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Home My WebLink About2010MATTITUCK FIRE DISTRICT AUDITED FINANCIAL STATEMENTS Year Ended December 31,2010 TABLE OF CONTENTS Page No. INDEPENDENTAUDITORS'REPORT .............................................................................................. 1-2 FINANCIAL STATEMENTS Balance Sheet - Governmental Funds ................................................................................................ 3 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds .......................................................................................... 4 Statement of Assets and Liabilities - Fiduciary Fund .......................................................................... 5 Notes to Financial Statements ............................................................................................................. 6-18 SUPPLEMENTARY INFORMATION General Fund - Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual .............................................................................. 19 General Fund - Schedule of Detailed Expenditures and Appropriations ................................................................................................................................. OTHER REPORTS 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 .................... 20-21 22-23 -1- CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENTAUDITORS'REPORT To Board of Fire Commissioners MattJtuck Fire District Mattituck, New York We have audited the accompanying Balance Sheet - Governmental Funds, Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds, and the Statement of Assets and Liabilities - Fiduciary Fund information of the Mattituck Fire District, New York, as of and for the year ended December 31, 2010. These financial statements are the responsibility of the Mattituck Fire District, New York's's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As described more fully in Note 2, the Mattituck Fire District, New York has prepared these financial statements using accounting practices prescribed or permitted by the Fire District Accounting and Reporting Manual issued by the Office of the New York State Comptroller, which practices differ from accounting principles generally accepted in the United States of America, The effect 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 because of the effects of the matter discussed in the preceding paragraph, the financial statements referred to above do not present fairly, in conformity with accounting principles generally accepted in the United States of America, the financial position of the District, as of December 31, 2010 and the changes in its financial position for the year then ended. Further, the District has not presented a management's discussion and analysis that accounting principles generally accepted in the United States has determined is necessary to supplement, although not required to be part of, the basic financial statements. In our opinion, the financial statements referred to above present fairly, in all material respects, the balance sheet and fiduciary net assets of the Mattituck Fire District, New York as of December 31, 2010, and the revenues, expenditures and changes in fund balance for the year then ended in conformity with the basis of accounting as described in Note 2, PERSONAL SERVICE. TRUSTED ADVICE. ALBRECHT, V!GGIANO, ZURECK & COMPANY, RC 245 PARK AVENUE, 24FH FLOOR 25 SUFFOLK COURT NEWYORK, NY 10167 HAUPPAUGL, NY 11788-3715 ~: 212 792 4075 ~ 631 4349500 F 631.4349518 -2- In accordance with Govemment Auditing Standards, we have also issued our report dated June 2, 2011, 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. 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 require that the accompanying financial information listed as supplementary information in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by 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, which consider it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquires of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Hauppauge, New York June 2, 2011 -3- MATTITUCK FIRE DISTRICT GOVERNMENTALFUNDS GENERALFUND BALANCESHEET December31,2010 ASSETS Cash Cash in special reserves LIABILITIES Accounts payable Accrued expenses FUND EQUITY Fund Balances - Reserved: Reserve for encumbrances Capital reserve for building and grounds Capital reserve for apparatus Fund Balance - Unreserved: Undesignated: General Fund $ 368,088 835,020 Total Assets $ 1,203,108 $ 126,092 7,098 Total Liabilities 133,190 Total Fund Equity Total Liabilities and Fund Equity $ 46,600 232,946 575,524 214,848 1,069,918 1,203,108 See notes to financial statements. MATTITUCK FIRE DISTRICT GOVERNMENTALFUNDS GENERALFUND STATEMENT OF REVENUES, EXPENDITURES ANDCHANGESINFUNDBALANCES YearEnded December31,2010 REVENUES Real property taxes Interest and earnings Insurance recoveries and refunds Miscellaneous income Total Revenues EXPENDITURES Personal services Equipment and capital outlay Fire protection Employee benefits Debt service Total Expenditures Net Change in Fund Balance Fund Balance at Beginning of Year, as Restated Fund Balance at End of Year $ 1,793,294 5,222 25,446 20 1,823,982 172,390 122,009 536,326 510,981 265,210 1,606,916 217,066 852,852 $ 1,069,918 See notes to financial statements. -5- MATTITUCK FIRE DISTRICT FIDUCIARY FUND STATEMENT OF ASSETS AND LIABILITIES December 31, 2010 ASSETS Service award program assets LIABILITIES Service awards Total Assets Total Liabilities Trust Fund $ 2,292,157 $ 2,292,157 $ 2,292,157 $ 2,292,157 See notes to financial statements. MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31,2010 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 all of whom are elected to five year terms. The District provides fire protection service and education for fire prevention to its residents. The financial reporting entity includes all functions and activities over which the elected officials exemise responsibility. No other governmental organizations have been included or excluded from the reporting entity. Note 2 - Summary of Significant Accounting Policies Fund Financial Statements The financial statements of the District have not been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The District prepares these financial statements on a prescribed basis of accounting that demonstrates compliance with the regulatory basis of accounting and budget laws of the State of New York, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. The 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 governmental functions are financed. The acquisition, use and balances of expendable financial resources and the related liabilities are accounted for through governmental funds. The measurement focus of the governmental funds is upon determination of financial position and changes in financial position. The District reports the following governmental funds: General Fund - the principal operating fund of the District which includes all receipts and disbursements not required to be included in other funds. Also included in the General Fund is: Capital Reserves - established in accordance with the provisions of general municipal law (Section 6g). Capital expenditures may be made only for the purpose of which the fund was established. The principal soumes of revenue for these funds are budgetary appropriations transferred from the General Fund. Expenditures from these funds are subject to permissive referendum. Capital Proiects Fund - used to account for capital expenditures financed from the proceeds of bonds, bond anticipation notes and capital notes. This fund is also used to account for construction projects financed, in whole or in part, from General Fund monies. 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 Accountinq The District follows the accounting principles as described in the Fire District Accounting and Reporting Manual issued by the Office of the New York State Comptroller. Under this system the District utilizes the modified accrual basis of accounting, whereby revenues are recognized in the accounting period in which they are available and measurable, and expenditures will generally be recognized in the accounting period in which the liability is actually incurred. This basis of accounting differs from accounting principles generally accepted in the United States of America for governments as promulgated by the Government Accounting Standards Board. -7- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31,2010 Note 2 - Summary of Significant Accounting Policies (continued) Basis of Acoountinq (continued) Encumbrance accounting, under which purchase 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 period in which the liability is incurred. 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 America 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 Cash in Special Reserves Cash balances of the Capital Reserve Building and Grounds Fund and the Capital Reserve Equipment and Apparatus Fund are classified as cash in special reserves because the use of these funds is restricted by New York State General Municipal Law. Receivables Receivables are recorded and revenues recognized as earned or as specific program expenditures are incurred. Interfund Receivables and Payables During the course of operations, numerous transactions occur between individual funds that may result in amounts owed between funds. Those transactions are classified as "due to and from other funds." Capital Assets All fixed assets with an original cost of $500 or more 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 years 5-20 years In accordance with the Accounting and Reporting Manual for the Fire Districts, issued by the Office of the New York State Comptroller, depreciation expense is not recorded the District's governmental funds and instead it is disclosed in the notes to the financial statements along with the District's changes in fixed assets. Additional information related to fixed assets is disclosed in Note 8 to the financial statements. -8- MA'n'ITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 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 fund balance. Unreserved fund balance consists of two classifications. A designation of unreserved fund balance indicates the planned use of these resources in the ensuing years' budget or tentative plans for future uses. The undesignated portion reports the remaining fund balance that has not been designated or reserved. Fund balance reserves are created to satisfy legal restrictions, plan for future expenditures or relate to resources not available for general use or appropriation. These reserve funds are established through Board action or voter approval and a separate identity must be maintained for each reserve. Earnings on the invested resources become part of the respective reserve funds. Fund balance reserves currently in use by the District include the following: Reserve for Encumbrances Reserve for Encumbrances represents the amount of outstanding encumbrances at the end of the year to be expended in the subsequent year. Capital Reserve Capital Reserve 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. The reserve is accounted for in the General Fund. 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 are normally received at various intervals during the year. Note 5 - Stewardship, Compliance and Accountability Budgetary Procedures The District prepares an annual budget for the General Fund, which is approved by the Board of Fire Commissioners. The budget is then submitted to the Town of Southold for inclusion in the Town Budget and a public hearing is held thereon. The budget is not subject to referendum. Any revisions to the annual budget are adopted by resolution of the Board of Fire Commissioners. -9- MATrITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 5 - Stewardship, Compliance and Accountability (continued) Capital Reserves The District has established a Capital Reserve Fund for Buildings and Grounds and a Capital Reserve Fund for Apparatus. A summary of activity in each of the District's Capital Reserve Funds is as follows: Capital Reserve for Buildinq and Grounds The Board of Fire Commissioners established a capital reserve for construction and repairs to building and grounds. A summary of activity in the Building and Grounds Capital Reserve Fund for the year ended December 311 2010 is as follows: Buildings and Grounds Capital Reserve Fund Balance at beginning of year Transfer from General Fund appropriations Interest earned on reserve cash Expenditures Buildings and Grounds Capital Reserve Fund Balance at end of year Amount due from General Fund from prior year overpayment of expenditures Buildings and Grounds Capital Reserve Cash Balance at end of year $ 221,955 25,240 751 (15,000) 232,946 (950) Capital Reserve for Apparatus The Board of Fire Commissioners established a capital reserve for pumhases and repairs associated with apparatus and equipment. A summary of activity in the Apparatus Reserve Fund for the year ended December 31,2010 is as follows: Apparatus Capital Reserve Fund Balance at beginning of year Transfer from General Fund appropriations Interest eamed on reserve cash Expenditures Buildings and Grounds Capital Reserve Fund Balance at end of year Amount due to General Fund for reimbursement of costs included in accounts payable Apparatus Capital Reserve Cash Balance at end of year $ 437,242 164,000 1,782 (27,500) 575,524 27,500 Reclassification of Capital Reserves Effective January 1, 2010, the District retroactively reclassified the Capital Reserve Funds in its financial statements to conform to the New York State Uniform System of Accounts issued by the Office of the New York State Comptroller, These reserves were previously reported in the Capital Projects Fund and are currently reported in the General Fund. Effective January 1, 2010, opening fund balance of the Capital Reserve Building and Grounds Fund in the amount of $221,955 and opening fund balance from the Capital Reserve Apparatus Fund in the amount of $437,242 totaling $659,197 were reclassified as follows: -10- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 5 - Stewardship, Compliance and Accountability (continued) Reclassification of Capital Reserves (continued) Fund Balance at beginning of year Restatement of fund balance Fund Balance at beginning of year, as restated General Capital Fund Proiects Fund $ 193,655 $ 659,197 659,197 (659,197) $ 852.852 $ -0- Note 6 - Cash and Cash in Special Reserves Custodial Credit Risk - Deposits - Custodial credit risk for deposits exists when, in the event of the failure of a depository financial institution, a government may be unable to recover deposits, or recover collateral securities that are in possession of an outside agency. The District's investment policies are governed by State statutes. In addition, the District has its own investment policy. District monies must be deposited in FDiC-insured commercial banks or trust companies located within the State. The Treasurer is authorized to use demand accounts and certificates of deposit. Permissible investments include obligations of the 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 risk if they are not covered by depository insurance, and the deposits are either: oUncollateralized; oCollateralized with securities held by the pledging financial institution in the District's name; or oCollateralized with securities held by the pledging financial institution's trust department or agent, but not in the District's name. At December 31, 2010, the District's bank balances were $1,216,866. Of the District's bank balances, $288,050 was covered by federal deposit insurance and $928,816 was secured by collateral held by the District's agent, a third party financial institution, in the District's name. The District does not typically pumhase investments for long enough duration to cause it to believe that it is exposed to any material interest rate risk. The District does not typically purchase investments dominated in a foreign currency, and is not exposed to foreign currency risk. -11- MATrITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 7 - Capital Assets Capital assets consist of the following at December 31, 2010: Balance Balance 01/01/10 Additions Deletions 12/31/10 $ 386,000 $ 386,000 386,000 $ -0- $ -0- 386,000 2,556,998 17,000 2,573,998 437,750 437,750 3,881,950 66,369 3,948,319 682,657 41,391 724,048 7,559,355 124,760 -0- 7,684,115 Capital assets, not being depreciated: Land 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 680,545 67,127 747,672 268,087 9,596 277,683 1,736,035 227,097 1,963,132 314~304 62,418 376,722 $ 2~998T971 $ 3661238 $ -0- 3,365,209 4,318,906 $ 4,704,906 $ 366~238 The District evaluates prominent events or changes in cimumstances affecting capital assets to determine whether impairment of a capital asset has occurred. The District's policy is to record an impairment loss in the period when the District determines that the carrying amount of the asset will not be recoverable. At December 31, 2010, the District has not recorded any such impairment losses. Note 8 - 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. -12- MATI'ITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31,2010 Note 8 - Retirement System (continued) 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 2010 $ 20,389 11.20% 2009 $ 14,934 6.90% 2008 $ 15,807 7.90% Note 9 - Length of Service Awards Program The District's Length of Service Award Program (the "Plan") financial statements are for the year ended December 31, 2010. 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 flrefighting 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 firefighter on January 1, 1992 and must have earned a year of service credit under the Point System during 1992. Benefits A Participant's benefit under the Plan is the actuarial equivalent of a monthly payment for life equal to $20 multiplied by the Participant's total number of years of firefighting service. The number of years of firefighting service used to compute the benefit cannot exceed forty. Effective January 1, 2003, except in the case of disability or death, benefits are not payable until a Participant reaches the Entitlement Age ("EA") of 62 or the Participant's age on December 31 of the first calendar year after 1990 during which the Participant earns a year of service credit under the Point System. -13- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 9 - Length of Service Awards Program (continue) Plan Description (continued) Benefits (continued) 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 firefighter shall receive five points for each complete calendar month of such disability under the Point System up to the earlier of the date such volunteer is no longer totally and temporarily or partially and permanently disabled or attains the EA. However, if such disability becomes a permanent and total disability and a Mattituck Fire District Service Award Program Total and Permanent Disability is awarded on account of such disablement, then no future points shall be credited under this special line of duty disability benefit provision after the date of the awarding of such Total and Permanent Disability by the Board of Fire Commissioners. If a Participant is awarded a Total and Permanent Service Award Program Disability by the Board of Fire Commissioners before attaining the EA for a disability commencing after December 31, 1991, the Participant is entitled to receive an amount equal to the Participant's Accrued Service Award earned as of the date such disability payment is awarded by the Board of Fire Commissioners and payable on the first day of every month for the lifetime of the Participant or for ten years, whichever is greater. Once a Participant is awarded a Total and Permanent Service Award Program Disability under the Plan provisions, such Participant shall no longer be eligible to participate in the District's Plan. If a Participant dies before attaining the EA, a lump-sum shall be paid to the Participant's designated beneficiary equal to the discounted actuarial present value of the Participant's Accrued Service Award earned as of the date of death. If the Participant was an active volunteer firefighter of the District as of the date of death, the minimum death benefit payable to the Participant's designated beneficiary shall be $20,000. 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 Nationwide Life Insurance as the Custodian of the Plan's assets. Nationwide Life Insurance shall make payments to Plan Participants and their beneficiaries in accordance with the Payment Schedule. Plan assets are required to be held in trust by Length of Service Award Program legislation, for the exclusive purpose of providing benefits to Participants and their beneficiaries or for the purpose of defraying the reasonable expenses of the operation and administration of the Plan. The trust agreement is dated January 1, 1992 as amended, and the trustees are the Board of Fire Commissioners of the District. Authority to invest Plan assets is vested in the Board of Fire Commissioners of the District. Subject to restrictions in the Plan document, Plan assets are invested in accordance with a statutory "prudent person" rule. The Plan document restricts the Trustee from investing in securities or obligations issued by the Mattituck Fire District, other than a de minimis amount held in common investment vehicles in which the Trustee invests. The District is required to retain an actuary to determine the amount of the District's contributions to the plan. The actuary retained by the District for this purpose is Tom Fiorillo, ASA, MAAA of Penflex, Inc. Portions of the following information are derived from a report prepared by the actuary dated February 24, 2011. -14- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31,2010 Note 9 - Length of Service Awards Program (continued) Plan Financial Condition As of and for the year ended December 31,2010 Funded Status of the Plan Actuarial present value of benefits Less: total assets available for benefits Unfunded actuarial present value of benefits Funded ratio $ 3,125,776 2,292,157 883.619 73.33% 182,651 1,180,455 803,787 125,264 Assets Available for Benefits Cash and cash alternatives Fixed income Domestic equities international equities Total assets available for benefits Receipts and Disbursements Plan assets, beginning of year Changes during the year: Plan contributions Changes in fair market value of investments Plan benefit withdrawals Plan assets, end of year $ 1,782,714 399,609 202,594 (92,760) An additional contribution of $50,000 was made from the District's 2011 budget but not deposited into the trust account until January 2012. This additional contribution when included in the total assets available for benefits increases the funded ratio to 74.93%. Prior Service Costa 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, 2010 report was $239,505. The amount of the District's actual contribution was $339,000. The District made the 2010 contribution on March 17, 2011. Administration Fees Fees paid to designated Plan administrator / actuary: $4,031 -15- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 9 - Length of Service Awards Program (continued) Funding Methodology and Actuarial Assumptions Normal Costs The actuarial valuation methodology used by the actuary to determine the District's contribution is the "Attained Age Normal Frozen Initial Liability". Under this cost method, there are two components to the annual cost each year. The first component, the "normal cost", is equal to the level annual payment required to fund the current Participant's projected benefits based on their service credit earned after the effective date of the Plan and before the EA. The second component, the annual amortization cost, equals the level annual payments required to fund over the amortization period(s), the Participant's benefits, if any based on (1) either service credit earned before the effective date of the Plan or service credit earned after the attainment of the EA, or (2) Plan amendments that create an immediate unfunded liability and are required to be amortized. Amortization period for liability for service after EA - 3 years Amortization period for liability for service after EA, Retro - 5 years Under the Attained Age Normal Frozen Initial Liability cost method, actuarial gains and losses are amortized over the future years of firefighting service before the EA for the group of firefighters participating in the Plan on the valuation date. Higher than expected investment income, for example, in any one particular year will reduce the normal cost in that year and in each of the future years based upon the ages of the current firefighters participating in the program on the valuation date. Likewise, losses to the Plan's Trust Fund will result in an increase in the future annual normal cost. The assumptions used by the actuary to determine the District's contribution and the actuarial present value of benefits are: Assumed rate of return on investment 6% Mortality TabLes used for: Withdrawal: Disability: Retirement: Death (Active): Death (Inactive): None Assumed 1.5% load of vested terminations and active Participants present value of projected benefits 100% at Entitlement Age None Assumed 1994 Unisex Pensioner Male Mortality Table projected with scale AA to 2007 Note 10 - Indebtedness Long-Term Debt The following is a summary of changes in long-term debt transactions for the year ended December 31, 2010: Balance Balance 1/1/10 Increases Reductions 12/31/10 General obligation serial bonds $ 923,000 Statutory installment bond 180,000 Capital lease obligations 604,932 $ 76,000 $ 847,000 36,000 144,000 81,666 523,266 $ 1,707,932 $ -0- $ 193,666 $ 1,514,266 -16- MA'I-rlTUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 10 - Indebtedness (continued) Long-Term Debt (continued) 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 serial bonds bear interest at 3.70% and 4.20% and have final maturity dates through 2019. The following is a summary of maturity of general obligation serial bonds: Final Interest Outstanding Issue Date Maturity Rate 12/31/10 2004 2019 3.70% $ 670,000 2005 2019 4.20% 177,000 $ 847,000 Future principal and interest payments to maturity are as follows: Year Principal Interest Total 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 95,000 17,865 112,865 2016-2019 411,000 33,568 444,568 $ 847,000 $ 156,394 $ 1,003,394 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 borne 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 bears interest at 3.20% and has a final maturity date of 2014. The following is a summary of maturity of the statutory installment bond: Year Principal Interest Total 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 $ 144,000 $ 11,520 $ 155,520 -17- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 10 - Indebtedness (continued) Long-Term Debt (continued) Capital Lease Obliqations 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 District has also entered into contracts to acquire defibrillators. The liability for these obligations are payable on a monthly basis and mature in April 2011 and June 2013. Interest rates range from 7.54% to 8.76%. The cost of the underlying equipment is $46,946. Future principal and interest payments to maturity are as follows: Year Principal Interest Total 2011 $ 83,422 $ 27,939 $ 111,361 2012 87,422 23,319 110,741 2013 85,620 18,570 104,190 2014 85,300 14,212 99,512 2013 89,796 9,716 99,512 2014-2016 91,706 7,807 99,513 $ 523,266 $ 101,563 $ 624,829 The actual allocation of principal and interest for the District's capital lease obligations may be different due to the leasing company recalculating the interest on a daily basis as opposed to a monthly basis as presented here. Management believes any differences as a result of this presentation are not significant. Note 11 - Commitments Risk Manaqement The Distdct 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 pumhased from independent third parties. Settled claims from these risks have not exceeded commercial insurance coverage for the past two years. Management believes that all claims currently pending are either adequately covered by insurance or will not materially affect the financial position or results of operations of the District. Lease Aqreements The District 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 [ease for one (1) additional twenty-five (25) year period. 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, 2010 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 period with 4 automatic renewal terms for an additional five (5) year period. The lease payments are $500 per month increased on the anniversary of the commencement date by an annual escalator of three (3) percent. In addition, there 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 31,2010 were $5,075. -18- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2010 Note 11 -Commitments (continued) Lease Aqreements (continued) Minimum annual commitments under the operating leases described above are as follows: Yearended December31, 2011 $ 8,685 2012 8,872 2013 9,064 2014 9,263 2015 9,467 2016 -2020 50,633 2021 -2025 56,798 2026 -2030 63,944 2031- 2033 28,961 $ 245,687 Note 12 - New Pronouncements The GASB has issued Statement No. 54, "Fund Balance Reporting and Governmental Fund Type Definitions." This statement establishes criteria for classifying fund balances into specifically defined classifications and clarifies definitions for governmental fund types. The requirements of this statement become effective for the District for the year ended December 31,2011. SUPPLEMENTARY INFORMATION -19- MATTITUCK FIRE DISTRICT GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2010 REVENUES Real property taxes Interest and earnings insurance recoveries and refunds Miscellaneous income Original Final Budget Budget $ 1,793,294 $ 1,793,294 Actual Encumbrances_ $ 1,793,294 5,222 25,446 20 Variance Positive (Negative) 5,222 25,446 20 Total Revenues 1,793,294 1,793,294 1,823,982 30,688 EXPENDITURES Personal services Equipment and capital outlay Fire protection Employee benefits Debt service 160,294 172,394 172,390 92,500 169,500 122,009 $ 614~977 644,092 536,326 470,181 527,181 510,981 266,102 266,102 265,210 46,600 4 891 107,766 16,200 892 Total Expenditures 1,604,054 1,779,269 1,606,916 46,600 125,753 Excess (Deficiency) of Revenues Over (Under) Expenditures 189,240 14,025 217,066 (46,600) 156,441 OTHER FINANCING USES Operating transfers out Net Change in Fund Balance $ Fund Balance at Beginning of Year, as Restated Fund Balance at End of Year (189,240) (19,140) -- -0- $ (5,115) 217,066 852,852 $ 1,069,918 19,140 $ (46,600) $ 175,581 -20- MATTITUCK FIRE DISTRICT GENERAL FUND SCHEDULE OF DETAILED EXPENDITURES AND APPROPRIATIONS Year Ended December 31,2010 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 Fireflghters Expense Uniforms Medical exams inspection dinner Total Firefighters 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) $ 160,294 $ 172,394 $ 172,390 $ 4 92,500 169,500 122,009 $ 46,600 891 17,000 30,796 22,539 8,257 1,000 1,000 950 50 69,200 53,200 52,657 543 7,750 7,750 1,809 5,941 -0- 1,000 423 577 94,950 93,746 78,378 -0- 15,368 69,500 69,500 48,106 21,394 12,000 12,000 9,730 2,270 25,600 27,600 27,182 418 107,100 109,100 85,018 -0- 24,082 12,000 12,000 2,241 9,759 35,000 35,000 34,746 254 20,000 20,000 19,831 169 67,000 67,000 56,818 -0- 10,182 19,500 19,500 18,330 1,170 102,500 102,500 68,313 34,187 102,500 102,500 68,313 -0- 34,187 2,500 2,500 1,725 775 22,000 24,000 23,203 797 110,000 146,319 145,853 466 30,000 20,000 14,801 5,199 164,500 192,819 185,582 -0- 7,237 59,427 59,427 43,887 15,540 59,427 59,427 43,887 -0- 15,540 614,977 644,092 536,326 -0- 107,766 (continued) -21- MATTITUCK FIRE DISTRICT GENERAL FUND SCHEDULE OF DETAILED EXPENDITURES AND APPROPRIATIONS Year Ended December 31,2010 Variance Original Final Positive Budget Bud~let Actual Encumbrances /Ne~lative/ 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 Other Financing Uses Operating transfers out Total Other Financing Uses Totals 12,262 13,262 13,122 140 14,934 20,934 20,389 545 344,445 394,445 393,031 1,414 36,000 36,000 31,405 4,595 3,046 3,046 529 2,517 12,554 12,554 12,269 285 46,940 46,940 40,236 6,704 470,181 527,181 510,981 -0- 16,200 192,707 193,707 193,666 41 73,395 72,395 71,544 851 266,102 266,102 265,210 -0- 892 189,240 19,140 19,140 189,240 19,140 -0- -0- 19,140 $ 1,793,294 $ 1,798,409 $ 1,606,916 $ 46,600 $ 144,893 OTHER REPORTS CERTIfiED PUBLIC ACCOUNTANTS -22- 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 Fire District, New York, as of December 31, 2010, and for the year then ended, as listed in the table of contents and have issued our report thereon dated June 2, 2011. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the Mattituck Fire District, New York's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Mattituck Fire District, New York's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Mattituck 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 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 reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, 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 material weaknesses, as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Mattituck 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 matter that is required to be reported under Government Auditing Standards. PERSONAL SERVICE. TRUSTED ADVICE. ALBRECHT V!GGIANO, ZURFCK & COMPANY, RC 245 PARK AVENUE 247- FtOOR 25 SUFFOLK COURT NEWYORK, NY 10167 HAUPPAUGE, NY 11788-3715 7 212 792 4075 · 631 43a9500 F 631 4349518 4 -23- We also noted certain matters that we reported to management of the Mattituck Fire District, New York, in a separate letter dated June 2, 2011. 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 June 2, 2011