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HomeMy WebLinkAbout2010Craig, Fitzsimmons & Michaels, LLP Certified Public Accountants, IManagement and I1' Consultants June 1, 2011 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, 2010, 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 we consider to be deficiencies. Prior Year Comments We found that the Board of Commissioners and the District's management team adequately addressed the following prior year recommendations: Conference expenses paid for attorney Whistleblower policy Document retention policy Electronic payments and transfers 20 Manor Road, Smithtown, New York 11787 Phone (631) 360-1400 ,~ (877) NPO~CPAS ~ Fax (631) 360~77;14 ~ www. cfmllp.com Board of Fire Commissioners June 1, 2011 Page 2 of 5 2010 Comments The following suggestions are new observations resulting from our 2010 audit and are being provided to assist management in strengthening controls as well as better complying with laws and regulations. Bondin,cI Town Law § 176 [4] requires that the Treasurer and Deputy Treasurer obtain a performance of duties bond in an amount that is reasonable and appropriate prior to taking their office. An additional requirement is that this bond be filed with the Town Clerk's office. Neither the Treasurer nor Deputy Treasurer is currently bonded. It is our understanding that the District currently holds criminal coverage in the form of a position bond for the Treasurer, Chairman and Vice Chairman; however this insurance is not the same as a "named surety bond." Bonding is a preventative control, the concept is that a person who has a suspect background is not "bondable" as such they would not be put in a position to harm the District. Criminal coverage makes the District whole in case of a loss. During a recent teleconference sponsored by the Office of State Comptroller this question of bonding was posed to an expert panel including general legal counsel of the OSC and the AFDSNY. The panelists reiterated that it is in fact a violation of Town Law Section 176 [4] for the Treasurer and Deputy Treasurer to hold their office and not be appropriately bonded. We suggest the District's legal counsel review the insurance coverage's in place as related to Town Law § 176 [4] and provide the District with a "comfort" letter as to the District's compliance with Town Law § 176 [4]. Furthermore, the District's counsel should provide advice to the District as to policy and procedure that will keep the District in compliance with Town Law § 176 [4]. Fixed Asset Policy The Board of Fire Commissioners should review the minimum standards for inclusion in the fixed assets records. The District should determine a dollar amount in which the asset is of significant value, meets a "capitalization threshold". In addition, consideration must be given to the estimated useful life and the physical characteristics of assets that will be capitalized. We recommend the details of the controls over fixed assets be formally written in a policy, and adopted annually by resolution at the reorganization meeting. For further guidance on fixed assets the Fire District can refer to the publication, General Fixed Assets Handbook from Municipalities. If copies are required, write the department of Audit and Control, Division of Municipal Affairs, Bureau of Municipal Accounting Systems, Alfred E. Smith, State office Building, Albany, New York 12236. Preferred Vendors The objective of a purchasing policy is to obtain goods and services of the appropriate quality, in the appropriate quantity, from the most appropriate source, at the best possible price, in compliance with the NYS laws. When applying your purchasing policy it is important to consider the aggregate spending for a particular good or commodity; gasoline and oil for example may not meet the minimum threshold stated in the procurement policy to be bid each time there is a purchase, however the overall spending for this type of procurement can well exceed the minimum threshold over the course of a year. It is also important to recognize that contracted services provided by a District mechanic, electrician, and other specialized service providers should be periodically be bid so that the District is assured it is paying reasonable rates and is in compliance with the District's procurement policy and relevant state laws. We recommend the Board review and amend the current procurement policy to include provisions for preferred vendors. This can be done by adopting a listing of preferred vendors by resolution that should declare why, as a matter of fact, not opinion, the District will be economically and efficiency served by utilizing a particular preferred vendor. The fact that a certain public official prefers the vendor or that certain equipment is generally more economical than other equipment is not sufficient. The resolution should explore in detail the impact of standardization, such as better operation of a product, less downtime, less repairs, and thus savings to the District. Part of standardizing a preferred vendor will include documenting actions taken by the Board of Fire Commissioners for determining the selection of a preferred vendor. The District should retain relevant documentation including board resolutions, memoranda, written quotes, telephone logs for verbal quotes, requests for proposals, contracts and other appropriate forms of "auditable" documentation. The "back-up" for the Board's decision should be retained and readily available for review upon request. Board of Fire Commissioners June 1, 2011 Page 3 of 5 Preferred Vendors - continued Once the Board has established which vendors or equipment is "preferred", it should be determined how frequently the vendor should be re-evaluated. We recommend documenting the process of selecting a preferred vendor at a minimum of every 3 years. It is our opinion that the Board can meet the "spirit" of the procurement laws by reviewing the preferred vendor status every 3 years. Thus, the evaluation process should be completed and re-documented for each 3 year "term". Sales Tax We noted instances in which the Fire District issued a reimbursement check for expenses that included sales tax. As local government of the State of New York, the East Marion Fire District is exempt from New York State and local sales and use taxes, this exemption is provided in section 1116(a)(1) of the Tax Law. We recommend the District provide evidence of its sales tax exemption when making purchases as to avoid being charged sales tax. It would also be helpful to ensure vendors that the District regularly does business with, have a copy of the district's sale tax exempt form on file. AS GENERAL NOTICE TO ALL FIRE DISTRICTS, PLEASE SEE OUR ADVICE BELOW REGARDING RECENT REGULATIONS ON FUND BALANCE PRESENTATION AND DISCLOSURE: Fund Balance Presentation and Disclosure Alterations - Effective June 30~ 2011 In February 2010, the Governmental Accounting Standards Board (GASB) issued Statement Number 54, Fund Balance Reporting and Governmental Fund Type Definitions, to clarify certain terms used in fund type definitions to establish consistency and improve upon the disclosure of fund balances in the financial statements. More specifically, the new standard is being used to clearly identify the portion of fund balance that is available to be appropriated for the following year's budget as well as those portions that are not available due to restrictions and commitments. Accordingly, the "reserved" and "unreserved" fund balance classifications are being replaced by five (5) new classifications: nonspendable, restricted, committed, assigned and unassigned. Please be advised, the requirements set forth under Statement 54 are effective for financial statements for periods ending on or after June 30, 2011. GASB Statement 54 requires local governments to focus on the constraints imposed upon resources when reporting in governmental funds. The classifications serve to inform readers of the financial statements of the extent to which the government is bound to honor constraints on the specific purposes for which resources in a fund can be spent. The new fund balance classifications, and their respective definitions, are as follows: Nonspendable: consists of assets that are inherently nonspendable in the current period either because of their form or because they must be maintained intact, including prepaid items, inventories, long-term portions of loans receivable, financial assets held for resale, and principal of endowments. Restricted: consists of amounts that are subject to externally enforceable legal purpose restriction imposed by creditors, 9rantors, contributors or laws and regulations of other 9ovemments; or through constitutional provisions. Restrictions may not be rescinded and amounts reallocated for other purposes. Committed: consists of amounts that are subject to a purpose constraint imposed by a formal action of the government's highest level of decision-making authority before the end of the fiscal year, and that require the same level of formal action to remove the constraint. To clarify, committed amounts for a specific purpose cannot be used for any other purpose unless the District removes or changes the specific use by taking the same type of actions (resolution) it used to previously commit those amounts. Be advised, actions to commit resources must occur prior to year-end; however, the actual amount to be committed may be determined after the year-end. Different from amounts classified as restricted, amounts in the committed fund balance are not legally enforceable. Consequently, these amounts may be uncommitted and reallocated for other purposes (requires formal action from the Board). Board of Fire Commissioners June 1, 2011 Page 4 of 5 Fund Balance Presentation and Disclosure Alterations - Effective June 30~ 2011 - continued Assi,qned: consists of amounts that are subject to a purpose constraint that represents an intended use established by the government's highest level of decision-making authority, or by their designated body or official. The purpose of the assignment must be narrower than the purpose of the general fund, and in funds other than the general fund, assigned fund balance represents the residual amount of fund balance. In other words, in any government fund, other than the general fund, the assigned fund balance will include all remaining amounts that are not already classified as nonspendable, restricted or committed. Assignment in the general fund is meant to communicate that the intended use of those amounts if for a specific purpose that is narrower than the general purposes of the fire district. The assigned fund balance in the general fund will include all residual amounts that are intended to be used for a specific purpose. The constraints imposed on the use of assigned amounts are more easily removed than those imposed on committed amounts. Unassiqned: represents the residual classification for the government's general fund, and could report a surplus or deficit. In funds other than the general fund, the unassigned classification should be used only to report a deficit balance resulting from overspending for specific purposes for which amounts had been restricted, committed, or assigned. Reserve funds will be classified as restricted funds on financial statement balance sheets. Reserve funds that authorize transfers to other reserve funds, which may require board action or voter approval, will still be classified as restricted, because even though the purpose for the restriction may change, the level of constraint on spending does not. To add, accounting for encumbrances will continue. If resources have already been restricted or committed for encumbrances, these amounts will be included with restricted or committed resources. If resources have not already been restricted or committed, amounts encumbered should be considered assigned for the purpose of the expected expenditure. Please note, encumbered amounts for specific purposes will not be displayed separately within each classification. Statutory Fund Balance Limitations: Statement 54 eliminates the unappropriated unreserved fund balance terminology. Consequently, in compliance with Chapter 528 of the Laws of 2000, local government should apply the "reasonable amount" calculation to the unrestricted portion of fund balance; this will be defined as the total of the committed, assigned, and unassigned fund balance classifications. Note Disclosure Requirements: Statement 54 establishes additional provisions for fund balance disclosures in the notes to the financial statements. These disclosures must include the following: 1. The government's highest level of decision-making authority, and the formal action required to establish a commitment of fund balance (if applicable), and the processes through which commitments are imposed. 2. If designated, the body or official to assign amounts to a specific purpose, the policy that established that authorization, and the processes through which assignments are imposed. 3. The order in which amounts are deemed to have been spent. The accounting policies of the local government should determine whether restricted, committed, assigned or unassigned amounts are considered to have been spent first when resources that are available from multiple constraint levels are spent; the default policy is that resources are first spent from the highest constraint level possible. 4. Significant encumbrances by major funds and non-major funds in the aggregate, with required disclosure about other significant encumbrances. 5. If fund balance classifications are displayed in the aggregate on the face of the financial statements, amounts for two (2) nonspendable classifications and specific purposes for other fund balance classifications must be disclosed in the notes. 6. A minimum fund balance policy, if formally adopted. Recommendation - The Board of Fire Commissioners should consider the provisions of this standard. We recommend that the Board consider adopting a minimum fund balance policy to implement requirements as set forth under Statement 54. This policy must, at a minimum, adequately address the following: 1. Whether the district considers restricted or unrestricted amounts to have been spent when an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available. 2. Whether committed, assigned or unassigned amounts are considered to have been spent when an expenditure is incurred for purposes for which amounts in any of those unrestricted fund balance classifications could be used. Board of Fire Commissioners June 1, 2011 Page 5 of 5 Fund Balance Presentation and Disclosure Alterations - Effective June 30~ 2011 - continued 3. Delineate the necessary procedures for the formal actions that are required to be taken to establish, modify or rescind fund balance commitments or assignments. We recommend that district consult with its legal counsel to review the board's new policies for the authority and actions that lead to committed and assigned fund balances, and the order of spending. At year end, we will provide our services to assist in determining how the various components of fund balance should be classified based upon the district's accounting policies. Of most importance, these policies should be implemented before the end of 2011. Concludin.q 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, 2010 financial statements. This report does not affect our report dated June 1,2011. 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. Respectfully submitted, Craig, Fitz_simmons & Michaels, LLP Craig, Fitzsimmons & Michaels, LLP Certified Public Accountants, IManagement and I1' Consultants June 1, 2011 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, 2010 and have issued our report thereon dated June 1,2011. 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 24, 2010 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 are, 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 Timinq 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 2010 included other additional procedures related to your LOSAP as required by current NYS legislation. This increased the time it took to perform certain audit procedures and financial statement disclosures. 20 Manor Road, Smithtown, New York 11787 Phone (631) 360-1400 ,~ (877) NPO~CPAS ~ Fax (631) 360~77;14 ~ www. cfmllp.com Board of Fire Commissioners June 1, 2011 Page 2 of 4 Other Information in Documents Containin~ 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. Siqnificant Accountinq 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 2010, 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. Accountinq 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 significanfiy from those expected. The most significant estimate in the financial statement relates to the calculation of the total unfunded benefits and the unfunded normal benefits of the LOSAP program. The methodologies and assumptions used to calculate the liability uses an assumed rate of return on the underlying investments of 5.5%. The higher the assumed rate of return, the lower the District's liability. If actual investment results are less than the assumed rate of 5.5%, the plan will be underfunded and additional contributions will be required to be made by the district to cover its commitment under the LOSAP program. Audit Adiustments 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. Manaqement Representations We have requested certain written representations from management. These are included in the management representation letter provided to us dated June 1,2011. Disagreements with Manaqement 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 June 1, 2011 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 Performinq 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, 2010, 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 June 1, 2011 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 East Marion Fire District Financial Statements December 31,2010 EAST MARION FIRE DISTRICT TABLE OF CONTENTS DECEMBER 31, 2010 Independent Auditor's Report Basic Financial Statements Annual Financial Report Update Document Paqe(s) Opinion 1-33 Notes to Financial Statements Supplemental Information 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 34-46 47 48-49 Craig, Fitzsimmons & Michaels, LLP Certified Public Accountants, Management and IT Consultants 20 Manor Road ,~ Smithtown, New York 11787 INDEPENDENT AUDITOR'S REPORT The Board of Fire Commissioners East Marion Fire District PO Box 131 92~5 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, 2010, 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, 2010, and their respective revenues and expenditures for the year then ended, on the basis of accounting described in Note 1. In accordance with Government Auditing Standards, we have also issued our report dated June 1, 2011 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 Government 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 fairly stated in all material respects in relation to the basic financial statements taken as a whole. Smithtown, NY June 1, 2011 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 12/31/2010 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 filed 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 2009 and has been used by the OSC as the basis for preparing this update document for the fiscal year ended 2010: (A) GENERAL (H) CAPITAL PROJECTS (K) GENERAL FIXED ASSETS (R) Reserve (TA) AGENCY (W) GENERAL LONG-TERM DEBT All amounts included in this update document for 2009 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 7) Schedule of Other Post Employment Benefits (OPEB) All numbers in this report will be rounded to the nearest dollar. Page 2 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2010 (A) GENERAL Balance Sheet ~~?~]~::::::::::::::::::::: Assets Cash 71,276 A200 137,261 Cash In Time Deposits A201 Accounts Receivable A380 1,433 Prepaid Expenses 19,803 A480 19,356 Cash, Special Reserves Cash In Time Deposits, Spec Res 169,653 A230 230,098 101,604 A231 103,544 Page 3 OSC Municipality Code 471179003500 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2010 (A) GENERAL Balance Sheet IIIIIIIIIIIIIIIIIIIIIIIIIIII ~??????????????????????~111111111~ 1~¢//1111111111111111111111111111 ~ ~///////////////////////:/~ Liabilities Accounts Payable 7,160 Accrued Liabilities Deferred Revenues A600 7,479 A601 2,157 A691 14,853 Reserve For Encumbrances Capital Reserve Miscellaneous Reserve (specify) Additional Description Prepaid expenses Unreserved Fund Balance Appropriated Unreserved Fund Balance Unappropriated A821 50,063 271,258 A878 333,642 39,803 A889 19,356 A910 45,000 44,115 A9fl 19,142 Page 4 OSC Municipality Code 471179003500 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2010 (A) GENERAL Results of Operation Revenues Real Property Taxes 520,966 A1001 495,907 Interest And Earnings 5,748 A2401 4,172 Rental of Real Property 35,425 A2410 18,817 Sales of Equipment 1,544 A2665 33,051 Refunds of Prior Year's Expenditures 102 A2701 47 Fed Aid Other Public Safety A4389 44,171 Page 5 OSC Municipality Code 471179003500 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2010 (A) GENERAL Results of Operation Expenditures Payment of Mta Payroll Tax,contr Expend A19804 102 Fire, Pets Serv 31,361 A34101 29,925 Fire, Equip & Cap Outlay 64,405 A34102 101,779 Fire, Contr Expend 157,004 A34104 153,974 State Retirement System Local Pension Fund, Empl Bnfts Social Security, Employer Cont Worker's Compensation, Empl Bnfts Unemployment Insurance, Empl Bnfts 2,757 A90108 2,697 136,252 A90258 136,573 2,480 A90308 2,290 11,303 A90408 12,071 A90508 201 Debt Principal, Serial Bonds Debt Principal, State Loans 33,000 A97106 33,000 6,024 A97906 6,175 Debt Interest, Serial Bonds Debt Interest, State Loans 4,950 A97107 3,814 1,688 A97907 1,537 Transfers, Other Funds A99019 Page 6 OSC Municipality Code 471179003500 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2010 (A) GENERAL Changes in Fund Equity ~??????????????????;1~¢//~ ANALYSIS OF CHANGES IN FUND EQUITY Fund Equity-Beginning of Year Prior Period Ad j-Increase To Fund Equity Restated Fund Equity- Beg of Year ADD - REVENUES AND OTHER SOURCES DEDUCT - EXPENDITURES AND OTHER USES Fund Equity-End of Year 33,911 A8021 355,176 208,704 A8012 242,615 A8022 355,176 563,785 596,165 451,224 484,138 355,176 A8029 467,203 Page 7 OSC Municipality Code 471179003500 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2010 (A) GENERAL Budget Summary Estimated Revenues Est Rev - Real Property Taxes 495,841 A1049N 490,246 Est Rev - Use of Money And Property 42,111 A2499N 69,250 Appropriated Reserve 20,000 A511 N 20,000 Page 8 OSC Municipality Code 471179003500 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2010 (A) GENERAL Budget Summary Appropriations App - Public Safety 220,256 A3999N 226,788 App - Employee Benefits 213,684 A9199N 215,346 App - Debt Service 44,012 A9899N 42,362 App - Interfund Transfer 80,000 A9999N 95,000 Page 9 OSC Municipality Code 471179003500 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2010 Balance Sheet IIIIIIIIIIIIIIIIIIIIIIII ~/////////~1111111~ ~?/~ IIIIIIIIIIIIIIIIIIIIII1~ ::::::::::::::::::::: Page 10 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2010 Balance Sheet IIIIIIIIIIIIIIIIIIIIIIIIIIII ~??????????????????????~111111111~ 1~¢//1111111111111111111111111111 ~ ~///////////////////////:/~ Page 11 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2010 Results of Operation Page 12 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2010 Results of Operation Page 13 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2010 (H) CAPITAL PROJECTS Changes in Fund Equity I IIIIIIIIIIIIIIIIIIIIII1~/////////;111111111~¢//~11111111111111111111111~ ANALYSIS OF CHANGES IN FUND EQUITY Fund Equity - Beginning of Year 208,704 H8021 Prior Period Adj - Decrease In Fund Equity 208,704 H8015 Restated Fund Equity- Beg of Year H8022 Fund Equity - End of Year H8029 Page 14 OSC M unicipality Code 471179003500 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2010 (K) GENERAL FIXED ASSETS Balance Sheet IIIIIIIIIIIIIIIIIIIIIIII ~/////////~1111111~ ~?/~ IIIIIIIIIIIIIIIIIIIIII1~ ::::::::::::::::::::: Assets Land 61,723 K101 61,723 Buildings 445,810 K102 445,810 Machinery & Equipment 1,135,228 K104 1,180,362 Page 15 OSC Municipality Code 471179003500 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2010 (K) GENERAL FIXED ASSETS Balance Sheet IIIIIIIIIIIIIIIIIIIIIIIIIIII ~??????????????????????~111111111~ 1~¢//1111111111111111111111111111 ~ ~///////////////////////:/~ Fund Equity Total Non-Current Govt Assets 1,642,761 K159 1,687,895 Page 16 OSC Municipality Code 471179003500 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2010 Balance Sheet IIIIIIIIIIIIIIIIIIIIIIII ~/////////~1111111~ ~?/~ IIIIIIIIIIIIIIIIIIIIII1~ ::::::::::::::::::::: Page 17 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2010 Balance Sheet IIIIIIIIIIIIIIIIIIIIIIIIIIII ~??????????????????????~111111111~ 1~¢//1111111111111111111111111111 ~ ~///////////////////////:/~ Page 18 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2010 Results of Operation Page 19 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2010 Results of Operation Page 20 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2010 (R) Reserve Changes in Fund Equity I IIIIIIIIIIIIIIIIIIIIII1~/////////;111111111~¢//~11111111111111111111111~ ANALYSIS OF CHANGES IN FUND EQUITY Fund Equity - Beginning of Year R8021 Restated Fund Equity- Beg of Year R8022 Fund Equity - End of Year R8029 Page 21 OSC M unicipality Code 471179003500 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2010 (TA) AGENCY Balance Sheet IIIIIIIIIIIIIIIIIIIIIIII ~/////////~1111111~ ~?/~ IIIIIIIIIIIIIIIIIIIIII1~ ::::::::::::::::::::: Assets Service Award Program Assets 731,148 TA461 1,028,760 Page 22 OSC Municipality Code 471179003500 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2010 (TA) AGENCY Balance Sheet IIIIIIIIIIIIIIIIIIIIIIIIIIII ~??????????????????????~111111111~ 1~¢//1111111111111111111111111111 ~ ~///////////////////////:/~ Liabilities Service Awards 731,148 TA13 1,028,760 Page 23 OSC Municipality Code 471179003500 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2010 (W) GENERAL LONG-TERM DEBT Balance Sheet ~~?~]~::::::::::::::::::::: Assets Total Non-Current Govt Liabilities 127,476 W129 88,301 Page 24 OSC Municipality Code 471179003500 East Marion FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2010 (W) GENERAL LONG-TERM DEBT Balance Sheet IIIIIIIIIIIIIIIIIIIIIIIIIIII ~??????????????????????~111111111~ 1~¢//1111111111111111111111111111 ~ ~///////////////////////:/~ General Long Term Debt State Loans Payable 61,476 W619 55,301 Bonds Payable 66,000 W628 33,000 Page 25 OSC Municipality Code 471179003500 East Marion FIRE DISTRICT Financial Comments For the Fiscal Year Ending 2010 Page 26 East Marion FIRE DISTRICT Statement of Indebtedness For the Fiscal Year Ending 2010 Indebtedness Not Exempt From Constitutional Debt Limit Bond No. 2006000002 J[EDPCODEJ[ Amoun~ Month and Year of Issue 2/12/2002J Purpose of Issue J~-adder truck purchase~ Current Interest Rate 5.0000~ Outstanding Beginning of Year J[2P18771 66,000~ Prior Year Adjustment Issued During the Fiscal Year (do not include renewals here) 112P18773 0 Paid During the Fiscal Year (do not include renewals here) J[2P18775 33,000~ Outstanding End of the Fiscal Year J[2P18777 33,000~ Final Maturity Date 2/12/2011 Total Bond Amoun~ Outstanding Beginning of Year 66,000~ Prior Year Adjustment 0 Issued During Fiscal Year 0 Paid During Fiscal Year 33,000 Outstanding End of Year 33,000~ Page 27 OSC Municipality Code 471179003500 East Marion FIRE DISTRICT Statement of Indebtedness For the Fiscal Year Ending 2010 Indebtedness Not Exempt From Constitutional Debt Limit State or Authority Loan No. 2009000001 IIEDPCODEII Amoun~ Month and Year of Issue 1/18/2008J Purpose of Issue Emergency repairs~ Current Interest Rate 2.5000~ Outstanding Beginning of Year J[2P18791 61,476~ Prior Year Adjustment 0I Issued During the Fiscal Year (do not include renewals here) 112P18793 0I Paid During the Fiscal Year (do not include renewals here) J[2P 18795 6,174 Outstanding End of the Fiscal Year J[2P18797 55,301~ Final Maturity Date 1/18/2018I Total State or Authority Loan Amoun~ Outstanding Beginning of Year 61,476~ Prior Year Adjustment 0I Issued During Fiscal Year 0I Paid During Fiscal Year 6,174 Outstanding End of Year 55,301~ Total of Ail Indebtedness Includes Total of Bonds and Notes - Exempt and Not Exempt Total State or Authority Loan Amoun~ Outstanding Beginning of Year 127,476I Prior Year Adjustment 0I Issued During Fiscal Year 0I Paid During Fiscal Year 39,174 Outstanding End of Year 88,3011 Page 28 OSC Municipality Code 471179003500 East Marion FIRE DISTRICT Schedule of Time Deposits and Investments For the Fiscal Year Ending 2010 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 Amount 9Z2001 $0.00 9Z2011 $373,679.00 9Z2021 $101,604.00 $475,283.00 9Z2014 $500,000.00 9Z2014A $250,000.00 $750,000.00 INVESTMENTS: - Securities (450) Book Value (cost) Market Value at Balance Sheet Date Collateralized with securities held in possession of municipality or its agent 9Z4501 9Z4502 9Z4504A - Repurchase Agreements (451) Book Value (cost) Market Value at Balance Sheet Date Collateralized with securities held in possession of municipality or its agent 9Z4511 9Z4512 9Z4514A Page 29 OSC Municipality Code 471179003500 East Marion FIRE DISTRICT Bank Reconciliation For the Fiscal Year Ending 2010 Include All Checking, Savings and C.D. Accounts Bank Account Number ..... -6088 ..... -2942 ..... -8786 ..... -0342 Bank Balance $143,581 Add: Deposit In Transit Less: Outstanding Checks $0 $6,320 Adjusted Bank Balance $137,261 $139,144 $0 $0 $139,144 $90,954 $0 $0 $90,954 $101,604 $1,940 $0 $103,544 9ZCASH 9ZCASHB Total Adjusted Bank Balance Betty Cash Adjustments Total Cash Total Cash Balance All Funds * Must be equal $470,903 $.oo $.00 $470,903 $470,903 Page 30 OSC Municipality Code 471179003500 East Marion FIRE DISTRICT Fire District Questionnaire For the Fiscal Year Ending 2010 1) Has your district adopted a written procurement prolicy and is it complied with? 2) Has your district contracted to have an independent audit of its 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 (LOSAP) for volunteer firefighters? If so, how are the LOSAP funds invested? Marketable Securities Annuities Life Insurance Other (describe) 7) Has your Fire District adopted an investment policy as required by General Municipal Law, Section 39? Response Y Y Y Y $435,163 Y Y Y Page 31 East Marion FIRE DISTRICT Employee and Retiree Benefits For the Fiscal Year Ending 2010 Total Full Time Employees: Total Part Time Employees: Account Description Total # of Full # of Part # of Retirees Code Expenditures Time Time (All Funds) Employees Employees 9010~ State Retirement System $2,697.0( 9015~ Police and Fire Retirement 9025~ Local Pension Fund $136,573.0( 9030~ Social Security $2,290.0( 9040~ Worker's Compensation $12,071.0( Insurance 9045~ Life Insurance 9050~ Unemployment Insurance 9055~ Disability Insurance 9060~ Hospital and Medical (Dental) Insurance 9070~ Union Welfare Benefits 9085~ Supplemental Benefit Payment to Disabled Fire Fighters 9189( Other Employee Benefits Total $153,631.0£ 3omputed Total From Financial ~ection (comparative purposes only) $153,832.0( Page 32 OSC Municipality 471179003500 Energy Type East Marion FIRE DISTRICT Energy Costs and Consumption For the Fiscal Year Ending 2010 Total Expenditures Total Volume Units Of Measure Alternative Units Of Measure Gasoline Diesel Fuel Fuel Oil Natural Gas Electricity $8,91 L Coal Page 33 OSC Municipality 471179003500 EAST MARION FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2010 1. Summary of Siqnificant Accountinq Policies The financial statements of the East Marion Fire District (District) as of and for the year ended December 31, 2010 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 accounting 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 Governments. 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, 2010 1. Summary of Siqnificant Accountinq 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: 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. Aqency Fund - used to account for money (and/or property) received and held in the capacity of trustee, custodian, or agent. c. 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 Lon~-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. d. 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- EAST MARION FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2010 1. Summary of Significant Accountinq Policies - continued d. Measurement Focus and Basis of Accounting - 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 Cash consist of cash on hand and monies in demand deposit checking or savings accounts. f. Cash in Time Deposits Cash in time deposits consist of monies held in an interest bearing account with restrictions or penalties for withdrawal, such as money market accounts, and short-term investments with original maturities of three months or less from the date of acquisition. g. 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 10th 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. h. Accounts Receivable Accounts receivable are recorded according to the contracted terms, which in the opinion of the District is the net realizable value. i. 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. -36- EAST MARION FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2010 1. Summary of Siqnificant Accountinq Policies - continued j. 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. 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, 2010 East Marion Fire District did not have any amounts due to or from other funds. k. 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. I. 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. m. 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: Miscellaneous Reserve - represents the amounts that are restricted as to their use at the end of the year, typically this relates to a reserve for prepaid expenditures which restricts the portion of general fund balance since it is not available for appropriation. This reserve is accounted for in the general fund. Capital Reserve - 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, 2010 is comprised of: Demand Time Total Deposits Deposits Reserves Building and Grounds Reserve $ 90,954 $ $ 90,954 Equipment and Apparatus Reserve 139,144 103,544 242,688 $ 230,098 $ 103,544 $ 333,642 -37- EAST MARION FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2010 1. Summary of Siqnificant Accountinq Policies - continued n. 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. Current year purchases are recorded as additions and assets removed from inventory are deleted at their historical cost. Capital thresholds, the dollar value above which asset acquisitions are added to the capital asset accounts are reported as follows: Capitalization Threshold Buildings and improvements $2,000 Equipment and apparatus $2,000 The District is in the process of establishing formal capitalization thresholds. 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. East Marion Fire District encumbered $50,063 of the general fund balance for the purchase of vehicles and equipment. c. Budqet Basis of Accountinq 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. East Marion Fire District appropriated $45,000 from the general fund balance and appropriated this for the year ending December 31,2011. 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. -38- EAST MARION FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2010 3. Deposits with Financial Institutions and Investments - continued 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. 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. 4. General Fixed Assets As of December 31,2010, any new additions or deletions are valued at historical cost. Capital asset balances and activity for the year ended December 31,2010 were as follows: Balance Balance 1/1/2010 Additions Deletions 12/31/2010 Land $ 61,723 $ $ $ 61,723 Buildings 445,810 445,810 Equipment 1,135,228 107,558 (62,424) 1,180,362 $ 1,642,761 $ 107,558 $ (62,424) $ 1,687,895 5. Interfund Transactions At December 31,2010, the interfund transfer amounts made were as follows: Interfund Interfund Revenue Expenditures General Fund Equipment and Apparatus Reserve $ 30,000 Building and Grounds Reserve 30,000 $ 60,000 $ 60,000 $ 60,000 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. -39- EAST MARION FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2010 6. Pension Plans New York State and Local Employees' Retirement System Plan Description The District participates in the New York State and Local Employees' Retirement System (ERS). This system is a cost-sharing, multiple-employer, retirement system. The System provides retirement benefits as well as death and disability benefits. Obligations of employers and employees to contribute and benefits to employees are governed by the New York State Retirement and Social Security Law (NYSRSSL). As set forth in the NYSRSSL, the Comptroller of the State of New York (Comptroller) serves as sole trustee and administrative head of the System. The Comptroller shall adopt and may amend rules and regulations for the administration and transaction of the business of the System and for the custody and control of their funds. The system issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained in writing to the New York State and Local Retirement Systems, 110 State Street, Albany, NY 12244. Funding Policy The system is noncontributory except for employees who joined the New York State and Local Employees' Retirement System after July 27, 1976, who contribute 3% of their salary for the first ten (10) years of membership and employees who joined on or after January 1, 2010 who generally contribute 3% of their salary for the entire length of service. Under authority of the NYSRSSL, the Comptroller annually certifies the actuarially determined rates expressed used in computing the employers' contributions based on salaries paid during the System's fiscal year ending March 31. Contributions for the current year and two preceding years were equal to 100% of the contributions required, and were as follows: 2010 2009 2008 District Contributions $2,697 $2,757 $3,036 The District's contribution to the system is actuarially determined and is established and may be amended by the ERS Board of Trustees. Chapter 260 of the Laws of 2004 of the State of New York was enacted that allows local employees to bond or amortize a portion of their retirement bill for up to 10 years in accordance with the following schedule: 1. For State fiscal year (SFY) 2004-05, the amount in excess of 7 percent of employees' covered pensionable salaries, with the first payment of those pension costs not due until the fiscal year succeeding that fiscal year in which the bonding/amortization was instituted. 2. For SFY 2005-06, the amount in excess of 9.5 percent of employees' covered pensionable salaries. 3. For SFY 2007-08, the amount in excess of 10.5 percent of employees' covered pensionable salaries. Chapter 57 of the Laws of 2010 of the State of New York was enacted that allows local employers to amortize a portion of their retirement bill for 10 years in accordance with the following stipulations: For State fiscal year 2010-2011, the amount in excess of the graded rate of 9.5 percent of employee's covered pensionable salaries, with the first payment of those pension costs not due until the fiscal year succeeding that fiscal year in which the amortization was instituted. For subsequent State fiscal years, the graded rate will increase or decrease by up to one percent depending on the gap between the increase or decrease in the system's average rate and the previous graded rate. -40- EAST MARION FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2010 7. Length of Service Awards Program - LOSAP The Fire District's financial statements are for the year ended December 31, 2010. The information contained in this note is based on information for the Length of Service Awards Program for the plan year ending on December 31,2011. 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 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 firefighter activities. Participation, Vesting 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 flrefighter member of the East Marion Fire Department. 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. -41- EAST MARION FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2010 7. Lenqth of Service Awards Proqram - LOSAP - continued Benefits - continued 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. Fiduciary 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. 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 frsssom a report prepared by the actuary dated March 22,2011. -42- EAST MARION FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2010 7. Lenqth of Service Awards Proqram - LOSAP - continued Program Financial Condition Assets and Liabilities Actuarial Present Value of Accrued Service Awards as of 12/31/10 $ 1,186,227 Less: Assets Available for Benefits Cash & Money Market Interest & Dividends Receivable U.S. Equities - Mutual Funds International Equities - Mutual Funds Fixed Income - Bank CD's, Mutual Funds Mixed Assets ~ Mutual Funds Advance Benefit Payments % of total 1.5% $ 15,739 0.0% 339 4.9% 50,057 9.8% 100,668 56.5% 580,656 26.9% 276,761 0.4% 4,540 1,028,760 Total Unfunded Liability for Prior Service $ 157,467 $ 205,898 $ Unfunded Liability for Separately Amortized Costs Unfunded Normal Benefits Receipts and Disbursements Plan Net Assets - Beginning of Year $ 877,110 Changes during the year: + Plan contributions (year) 136,573 + Investment income earned 42,083 (+/~) Changes in fair market value of investments 43,723 Investment expenses (6,560) Plan benefit withdrawals (54,480) Annuity Surrender Charge (Standard Security) (4,153) Administrative and other fees/charges (5,536) Plan Net Assets, end of year $1,028,760 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%. -43- EAST MARION FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2010 7. Length of Service Awards Proqram - LOSAP - continued Contributions Amount of sponsor's 2010 contribution recommended by actuary: Amount of sponsor's actual 2010 contribution: Plan contribution Administrative fees paid directly Total contribution by sponsor Amount of sponsor's 2011 contribution recommended by actuary: Administration Fees $ 131,721 4,852 $ 131,654 $ 136,573 $ 101,721 Fees paid to adminstrative/actuarial services provider $ 4,037 Fees paid to investment management $ 6,559 Other administration fees $ 1,499 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%. Tables used for: Post Entitlement Age mortality: 1994 Unisex Pensioner Male Mortality Table projected with scale AA to 2010 *Pre Entitlement Age mortality: None *Pre Entitlement Age disability: None *Pre Entitlement Age withdrawal: None *Pre Entitlement Age service credit accruals: 100% * 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. 8. Lonq-Term Liabilities Long-term liability balances and activity for the year are summarized below: Amounts Balance Balance Due Within 1/1/2010 Additions Reductions 12/31/2010 One Year Long-term debt: Serial Bonds (Truck Bond) $ 66,000 Emergency Services Loan 61,476 $ $ (33,000)$ 33,000 $ 34,136 (6,175) 55,301 7,712 Total $127,476 $ $ (39,175) $ 88,301 $ 41,848 The general fund has typically been used to liquidate long-term liabilities. -44- EAST MARION FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2010 Lonq-Term Liabilities - continued 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. I. Maturity of Lonq Term Indebtedness Serial Bonds (Truck Bond) The following is a summary of future debt service requirements: Total Year Principal Interest Payment 2011 33,000 1,136 34,136 II. Maturity of Lonq Term Indebtedness Emergency Services Revolving Loan Fund On January 18, 2010 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 principal and interest are first due January 18, 2010 and end January 18, 2018. III. Maturity of Lonq Term Indebtedness The following is a summary of future debt service requirements: Principal Principal Interest Total Year Balance Payment Payment Payment 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 $ 55,301 $ 6,395 $ 61,696 -45- EAST MARION FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2010 9. 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. 10. Related Party Transaction The District's Deputy Treasurer is a principal at the insurance company that the District utilizes. 11. Spendinq Limitation The District did not exceed the statutory spending limitation mandated by New York State Law for the year ended December 31,2010. 12. Subsequent Events The date through which management has evaluated the impact of subsequent events on these financial statements is June 1,2011. -46- EAST MARION FIRE DISTRICT STATEMENT OF REVENUE~ EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - GENERAL FUND - MODIFIED ACCRUAL BASIS FOR THE YEAR ENDED DECEMBER 31,2010 REVENUES Real property taxes Interest and earnings Building use fees Cell tower rental Sale of equipment Federal Aid Refund of prior year expenditures Total revenues Variance to Final Budget Original Final Favorable Budget Budget Actual (Unfavorable) $495,841 $495,841 $495,907 $ 66 750 1,788 1,788 9OO 25,461 26,961 18,817 (8,144) 33,051 33,051 39,459 44,171 4,712 47 47 $522,952 $595,312 $593,781 $ (1,531) EXPENDITURES Personal services Equipment Contractual State retirement Service award Social security Workers compensation Interest on bonds Interest on notes Redemption of bonds Redemption of notes Total expenditures $ 31,556 $ 31,556 $ 30,228 20,000 135,370 101,779 168,100 164,936 153,974 1,784 1,784 2,697 158,000 137,640 136,573 2,500 2,500 2,290 17,000 17,000 12,071 3,300 3,814 3,814 1,537 1,537 1,537 33,000 33,000 33,000 6,175 6,175 6,175 1,328 33,591 10,962 (913) 1,067 210 4,929 Excess (deficiency) of revenues over expenditures $442,952 $535,312 $484,138 $ 51,174 $ 49,643 $ OTHER FINANCING SOURCES AND (USES) Operating transfers (out) $ 80,000 $ 60,000 $109,643 $ (80,000) $ (60,000) $ (60,000) Total other financing sources and (uses) $ (80,000) $ (60,000) $ (60,000) $ $ $ $ 49,643 $ 49,643 Net Change in Fund Balance - for year (50,063) (50,063) (45,000) (45,000) Less: Reserve for encumbrances Less: Unreserved fund balance appropriated 83,918 83,918 Fund Balance - Beginning of Year - including surplus appropriated for 2010 $ $ $ 38,498 $ 38,498 Fund Balance - End of Year -47- Craig, Fitzsimmons & Michaels, LLP Certified Public Accountants, Management and FF Consultants 20 Manor Road ~ Smithtown, New York 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 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, 2010, which comprises the District's basic financial statements, and have issued our report thereon dated June 1, 2011. We conducted our audit in accordance with auditing standard generally accepted in the United States of Amedca and the standards app!icab!e to financia! 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 financia! statements~ but not for the purpose of exBressing an op!nion on the effectiveness of East Mar!on Fire D!strict~ 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 performin9 their assigned functions, to prevent or detect 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 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 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 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 June 1,2011. -48- 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 June 1, 2011 -49- Page 1 of 1 Norklun, Stacey From: Neville, Elizabeth Sent: Tuesday, June 28, 2011 1:16 PM To: Norklun, Stacey (Stacey. Norklun@town.southold.ny.us) Subject: FVV: East Marion Fire District 2010 Audit Stacey, Please place everything in LF, the e-mail and all attachments, under East Marion Fire District, 2010, Annual Audit. Betty From: emfdistrict@optonline.net [mailto:emfdistrict@optonline.net] Sent: Monday, June 27, 2011 5:02 PM To: Neville, Elizabeth Subject: Fw: East Marion Fire District 2010 Audit ..... Original Message ..... From: emfdistriot~optonline, net To: afffile~osc.state, nv. us Sent: Monday, June 27, 2011 4:59 PM Subject: East Marion Fire District 2010 Audit The East Marion Fire District has complied with the annual aduit reqirements for our Lenght of Service Awards Program by allowing our District's independent auditors to audit the control procedures over our LOSAP and providing enhanced LOSAP note disclosures. Please see the attached copy of our independent audit report on our financial statements for details relating to our LOSAP. Sincerely, Walter Gaipa Secretary/Treasurer East Marion Fire District Suffolk County (631) 477-0163 (631) 477-8310 fax 6/28/2011