31,556 $ 31,556 $ 31,361 45,600 92,499 64,405 181,700 173,825 157,004 3,998 3,998 2,757 141,700 141,700 136,252 2,500 2,500 2,480 14,000 16,820 11,303 4,950 4,950 4,950 1,688 1,688 1,688 33,000 33,000 33,000 6,024 6,024 6,024 15,000 $ 195 28,094 16,821 1,241 5,448 20 5,517 15,000 $ 466,716 $ 523,560 $ 451,224 $ 72,336 $ 75,000 $ 80,000 $ 110,007 $ 30,007 $ (75,000) $ (60,000) $ (60,000) $ $ (75,000) $ (60,cc0) $ (60,cc0) $ $ $ 20,000 $ 50,007 $ 30,007 (2O,OOO) (20,000) (2O,OOO) 33,911 33,911 $ $ $ 63,918 $ 43,918 -48- I I I I I I I I I I I I I I I I I I I 1 Craig, Fitzsimmons & Michaels, LLP Ccrti£icd Public ,,\ccountant~, Management and I'1 ( ;onsultants 2{) Mallol Road Snlithto~xn, Ncx~ Yolk 11787 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH I I I I I I I I I I I I I I I GOVERNMENT AUDITING STANDARDS The Board of Fire Commissioners East Marion Fire District PO Box 131 9245 Main Road East Marion, NY 11939 We have audited the Annual Financial Report Update Document of the East Marion Fire District, New York as of and for the year ended December 31, 2009, which comprises the District's basic financial statements, and have issued our report thereon dated May 15, 2010. We conducted our audit in accordance with auditing standard 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 considered the East Marion Fire District, New York's internal control over financial reporting as a basis for designing our audit 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 East Marion Fire District, New York's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the East Marion Fire District, New York'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 misstatements on a timety basis. A material weakness is a deficiency or combination of deficiencies in internal control, such that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this report and was not designed to identify all deficiencies in internal control over financial reportin9 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 material weaknesses as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether the East Marion Fire District, New York'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 matters that are required to be reported under Government Auditing Standards. We noted certain matters that we reported to the Board of Fire Commissioners of the East Marion Fire District, New York in a separate letter dated May 15, 2010. -49- Compliance and Other Matters - continued The East Marion Fire District, State of New York's response to the findings identified during our audit is not due to the New York Office of the State Comptroller until 90 days after the issuance of this report. As such, we have not audited the East Marion Fire District, State of New York's response and, accordingly, express no opinion on it. This report is intended solely for the information and use of Management, the Board of Fire Commissioners, the New York State Office of the State Comptroller, federal and state awarding agencies, and is not intended to be and should not be used by anyone other than these specified parties. Smithtown, NY May 15, 2010 -50- I I I I I I I I I I I I I I I I I I I