HomeMy WebLinkAbout2010TOWN OF SOUTHOLD
SINGLE AUDIT REPORTS
Year ended December 31,2010
FINANCIAL SECTION
independent Auditors' Report ........................................................................................................ 1-2
REQUIRED SUPPLEMENTARY INFORMATION
Management's Discussion and Analysis ...................................................................................... 3-10
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements
Statement of Net Assets
Statement of Activities
11
12
Fund Financial Statements
Governmental Fund Financial Statements
Balance Sheet and Reconciliation of the Governmental Funds Balance Sheet to
the Statement of Net Assets .......................................................................................................... 13-14
Statement of Revenues, Expenditures, and Changes in Fund Balances and
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures,
and Changes in Fund Balances to the Statement of Activities ........................................................ 15-16
Fiduciary Fund Financial Statements
Statement of Fiduciary Net Assets ......................................................................................................... 17
Notes to Financial Statements ................................................................................................... 18-40
REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANAGEMENT DISCUSSION AND
ANALYSIS
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
General Fund .................................................................................................................................. 41
Highway Fund ................................................................................................................................ 42
Community Preservation Fund 43
Postemployment Benefits Healthcare Costs - Schedule of Funding Progress ............................ 44
OTHER SUPPLEMENTARY INFORMATION
Combining Fund Statements:
Non-major Governmental Funds Combining Balance Sheet .................................................................................................................
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
DISCRETELY PRESENTED COMPONENT UNITS
45
46
Discretely Presented Component Units:
Combining Statement of Net Assets ......................................................................................... 47
Combining Statement of Activities ........................................................................................... 48
OTHER REPORTS
Schedule of Expenditures of Federal Awards ........................................................................... 49
Notes to Schedule of Expenditures of Federal Awards ............................................................ 50
Report on Internal Control Over Financial Reporting
and on Compliance and Other Matters Based on an Audit
of Financial Statements Performed in Accordance with
Govemment Auditing Standards ................................................................................................ 51-52
Independent Auditors' Report on Compliance With Requirements That Could
Have a Direct and Material Effect on Each Major Program and on Internal Control
Over Compliance in Accordance with OMB Circular A~133 ....................................................... 53-54
Schedule of Findings and Questioned Costs ........................................................................... 55-57
FINANCIAL
SECTION
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENTAUDITORS'REPORT
Honorable Supervisor and Town Board
Town of Southold
Southold, New York
We have audited the accompanying financial statements of the governmental activities, the aggregate
discretely presented component units, each major fund, and the aggregate remaining fund information of the
Town of Southold, New York, as of and for the year ended December 31, 2010, which collectively comprise
the Town's basic financial statements as listed in the table of contents. These financial statements are the
responsibility of the Town of Southold, New York's management. Our responsibility is to express opinions on
these financial statements based on our audit.
Except as discussed in the following paragraph, we conducted our audit in accordance with auditing standards
generally accepted in the United States of America and the standards applicable to financial audits contained
in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.
The financial statements of the seven discretely presented component units were not audited as of the report
date, nor were we able to satisfy ourselves as to those financial activities by other auditing procedures.
In our opinion, except for the effects of such adjustments, if any, as might be determined necessary had those
discretely presented component units been audited, the financial statements referred to above present fairly, in
all material respects, the respective financial position of the governmental activities, the aggregate discretely
presented component units, each major fund, and the aggregate remaining fund information of the Town of
Southold, New York, as of December 31, 2010, and the respective changes in financial position for the year
then ended in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note A.8 to the basic financial statements, the Town of Southold, New York adopted the
provisions of Governmental Accounting Standards Board (GASB) Statement No. 51, "Accounting and
Financial Reporting for Intangible Assets" as of and for the year ended December 31, 2010.
In accordance with Government Auditing Standards, we have also issued our report dated September 22,
2011, on our consideration of the Town of Southold'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.
PERSONAL SERVICE, TRUSTED ADVICE,
ALBRECHT, VIGGIANO, ZURECK & COMPANY, RC
245 PARK AVENUE, 24TH FLOOR 25 SUFFOLK COURT
NEWYORK, NY 10167 HAUPPAUGE, NY 11788-3715
T: 212.792.4075 T: 531.434.9500 F: ,531.434.9518
~1 - www. avz,com
The management's discussion and analysis, schedule of funding progress for the other postemployment
benefits and the budgetary information are not a required part of the basic financial statements but are
supplementary information required by accounting principles generally accepted in the United States of
America and the Governmental Accounting Standards Board. We have applied certain limited procedures,
which consisted principally of inquiries of management regarding the methods of measurement and
presentation of the supplementary information. However, we did not audit the information and express no
opinion on it.
Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively
comprise the Town of Southold, New York's basic financial statements. The combining and individual
nonmajor fund financial statements are presented for purposes of additional analysis and are not a required
part of the basic financial statements. The schedule of expenditures of federal awards is presented for
purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits
of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the basic
financial statements of the Town of Southold, New York. The combining and individual nonmajor fund financial
statements and the schedule of expenditures of federal awards has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is fairly presented in all material
respects in relation to the basic financial statements taken as a whole.
Hauppauge, New York
September 22, 2011
REQUIRED SUPPLEMENTARY INFORMATION
Management's Discussion and Analysis
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2010
The following is a discussion and analysis of the Town of Southold's financial performance, providing an overview
of the Town's financial activities for the year ended December 31, 2010. Use this section in conjunction with the
Town's basic financial statements.
USING THIS ANNUAL REPORT
This annual repod consists of a series of financial statements, The Statement of Net Assets and the
Statement of Activities provide information about the activities of the Town as a whole and present a longer-
term view of the Town's finances, For governmental activities, these statements tell how these services were
financed in the short term as well as what remains for future spending. Fund financial statements also report
the Town's operations in more detail than the government-wide statements by providing information about the
Town's most significant funds. The remaining statements provide financial information about activities for
which the Town acts solely as a trustee agent for the benefit of those outside of the government.
Cedain amounts presented in the prior year data have been reclassified in order to be consistent with current
year's presentation.
Reportin,q the Town as a Whole
The Statement of Net Assets and the Statement of Activities
One of the most important questions asked about the Town's finances is, "Is the Town as a whole better off or
worse off as a result of the year's activities?" The Statement of Net Assets and the Statement of Activities
report information about the Town as a whole and about its activities in a way that helps answer this question.
These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the
accounting used by most private-sector companies. The Statement of Activities is significantly different than a
typical Statement of Revenues, Expenses, and Changes in Fund Balance. You will notice that expenses are
listed in the first column with revenues from that particular program reported to the right. The result is a net
(expense)/revenue. The reason for this kind of format is to highlight the relative financial burden of each of the
functions on the Town's taxpayers, It also identifies how much each function draws from the general revenues
or if it is self-financing through fees and grants. All of the current year's revenues and expenses are taken into
account regardless of when cash is received or paid.
These two statements report the Town's net assets and their respective changes. You can think of the Town's
net assets--the difference between assets and liabilities--as one way to measure the Town's financial health,
or financial position. Over time, increases or decreases in the Town's net assets are one indicator of whether
its financial health is improving or deteriorating, You will need to consider other non-financial factors, however,
such as changes in the Town's property tax base and the condition of the Town's buildings, roads, drainage
and other assets to assess the overall health of the Town.
In the Statement of Net Assets and the Statement of Activities, we divide the Town into two kinds of activities:
Governmental activities - The Town's basic services are reported here, including: general government
support; public safety; public health; transportation; economic assistance and opportunity; culture and
recreation and home and community services. Property taxes, sales taxes, franchise fees, fines, and
state and federal grants finance these activities. The Town also charges fees to customers to help it
cover the cost of certain services it provides.
Component units - The Town includes seven separate legal entities in its report (one ferry district, one
sanitation district, one mosquito district and four park districts). Although legally separate, these
component units are important because the Town is financially accountable for them. Complete
financial statements of the individual component units can be obtained from their respective
administrative offices (Note A.2).
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2010
Reportin.q the Town's Most SiRnificant Funds
Fund Financial Statements
The fund financial statements provide detailed information about the most significant funds--not the Town as a
whole. Some funds are required to be established by state law and by bond covenants. However, the Town
establishes many other funds to help it control and manage sources of funding and spending related to specific
activities.
The Town's basic services are reported in governmental funds, which focus on how money flows into and out
of those funds and the balances left at year-end that are available for spending. These funds are reported
using an accounting method called modified accrual accounting, which measures cash and all other financial
assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term
view of the Town's general government operations and the basic services it provides. Governmental fund
information helps you determine whether there are more or fewer financial resources that can be spent in the
near future to finance the Town's programs. We describe the relationship (or differences) between
governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and
governmental funds in a reconciliation that follows these fund financial statements.
The Town as Trustee
Reporting the Town's Fiduciary Responsibilities
All of the Town's fiduciary activities are reported in a separate Statement of Fiduciary Net Assets. We exclude
these activities from the Town's other financial statements because the Town cannot use these assets to
finance its operations. The Town is responsible for ensuring that the assets reported in these funds are used
for their intended purposes.
FINANCIAL ANALYSIS OF THE TOWN AS A WHOLE
Our analysis below focuses on the net assets and changes in net assets of the Town's governmental activities.
Condensed Statement of Net Assets
Primary Governmental Activities
December 31, 2010 and 2009
2009
2010 (As Restated)
Assets
Current and other assets $ 26,385,103 $ 24,737,490
Capital assets 144,271,376 140,022,886
Total Assets 170,656,479 164,760,376
Liabilities
Current and other liabilities 17,254,779 16,056,714
Long-term liabilities 51,428,253 48,578,196
Total Liabilities 68,683,032 64,634,910
Net Assets
Invested in capital assets,
net of related debt 108,425,137 105,312,871
Restricted:
Land acquisition 6,002,350 8,141,524
Debt service 4,981
Unrestricted (12,454,040) (13,333,910)
Total Net Assets $ 101,973,447 $ 100,125,466
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2010
FINANCIAL ANALYSIS OF THE TOWN AS A WHOLE (continued)
Total assets of the primary government as of December 31, 2010 were $170.7 million, an increase of $5.9
million. Total liabilities as of December 31, 2010 were $68.7 million, which represents an increase of $4.0
million from December 31, 2009. This results in a net asset balance of $102.0 million, an increase of $1.9
million. The Town recorded a prior period adjustment of $2.7 million to beginning net assets for capital assets
recorded on the Town's books which were previously recorded on the Fisher's Island Ferry District's books (as
discussed in Note G). Of the Town's net asset balance, $108.4 million were invested in capital assets, net of
related debt; $6.0 million was restricted for future land acquisition while there was a deficit of ($12.4) million in
unrestricted net assets.
The deficit balance of unrestricted net assets does not necessarily indicate stress. The deficit balance of
unrestricted net assets arose primarily because of certain factors including the increase in the post-
employment benefits liability of approximately $5.0 million. The unfunded liability for postemployment benefits
healthcare costs increased in 2010 by $5.0 million bringing the unfunded liability at year end to $13.7 million.
Additional information on postem¢oyment benefits healthcare costs can be found in Note C.6 to the financial
statements, in addition, long-term liabilities, which include other postemployment benefits payable,
compensated absences, due to employees retirement system and land closure and postclosure care
monitoring, will be funded through future budgetary appropriations when they become payable in future
periods.
Changes in Net Assets
Primary Governmental Activities
For the years ended December 31, 2010 and 2009
Charges for services
Operating grants and contributions
Capital grants and contributions
General Revenues Real property taxes
Other real property tax items
Non-property tax items
Interest earnings
State aid - unrestricted
Other
Total Revenues
Program Expenses
General government support
Public safety
Public health
Transportation
Economic assistance and opportunity
Culture and recreation
Home and community services
Interest on debt
Total Expenses
Increase (Decrease) in Net Assets
2009
2010 (As Restated)
$ 3,454,614 $ 3,434,214
1,154,616 701,718
3,120,735 2,365,728
7,729,965 6,501,660
29,310,575 27,118,830
94,923 70,017
5,056,210 4,135,566
185,803 186,229
1,317,314 1,100,006
939,436 700,131
36,904,261 33,310,779
44,634,226 39,812,439
8,198,435 8,498,905
16,424,971 15,827,695
39,276 47,576
7,864,050 8,284,993
1,840,981 1,810,543
483,285 501,451
6,622,084 6,885,454
1,313,163 1,312,687
42,786,245 43,169,304
$ 1,847,981 $ (3,356,865)
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2010
FINANCIAL ANALYSIS OF THE TOWN AS A WHOLE (continued)
Net Cost of Services
Primary Governmental Activities
For the year ended December 31,2010
General government support
Public safety
Public health
Transportation
Economic assistance and opportunity
Culture and recreation
Home and community services
Interest on debt
Total Cost Program Net Cost
of Services Revenues of Services
$ 8,198,435 $ 553,277 $ (7,645,158)
16,424,971 742,679 (15,682,292)
39,276 11,033 (28,243)
7,864,050 507,082 (7,356,968)
1,840,981 448,066 (1,392,915)
483,285 221,361 (261,924)
6,622,084 5,246,467 (1,375,617)
1,313,163 (1,313,163)
42,786,245 $ 7,729,965 $ (35,056,280)
The cost of all governmental activities in the primary government this year was $42.8 million. The net cost of
these services, however, after subsidized by program revenues including charges for services and program
grants, was $35.1 million. The Town's change in net assets after general revenues of $36.9 million was an
overall increase of $1.8 million.
$t0,000,000
$16,000,000
$14,000,000
$12,000,000
$10,000,000
$8,000,0O0
$6,000,000
~,000,000
$2,000,000
Expenses and Program Reven~
~overnmenta! ActiCtles
-6-
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2010
FINANCIAL ANALYSIS OF THE TOWN AS A WHOLE (continued)
Othergeneral
14%
Charges for
$%
Revenue by Source
Primary Governmental Activities
for the year ended December 31, 2010
Real properly taxes $ 29,310,575
State aid - unrestricted 1,317,314
Charges for services 3,454,614
Other general revenues 6,276~372
Operating grants and contributions 1,154,616
Capital grants and contributions 3,120,735
$ 44,634,226
THE TOWN'S FUNDS
The General Fund balance has increased by $2.9 miltion due to the combination of the increase in property
taxes to cover the costs of expenditures which has been previously subsidized by other sources of revenues
such as mortgage tax and interest earnings. The Town has also continued to minimize their overall spending
due to the current economic conditions
The following schedule presents a summary of the Governmental Funds - (General, Special Revenue, and
Capital Projects) revenues and expenditures for the year ended December 31, 2010, and the amount of
change and percentage of total in relation to the prior year.
Increase %
20!0 2009 (Decrease) Change
REVENUES
Real property taxes $ 29,310,575 $ 27,118,830 $ 2,191,745 8.1%
Other real property tax items 94,923 70,017 24,906 35.6%
Non-property tax items 5,056,210 4,135,566 920,644 22.3%
Departmental income 2,513,430 2,566,982 (53,552) -2.1%
Intergovernmental charges 222,907 356,548 (133,641) -37.5%
Use of money and property 351,416 338,016 13,400 4.0%
Licenses and permits 412,723 421,744 (9,021) -2.1%
Fines and forfeitures 225,311 210,209 15,102 7.2%
Sale of property and compensation for loss 614,216 576,314 37,902 6.6%
Miscellaneous local sources 415,241 117,288 297,953 254.0%
lnterfund revenues 30,000 30,000 100.0%
State aid 1,895,546 1,690,345 205,201 12.1%
Federal aid 3,267,509 2,230,027 1,037,482 46.5%
Total GovernmentaIFund Revenues $ 44~418,007 $ 39,831,886 $ 4,578,121 11.5%
-7-
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2010
THE TOWN'S FUNDS (continued)
2010 2009
Increase %
(Decrease) Change
EXPENDITURES
General government support
Public safety
Public health
Transportation
Economic assistance and oppodunity
Culture and recreation
Home and community services
Employee benefits
Capital
Debt service principal and interest
Bond issuance costs
Total Governmental Fund Expenditures
$ 5,201,748 $ 5,616,102 $ (414,354)-7.4%
9,758,347 9,694,008 64,339 0.7%
33,788 42,508 (8,720) -20.5%
3,384,027 3,619,202 (235,175) -6.5%
1,118,864 1,139,753 (20,889) -1.8%
282,289 335,993 (53,704) -16.0%
10,760,705 6,824,446 3,936,259 57.7%
8,559,979 7,578,847 981,132 12.9%
1,787,275 677,436 1,109,839 163.8%
3,261,848 3,104,723 157,125 5.1%
98,600 (98,600) 100~0%
$ 44,148,870 $ 38,731,618 $ 5,417,252 14.0%
GENERAL FUND BUDGETARY HIGHLIGHTS
The Town appropriated expenditures in the original General Fund Budget in excess of estimated revenues in
the amounts of approximately $100 thousand, by designated unreserved fund balance from the prior year.
Actual revenues were more than anticipated by approximately $500 thousand. Actual expenditures in all
budgetary line items were less than the budgetary appropriation by approximately $2.5 million. Over the course
of the year, the Town Board revises the budget as needed so that expenditures do not exceed appropriations.
In all Town funds, various transfers between appropriations were approved for this purpose. The change in the
original budget to final budget for revenues and expenditures did not change significantly.
..CA.P_I._TAL_.A...SSE_ T AI~D...I~.I~.E~?
Capital Assets
As of December 31, 2010 the primary government had $144.3 million in net capital assets including land, land
development rights, buildings, improvements, machinery and equipment, and infrastructure. The Town's
component units had $17.7 million in net capital assets including land, land development rights, buildings,
improvements, machinery and equipment, and infrastructure.
Capital Assets at December 31,
(As Restated )
Pri0~8_ry~Government 2010 2009
La,id $ 5,256,156 $ 5,214,093
Land development rights 100,094,235 93,340,815
Construction in progress 1,337,090 3,450,336
I3uildings 12,759,942 12,215,822
Improvements other than buildings 15,410,764 15,198,835
Machinery and equipment 10,661,595 10,643,102
Software 587,152 548,705
Infrastructure 73,594,619 78,271,700
Total Capital Assets 219,681,553 213,883,208
Less: accumulated depreciatior~ 75,410,177 73,860,322
Primary Government - Total Net Capital Assets $ 144,271,378 $ 140,022,886
ComPonent Units Land
Construction in progress
Buildings
Improvements other than buildings
Macfl[nery and equipment
Infrastructure
Total Capital Assets
Less: acouraulated depreciation
Component Units - Total Net Capital Assets
$ 2,193,353 $ 2,193,353
92,382
14,227,122 14,056,681
2,336,272 2,283,862
3,518,312 3,450,804
2,804,422 2,744,865
25,171,863 24,729,565
7,496,338 6,792,512
$ 17,675,525 $ 17,937r053
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2010
CAPITAL ASSET AND DEBT ADMINISTRATION (continued)
Capital Assets (continued)
The capital program is a long range financing guide and not a definitive plan. Each appropriation must be
authorized by Town Board resolution before being undertaken. Each may be financed by issuance of general
obligation bonds, which, at times, are preceded by issuance of bond anticipation notes for various periods of
time depending on the probable usefulness of the purpose of expenditure. The following sets forth a summary
of the Town's capital program.
__.~,~_ip m e .,nt 2011
General Fund $ 372,807
Highway Fund 284,000
Special Districts ~ 0,~Q~00
Total Equipment 664,807
.... ~lm.~.. rovements
General Fund 1,050,000
Total Improvements
Total Program Cb 1.714.807
Additional information on the Town's capital assets can be found in Note C.3 to the financial statements.
Debt Administration
The Town of Southold's bond credit rating from Moody's Investors Services was Aa2 as of December 31,
2010.
Debt Limit - The Town has the power to contract indebtedness for any Town purpose so long as the principal
amount thereof, subject to certain limited exceptions, shall not exceed seven percent of the average full
valuation of taxable real estate of the Town, and subject to certain enumerated exclusions and deductions
such as water and certain sewer facilities and cash or appropriations for current debt service.
The constitutional method for determining full valuation is calculated by taking the assessed valuation of
taxable real estate as shown upon the latest completed assessment roll and dividing the same by the
equalization rate as determined by the State Board of Equalization and Assessment. The State Legislature is
required to prescribe the manner by which such ratio shall be determined. Average full valuation is
determined by taking the sum of the full valuation of the last completed assessment roll and the four preceding
assessment rolls and dividing such sum by five. Percentage of debt contracting power exhausted at December
31, 2010 was 6.51%.
At December 31, 2010, the Town had approximately $33.4 million in long term general obligation bonds
outstanding, of which $31.3 million was for the primary government. Aisc outstanding at year-end were bond
anticipation notes in the amount of $6.2 million of which $5.4 million was for the primary government.
Additional information on the Town's debt activity can be found in Note C.4 to the financial statements.
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2010
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
Property Tax
The Town has adopted a budget for the 2011 fiscal year which factors in inflation and other adjustments to
revenues and expenditures as well as prior year positive and negative fund balances. The 2011 budget
includes an overall increase in real property tax revenues from the prior year of approximately 1.15% for the
general Town governmental activities.
In June 2011, New York State enacted Chapter 97, Laws of 2011 Real Property Tax Levy Cap and Mandate
Relief Provisions, which includes a 2% property tax cap for municipalities that affects the Town and its
municipal component units. Beginning in 2012, and lasting through at least June 15, 2016, no local
government is authorized to increase its property lax levy by more than 2% or the rate of inflation (whichever is
less); however the permitted increase will not be less than 1%. Local governments can exceed the tax levy
limit by a 60% vote of the governing body, or local law. There are permitted exceptions and adjustments. The
Town is currently evaluating the effect of the cap on future year's budgets.
State Aid and Local Assistance
The Town receives financial assistance from New York State and from Suffolk County. During 2010, financial
assistance included state aid consisting of mortgage tax of $1.1 million, consolidated highway aid of $323
thousand, and other state aid of approximately $419 thousand. State aid per capita was $90 thousand and
County local government assistance was $268 thousand. Additionally, if the State should not adopt its budget
in a timely manner, municipalities and school districts in the State, including the Town, may be affected by a
delay in the payment of state aid. The State is not constitutionally obligated to maintain or continue state aid
to the Town. The Town's 2011 budget included similar amounts for this financial assistance.
CONTACTING THE TOWN'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, and creditors with a general
overview of the Town's finances and to show the Town's accountability for the money it receives. If you have
questions about this report or need additional financial information, contact the Town of Southold, Office of the
Town Comptroller, Southold, New York.
-10-
BASIC FINANCIAL
STATEMENTS
TOWN OF SOUTHOLD
GOVERNMENT-WIDE FINANCIAL STATEMENT
STATEMENT OF NET ASSETS
December 31, 2010
ASSETS
Current Assets:
Cash and investments
Cash - restricted
Accounts receivable
Due from other governments
Due from primary government
State and federal aid receivables
Prepaid charges
Inventory of material and supplies
Total Current Assets
Non-Current Assets:
Deferred charges, net of accumulated amorlization
Non-depreciable capital assets
Depreciable capital assets, net of depreciation
Total Non-Current Assets
LIABILITIES
Current Liabilities:
Accounts payable and accrued liabilities
Accrued interest payable
Bond anticipation notes payable
Due to other governments
Due to component units
Unearned revenue
Non-current liabilities due within one year
General obligation bonds payable
Bond anticipation notes payable
Compensated absences
Claims and judgments payable
Estimated liability for landfill closure
and postclosure care costs
Total Current Liabilities
Non-Current Liabilities:
General obligation bonds payable
Due to employees retirement system
Compensated absences
Estimated liability for landfill closure
and postclosure care costs
Other postemployment benefits payable
Total Non-Current Liabilities
NET ASSETS
Investment in capital assets, net of related debt
Restricted:
Land acquisition
Unrestricted
Primary Component
Governmental Units
Activities (Unaudited)
$ 16,512,956 $ 2,058,159
4,756,837
293,430 73,374
2,145,379
459,393
1,433,935 4,758
1,087,439 55,445
2,637
26,232,613 2,651,129
152,490
106,687,481 2,285,735
37,583,895 15,389,790
144,423,866 17,675,525
Total Assets 170,656,479 20,326,654
Total Liabilities
Total Net Assets
See notes to the financial statements.
1,866,597 299,371
262,822 29,985
5,418,000 50,000
2,139 3,859
459,393
6,536,859 466,843
1,990,000 175,000
750,000
416,000 54.052
278,739
24,230
17,254,779 1,829,110
29,310,000 1,900,000
312,837
7,128,371 162,157
969,106
13,707,939 302,137
51,428,253 2,364,294
68,683,032 4,193,404
108,425,137 15,189,148
6,002,350
(12,454,040) 944,102
$101,973,447 $ 16,133,250
-11-
COMPONENT UNITS (Unaudited}
TOWN OFSOUTHOLD
GOVERNMENTWIDE FINANCIAL STATEMENT
STATEMENT OF ACTIVITIES
Yearended December31,2010
Operating Capital
Charges for Gracts and Grants and
Expenses SePrtces Contributions Contdbu6ons
$ 8,t98,435 $ 289,529 $ 165,607 $ 98,141 $ (7~645,158)
16,424,971 609,268 133,411 (15,682,292)
39,276 11,033 (28,243)
7,864,050 7,164 176,999 322,919 (7,356,988)
1,840,981 193,436 254630 (%392,915)
483,285 221,361 (261,924)
6,622084 2,133,856 412,936 2,699,675 (%375,617)
1,313163 (1,313,163).
Totai Primary Government $
Change in Net Assets
Pdmary Units
Government (Unaudited)
42,786 245 $ 3,454,614 $ 1,154,616 $ 3,120,735 $ (35,056,280)
156,630
89,137
3336,065 $ 2,662,572
828,187 4,589
481,184 39,177
93,409
$ 192,851
Total Component Units $ 4,984,612 $ 2,706.338 $ -0- $ 192,851
$ (156,630)
(89,I37)
(480,642)
(823,598)
(442,007)
(93,409)
$ (2,085,423)
GENERAL REVENUES
Real properly taxes $ 29,310,575 $ 2,153,038
Other real proped7 tax items 94,923 240
Non-property tax items 5,056,216
Interest earnings 185,803 41,811
State aid - unrestricted 1 317,314
Other 939,436 66,620
Total Ger~ral Revenues 36,904,261 2,26I ,709
Char'ge in Net Assets 1,847.98t 176,286
See notes to financial statements
TOWN OF SOUTHOLD
BALANCE SHEET
GOVERNMENTALFUNDS
December31,2010
ASSETS
Cash and investments
Cash - restricted
Accounts receivable
Due from other funds
State and federal aid receivable
Due from other governments
Supply inventory
Prepaids
Total Assets
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts payable
Retained percentages
Bond anticipation notes payable
Due to other funds
Due to component units
Due to other governments
Deferred revenue
Total Liabilities
FUND BALANCE
Fund Balance ~ Reserved:
Encumbrances
Supply inventory
Prepaids
Community preservation
Fund Balance - Unreserved:
Designated * Ensuing year's budget
Insurance claims
Specia~ revenue funds
Undesignated
Total Fund Balance (Deficit)
Tota~ Liabilities and Fund Balance
MAJOR GOVERNMENTAL FUNDS NomMajor
Capital Community Governmental
General Highway Projects Preservation Funds Totals
$ 13,276,530 $ 704,809 $ 1,357,100 $ 1,174,517 $ 16,512,956
$ 4,756,837 4,756,837
61,006 20,976 211,448 293,430
2,563 983,329 135,115 864,906 1,985,913
118,091 217,940 905,632 192,272 1,433,935
1,550,265 340,895 1,891,160
2,637 2,637
420,963 55,567 55,236 531,766
$ 15,432,055 ' $ 1,961,645 $ 1,492,215 $ 6,024,340 $ 2,4~8_~,37~_ 9--$ 27,408 634
$ 926,611 $ 331,359 $ 425,841 $ 21,990 $ 347,274 $ 2,053,075
92,261 92,261
5,418,000 5,418,000
1,982,551 1,537 1,825 1,985,913
459,393 459,393
2,139 2,139
4,638,260 986,283 912,316 6,536,859
8 ,~.0..8.~?.5.,~.. 1,319,179 5,937,927.._ 21,990 1,259,590 16,547,640
27,961 453,317 16,400 497,678
2,637 2,637
420,963 55,567 55,236 531,766
6~002,350 6,002,350
1,914,000
1,149,498
3,908,042
7,423,101
228,850 531,585 2,674,435
1,149,498
635,568 635,568
358,049 ~&~,~29) (632,93~
642r466 (~.~7....~2~ 6,002,350 1,238,789 10,860.994
$ 15,432,055 $ 1,96%645 $ 1,492,21~5 .~$_= 6,724,340 ~$ 2,498,379 $ 27,408,634
See notes to the financial statements.
-13-
TOWN OF SOUTHOLD
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE
STATEMENT OF NET ASSETS
December 31, 2010
Total Fund Balances ~ Governmental Funds
Amounts reported for governmental activities in the
Statement of Net Assets are different because:
Capital assets less accumulated depreciation are
included in the Statement of Net Assets:
Capital assets - non-depreciable
Capital assets - depreciable
Accumulated depreciation
Long-term liabilities applicable to the Town's
governmental activities are not due and payable
in the current period and accordingly are not
reported in the funds. However these liabilities
are included in the Statement of Net Assets:
General obligation bonds payable
Due to employees retirement system
Compensated absences
Estimated liability for landfill closure
and postclosure care costs
Other postemployment benefits payable
Revenues in the Statement of Activities that do not provide current financial
resources are not reported as revenues in the funds.
Prepaid items included in the Statement of Net Assets
Deferred charges, included in the Statement of Net Assets
interest payable applicable to the Town's governmental
activities are not due and payable in the current period
and accordingly are not reported in the funds. However
these liabilities are included in the Statement of Net Assets.
Net Assets of Governmental Activi[ies
$106,687,481
112,994,072
(75,410,177)
$ (31,300,000)
(312,837)
(7,544,371)
(993,336)
(13,707,939)
$ 10,860,994
144,271,376
(53,858,483)
254,219
555,673
152,490
(262,822)
$101,973,447
See notes to financial statements.
TOWN OF SOUTHOLD
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES iN FUND BALANCES
GOVERNMENTAL FUNDS
For the year ended December 31, 2010
REVENUES
Real properly taxes
Other real property tax items
Nompropedy tax items
Departmental income
Intergovernmental charges
Use of money and property
Licenses and permits
Fines and forfeitures
Sale of property and compensation for toss
Miscellaneous local sources
Inteffund revenues
State aid
Federal aid
Total Revenues
EXPENDITURES
Current:
General government support
Public safety
Public health
Transportation
Economic assistance and opportunity
Culture and recreation
Home and community services
Employee benefits
Capital Outlay
Debt Service:
Principal
Interest
MAJOR GOVERNMENTAL FUNDS Non-Major
Capital Community Governmental
General Highway Proiects _ __Prese~at n.~ ........ ~.~.8~ ................. Totals
$ 21,532,952 $4,032,425 $3,745,198
84,201 6,477 4,245
885,473 $ 3,869,750 300,987
416,600 2,096,830
222,657 250
306,952 5,634 $ 3,723 26,102 9,005
261,339 6,914 144,470
225,311
300,228 1,419 312,569
369,402 45,001 100 738
30,000
1,216,047 343,024
98,141 81,753 156,581
.................. ~,3~ ?~,~,,. 1 ~,6__3.(~ ................. 2.__.¢ 1...~_, 1..,,19. 304,342
..... :~6... 0._§..2.: 6 8___9.
$ 29,310,575
94,923
5,056,210
2,513,430
222,907
351,416
412,723
225,311
614,246
415,241
30,000
1,895,546
3,267,~
.... .4,,,5.161773 ......... ~ .4.6,86~5 ....... ,6,',, :~ 8_.¢...8.~:~ 7,074,965 44410,007
5,125,064 6,884 69,800 5,201,748
8,626,229 1,132,118 9,758,347
33,788 33,788
424,568 2,959,459 3,384,027
1,118,864 1,118,864
282,289 282,289
402,959 7,065,293 3,292,453 10,760,705
5,911,381 1,484,619 1,163,979 8,559,979
1,787,275 1,787,275
632,425 86,000 693,500
191 ,~ 120ZO ................................ 973,136
Total Expenditures ~2~2.~...~9~ ~4,,.5.49,032 ....... '~.,,..~8_,7,,~,.,2.,~,~,,. 8,731,929
Excess (Deficiency) of Revenues Over
Expenditures
Other Financing Sources (Uses)
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balance
Fund Balances (Deficit) at Beginning of Year
Fund Balances (Deficit) at End of Year
456,075 1,868,000
21665~ ~,~.,~.~
6 331,075 ......... ~.,.~¢~..
...... .3.,.,,333,071 ..... (32,259) .... /,1,,~,,4,,,,0.,..4~1..~ ........ _~,~¥~3,105~) __ 743,890 ....... ~1,.~!~3..~.
632,847 632,847
........ l~.~.~). (30,000~_ (149,234) ......... ~32847}.
....... ~.~4..5..~.~). __ (30,000) ............... 632,84_. 7 t~X... (149,234) ................ -8. ~
2,879,408 (62,259) (1,007,563) (2,143,105) 594,656 261,137
4,543,693 704r725 (3,438,149) 8,145,455 644,133 10,599,857
$ 7,423,10'i'"' $ 642,466 $ (4,445,712) $1,238,789 $10,860,994
See notes to the financial statements.
-15-
TOWN OF SOUTHOLD
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES
For the year ended December 31, 2010
Net Change in Fund Balance
Governmental funds report capital outlays as expenditures. However, in
the Statement of Activities the cost of those assets is allocated over their
estimated useful lives and reported as depreciation expense. The amount
by which capital outlay exceeds depreciation in the current period is:
Capital outlay
Depreciation expense
Loss on dispositions
Revenues in the Statement of Activities that do not provide current financial
resources are not reported as revenues in the funds.
Some expenses reported in the Statement of Activities do not require
the use of current financial resources and therefore, are not reported as
expenditures in governmental funds:
Prepaid charges
Deferred charges
The issuance of Iong-term debt and increase in obligations under capital
leases provides current financial resources to governmental funds, while the
repayment of the principal of long term debt and capital leases consumes
the current financial resources of governmental funds.
Neither transaction has any effect on net assets.
Repayment of bond principal
Due to employees retirement system
Compensated absences
Estimated liability for landfill closure
and postclosure care costs
Other postemployment benefits payable
Accrued interest payable
Change in Net Assets of Governmental Activities
8,699,268
(4,358,636)
(92,142)
$ 261,137
4,248,490
254,219
141,569
(31,110)
1,868,000
(312,837)
65,364
260,837
(4,988,373)
80,685
$ 1,847,981
See notes to financial statements.
TOWN OF SOUTHOLD
STATEMENT OF FIDUCIARY NET ASSETS
December 31,2010
ASSETS
Cash and investments
LIABILITIES
Due to other governments
Other liabilities
Deposits held
Town
Fishers Island
Fer~ District Totals
$ 18,204,174 $ 954 $ 18,205~128
Total Assets $ 18,204,174 $ 954 $18,205,128
$ 17,607,497 $17,607,497
377,025 $ 954 377,979
219,652 219,652
Total Liabilities $ 18,204,174 . $ 954 $18,205,128
See notes to financial statements.
-17-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Town of Southold (the "Town"), which was established in 1640, is governed by Town Law and other
general laws of the State of New York and various local laws. The Town Board is the legislative body
responsible for overall operations. The Town Board consists of the Supervisor who is elected for a term
of four years and five council members who are elected for terms of four years. The Town Board appoints
the Town Attorney, Comptroller and the Commissioner of Public Works whose terms are fixed by Town
Law. The Town Clerk, Receiver of Taxes, Superintendent of Highways, Justices and Town Trustees are
all elected and serve for four years, respectively. The Town provides a full range of municipal services,
including public safety, transportation, home and community services, public works and road
maintenance, recreation and parks, and general and administrative services.
The financial statements of the Town of Southold have been prepared in conformity with accounting
principles generally accepted in the United States of America (GAAP) as applied to governmental units.
The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for
establishing governmental accounting and financial reporting principles.
The more significant of the government's accounting policies are described below.
1. REPORTING ENTITY
The financial reporting entity consists of: (a) the primary government, which is the Town of
Southold; (b) organizations for which the primary government is financially accountable; and (c)
other organizations for which the nature and significance of their relationship with the primary
government are such that exclusion would cause the repoding entity's financial statements to be
misleading or incomplete as set forth in GASB Statement No. 14 as amended by GASB Statement
No. 39~
The decision to include a potential component unit in the Town of Southold reporting entity is based
on several criteria set forth in GASB Statement No. 14 as amended by GASB Statement No. 39
includin9 legal standing, dependency and financial accountability. Based on the application of
these criteria, the following is a summary of certain entities considered in determining the Town of
Southold's reporting entity.
Certain special districts of the Town of Southold provide sanitation, ferry, and park services to
residents and businesses within the districts. These special districts are organized under New
York State Town law and have separately elected boards. Special districts cannot issue bonded
debt without the approval and the backing of the full faith and credit of the Town. Tax levies of the
special districts are collected by the Town Receiver of Taxes. As a result of this fiscal dependency,
the Town is financially accountable for these special districts. Accordingly, these special districts
have been determined to be component units of the Town and are presented discretely in a
separate column in the combined financial statements to emphasize that they are legally separate
from the primary government.
2. BASIS OF PRESENTATION
The Town's basic financial statements include both government-wide (reporting the Town as a
whole) and fund flnancia statements (report'ng the Town's major funds).
Government-wide Financial Statements
The government-wide financial statements reports information on the Town as a whole, except
fiduciary activities, with separate columns for the primary governmental activities as well as the
discretely presented component units.
In the government-wide Statement of Net Assets, the Town's governmental activities are
presented on a consolidated basis and are reported on a full accrual, economic resource basis,
which recognizes all long-term assets and receivables as well as long-term debt and obligations.
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2. BASIS OF PRESENTATION (continued)
Government-wide Financial Statements (continued)
The Town's net assets are reported in three parts--investments in capital assets, net of related
debt; restricted net assets; and unrestricted net assets.
The government-wide Statement of Activities reports both the gross and net cost of each of the
Town's functional categories (public safety, transportation, home and community services, etc.),
which are otherwise supported by general government revenues (property, sales and use taxes,
certain intergovernmental revenues, fines, permits and charges, etc.). The Statement of
Activities reduces gross expenses (including depreciation), by related program revenues and
operating and capital 9rants, to produce the net cost of each program. Program revenues
include (a) charges for services and (b) operating and capital grants and contributions that are
directly associated with the function. Operating grants include operating-specific and
discretionary (either operating or capital) grants while the capital grants column reflects capital-
specific grants. The net costs (by function) are normally covered by general revenue (property
taxes, intergovernmental revenues, interest income, etc).
As a general rule the effect of interfund activity has been eliminated in the general purpose
financial statements.
This government-wide focus is more on the sustainability of the Town as an entity and the
change in the Town's net assets resulting from the current year's activities.
Fund Financial Statements
The fund financial statements are similar to the financial statements presented in the previous
model. The emphasis is on the major funds in the fund financial statements. Non-major funds are
summarized into a single column.
The accounts of the Town are organized on the basis of funds, each of which is considered a
separate accounting entity. The operations of each fund are accounted for with a separate set of
self-balancing accounts that comprise its assets, liabilities, fund balances, revenues, and
expenditures, which are segregated for the purpose of carrying on specific activities or attaining
certain objectives in accordance with special regulations, restrictions or limitations. The various
funds are presented by type in the fund financial statements. Accordingly, the Town maintains the
following fund types:
Governmental Funds ~ Governmental funds are those through which most governmental
functions are financed. The acquisition, use and balances of expendable financial resources and
the related liabilities are accounted for through governmental funds. The measurement focus of
the governmental funds is upon determination of financial position and changes in financial
position. Governmental funds are further classified as major and non-major funds.
The Town reports the following major governmental funds:
General Fund - is the principal operating fund of the Town. This fund is used to account for all
financial resources except those required to be accounted for in other funds.
Highway Fund - used to account for the maintenance and operation of highways.
_Capital Projects Fund - used to account for financial resources to be used for the acquisition
or construction of major capital facilities (other than those financed by special assessment
funds and trust funds).
Community Preservation Fund - is used to account for financial resources for the purchase of
land and land development rights.
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
BASIS OF PRESENTATION (continued)
Fund Financial Statements (continued)
Additionally, the Town reports the following non-major funds:
Special Revenue Funds - are used to account for the proceeds of specific revenue sources (other
than major capital projects) that are legally restricted to expenditures for specified purposes.
Special Revenue Funds include the following:
General Fund Part Town - to provide general services outside the Village of Greenport.
Special Grant Fund - segregate and account for projects funded by Community
Development revenue.
Special District Funds - to provide special services to areas that encompass less than the
whole town.
Fiduciary Funds - Fiduciary Funds are used to account for assets held by the Town in a trustee
or custodial capacity.
A,qency Fund - is for money (and/or property) received and held in the capacity of trustee,
custodian or agent.
Discretely Presented Component Units
Certain special districts that have separately elected boards provide transpodation, park, mosquito
control, and sanitation services to residents and businesses within these districts, and follow
government fund accounting principles. These districts, which are accounted for as discretely
presented component units, are as follows:
Orient Mosquito District, established in 1916
Cutchogue-New Suffolk Park District, established in 1953
Southold Park District, established in 1907
The Fishers Island Ferry District, established in 1947
Fishers Island Waste Management District, established in 1952
Orient-East Marion Park District, established in 1969
Mattituck Park District, established in 1941
Complete financial statements of these component units can be obtained from their respective
administrative offices:
Orient Mosquito District
145 Platt Road
Orient, NY 11957
Cutchogue-New Suffolk
Park District
P.O. Box 311
Cutchogue, NY 11935
Southold Park District
P.O. Box 959
Southold, NY 11971
Fishers Island Ferry District
P.O. Box 1179
Southold, NY 11971
Fishers island Waste
Management District
Fishers Island, NY 06390
Orient-East Marion
Park District
P.O. Box 12
Orient, NY 11957
Mattituck Park District
P.O. Box 1413
Mattituck, NY 11952
20-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31,2010
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
3. BASIS OF ACCOUNTING/MEASUREMENT FOCUS
Measurement focus refers to what is being measured whereas the basis of accounting refers to
when revenues and expenditures are recognized in the accounts and reported in the financial
statements. Basis of accounting relates to the timing of the measurement made, regardless of the
measurement focus applied.
In the government-wide statements, governmental activities are presented using the economic
resources measurement focus and are presented using the accrual basis of accounting. Under the
accrual basis of accounting, revenues are recognized when earned and expenses are recorded
when the liability is incurred or economic asset used. Revenues, expenses, gains, losses, assets,
and liabilities resulting from exchange and exchange-like transactions are recognized when the
exchange takes place.
In the funds statements, governmental funds use a current financial resources measurement focus
and are accounted for using the modified accrual basis of accounting. Under the modified accrual
basis of accounting, revenues are recognized when susceptible to accrual (measurable and
available to finance current operations). "Measurable" means the amount of the transaction can be
determined and "available" means collectible within the current period or soon enough thereafter to
pay liabilities of the current period. The Town considers all revenues available if they are collected
within 60 days after the year end. Revenues susceptible to accrual include Suffolk County local
assistance at year end on behalf of the Town, franchise fees, and charges for services,
intergovernmental revenues and operating transfers. Permits, fees, and other similar revenues are
not susceptible to accrual because generally they are not measurable until they are received in
cash. In those instances where expenditures are the prime factor in determining eligibility for state
and federal grants, revenues are recognized when the expenditure is incurred. In the Capital
Projects Fund, long-term debt is recognized as revenue upon receipt of the proceeds.
Expenditures are recorded on the accrual basis except that (a) expenditures for prepaid expenses
are recognized when incurred; (b) principal and interest on indebtedness are recognized as
expenditures when due; (c) compensated absences, such as vacation and sick leave, which vest or
accumulate, are charged as expenditures when paid.
Encumbrance accounting, under which purchase orders, contracts and other commitments are
recorded for budgetary control purposes in order to reserve that portion of the applicable
appropriation, is employed in the governmental funds. Appropriations for all governmental funds
except the Capital Projects Fund lapse at year-end. However, encumbrances reserved against
fund balances are re-appropriated in the ensuing year. Encumbrances are reported as reservations
of fund balances since they do not constitute expenditures or liabilities. Expenditures for such
commitments are recorded in the period in which the liability is incurred.
4. ASSETS, LIABILITIES AND FUND EQUITY
CASH AND CASH EQUIVALENTS
Cash consists of funds deposited in demand accounts, time deposit accounts and certificates of
deposit with maturities of less than three months.
RESTRICTED ASSETS
Certain assets of the Community Preservation Fund are classified as restricted assets because
their use is restricted by contractual agreements and regulations.
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
4. ASSETS, LIABILITIES AND FUND EQUITY (continued)
RECEIVABLES
Receivables include amounts due from Federal, State, and other governments or entitles for
services provided by the Town. Receivables are recorded and revenues recognized as earned or
as specific program expenditures are incurred.
INVENTORY - MATERIALS AND SUPPLIES
Inventory in the general and special revenue funds is valued at cost. Inventory in these funds is
accounted for under the consumption method.
CAPITAL ASSETS
Capital assets purchased or acquired with an original cost of $5,000 or more are reported at
historical cost or estimated historical cost. Contributed assets are reported at fair market value
as of the date received. Additions, improvements and other capital outlays that significantly
extend the useful life of an asset are capitalized. Other costs incurred for repairs and
maintenance are expensed as incurred. Depreciation and amortization on all assets is provided
on the straight-line basis over the following estimated useful lives:
Buildings
Improvements and other
Machinery and equipment
Software
Infrastructure
10-40 years
20 years
5-10 years
5-10 years
20-30 years
infrastructure assets, consisting of certain improvements other than buildings including roads,
curbs, sidewalks, bridges and street lighting are capitalized along with other capital assets.
In the fund financial statements, capital assets are recorded as capital outlay expenditures in the
governmental fund upon acquisition.
DEFERRED CHARGES
Discounts and expenses related to the issuance of long-term debt and the loss on the early
retirement of refunded debt are amortized on a straight-line basis over the life of the issue, and are
presented net of accumulated amortization, in the government-wide financial statements. Bond
issuance costs that are immaterial are charged as operating expenses in the fund servicing the debt
when incurred.
In the fund financial statements bond issuance costs are recognized, during the current period, as
debt service expenditures in the fund servicing the debt.
PREMIUMS ON DEBT ISSUANCE
Premiums related to the issuance of long-term debt are amortized on a straight-line basis over the
life of the issue and are presented as part of general obligations in the changes in long-term
liabilities (Note C.4). Premiums that are immaterial will not be amortized.
In the fund financial statements premiums are recognized, during the current period, and reported
as other financing sources.
- 22-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
4. ASSETS, LIABILITIES AND FUND EQUITY (continued)
DEFERRED REVENUE/UNEARNEDINCOME
Deferred revenues/unearned income are those where asset recognition criteria have been met, but
which revenue recognition criteria have not been met. Such amounts include collections in
advance, unearned income and amounts that have been deemed to be "measurable" but not
"available" to finance current expenses pursuant to generally accepted accounting principles.
PREPAIDS
Prepaids record payments to vendors that benefit future recording periods and are reported on the
consumption basis. Prepaids in the General and Special Revenue Funds represent insurance
premiums paid for coverage that will benefit the subsequent period and for retirement benefits that
will benefit a future period.
LONG-TERM OBLIGATIONS
The liabilities for long-term obligations consisting of general obligation bonds, compensated
absences, claims and judgments, other postemployment benefits, due to employees retirement
system and liability for landfill closure and postclosure costs are recognized in the government-wide
financial statements.
In the fund statements, long-term obligations are not reported as liabilities. The debt proceeds
are reported as other financing sources and payment of principal and interest reported as
expenditures.
EQUITY CLASSIFICATIONS
In the government-wide statements, equity is classified as net assets and displayed in three
components:
a) Invested in capital assets, net of related debt--Consists of capital assets including
restricted capital assets, net of accumulated depreciation and reduced by the outstanding
balances of any bonds, notes, or other borrowings that are attributable to the acquisition,
construction, or improvement of those assets.
b) Restricted net assets--Consists of net assets with constraints placed on the use either by
(1) external groups such as creditors, grantors, contributors, or laws or regulations of other
governments; or (2) law through constitutional provisions or enabling legislation.
c) Unrestricted net assets--All other net assets that do not meet the definition of "restricted"
or "invested in capital assets, net of related debt."
When both restricted and unrestricted resources are available for use, it is the Town's policy to
use restricted resources first, then unrestricted resources as needed.
In the fund statements, governmental fund equity is classified as fund balance. Fund balance is
further classified as reserved and unreserved, with unreserved further split between designated
and undesignated. Portions of fund equity are segregated for future use and therefore not
available for future appropriation or expenditure. Amounts reserved for encumbrances, inventory,
prepaids, community preservation and debt service represent portions of fund equity, which are
required to be segregated in accordance with state law or GAAP. Designations of fund balances in
governmental funds indicate the utilization of these resources in the subsequent year's budget or
tentative plans for future use.
23-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
REVENUES AND EXPENDITURES
REAL PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES
In Suffolk County, the assessment and lien of real properly for taxation is done by the County
Department of Assessment. Real property taxes become a lien on December 1 for both school and
general taxes. The Town's assessment roils are used for the levy of real property taxes by the
Town and the School Districts, as well as by the County and by Special Districts of the County and
the Town.
The Town of Southold Receiver of Taxes collects all real property taxes for the Town, Suffolk
County, Town Special Districts and School Districts. These taxes are levied on December 1, and
are due in two installments, 50% on December 1 and 50% on May 10, payable without penalty to
January 10 and May 31, respectively. Penalties are imposed thereafter at the rate of one-twelfth of
the rate of interest determined by the State Commissioner of Taxation and Finance, after which
taxes are payable to the County Treasurer. The Town retains the total amount of Town, Highway
and Town Special Districts levies from the amount collected, and forwards the balance collected to
the County which assumes collection responsibility. The Town and Town's Special Districts
therefore realize annually the 100% collection of real property taxes.
School District property taxes are also levied on December 1, and are also payable in two
installments. School property taxes are due in two installments, 50% on December 1 and 50% on
May 10 payable without penalty to January 10 and May 31, respectively. The County is also
responsible for uncollected school taxes.
INTERFUND TRANSACTIONS
Interfund transactions have been eliminated from the government-wide financial statements, in
the funds statements interfund transactions include:
a) Interfund Revenues
tnterfund revenues, which are quasi-external transactions, in the General Fund represent
amounts charged for services or facilities provided by the General Fund. The amounts paid
by the fund receiving the benefit of the service or facilities are reflected as an expenditure of
that fund.
b)
Transfers
Transfers represent payments to the General Fund and Capital Projects Funds from the other
funds for their appropriate share of the General Fund or capital project costs.
COMPENSATED ABSENCES
The liability for vested or accumulated vacation or sick leave (compensated absences) is
recorded as current and non-current obligations in the government-wide statements. The
current portion of this debt is estimated based on historical trends. In the fund financial
statements only the compensated absence liability payable from expendable available financial
resources is incurred.
The amount that is expected to be liquidated with expendable available financial resources is
reported as expenditures and a liability in the funds statement in the respective fund that will pay it.
24-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
5. REVENUES AND EXPENDITURES (continued)
OTHER POSTEMPLOYMENT BENEFITS
In addition to providing pension benefits, the Town provides health insurance coverage and survivor
benefits for retired employees and their survivors. Substantially all of the Town's employees may
become eligible for these benefits if they reach normal retirement age while working for the Town.
Health care benefits in accordance with New York State Health Insurance Rules and Regulations
(administered by the New York State Department of Civil Service), are provided through the New
York State Empire Plan (the "Empire Plan") whose premiums are based on the benefits paid
throughout the State during the year or under the Town of Southold's self insurance plan which is
further described in Note D.
The Town recognizes the cost of providing benefits by recording its share of insurance premiums
as an expenditure in the year paid. The liability for these other postemployment benefits payable is
recorded as Iong~term debt in the government-wide statements. The Town's union contracts and
ordinances require that it provide its eligible enrollees with Empire Plan benefit coverage, or if
another provider is utilized, the equivalent coverage. Under the provisions of the Empire Plan.
premiums are adjusted on a prospective basis for any losses experience by the Empire Plan. The
Town has the option to terminate its participation in the Empire Plan at any time without liability for
its respective share of any previously incurred loss.
POLLUTION REMEDIATION OBLIGATION
The Governmental Auditing Standards Board (GASB) issued Statement No. 49, Accounting and
Financial Reporting for Pollution Remediation Obligations, This Statement establishes specific
guidance on the measurement and recognition of pollution remediation obligations or
responsibilities. The guidance lists what events must occur for a government to be required to
calculate and report a pollution remediation liability. The Town adopted GASB statement No. 49 in
fiscal year ended 2008 which had no effect on the accompanying financial statements.
6, USE OF ESTIMATES
Management uses estimates and assumptions in preparing financial statements. Those estimates
and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities, and the reported revenues and expenses. Actual results could differ from
those estimates,
7. RECLASSIFICATIONS
The Town has made certain classifications to prior year financial statements to conform to the
current year presentation, Such reclassifications did not have a material effect on net income as
previously repoded,
NEW PRONOUNCEMENTS
The Town has adopted GASB Statement No. 51, "Accounting and Financial Reporting for
Intangible Assets" for the year ended December 31, 2010. This statement establishes accounting
and financial reporting requirements for intangible assets to reduce inconsistencies in reporting of
these types of assets. The statement requires that all intangible property not specifically excluded
by its scope and provisions be classified as capital assets, This resulted in a reclassification of
asset categories and no adjustment to beginning net assets.
The Town has adopted GASB Statement No, 53 "Accounting and Financial Reporting for Derivative
Instruments" for the year ended December 31, 2010. Management has determined that this new
accounting principles has no effect on these financial statements.
-25-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31,2010
STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
1. BUDGETARY DATA
Budgets are adopted annually on a basis consistent with generally accepted accounting
principles. Appropriations authorized for the current year are increased by the amount of
encumbrances carried forward from the prior year.
Budgetary controls for Special Revenue Funds are established in accordance with the
applicable grant agreement, which may cover a period other than the Town's fiscal year.
Appropriate budgetary adjustments have been made to reflect these grant agreements during
the Town's fiscal year.
The Town follows the procedures enumerated below in establishing the budgetary data reflected in
the financial statements:
a)
No later than October 1, the Supervisor submits a tentative budget to the Town Board for
the fiscal year commencing the following fiscal year. The tentative budget includes the
proposed means of financing for all funds.
b) After public hearings are conducted to obtain taxpayer comments, no later than November
20, the Town Board adopts the budget.
c) The Town Board must approve all modifications of the budget. However, the Supervisor
is authorized to transfer certain budgeted amounts within departments.
FUND BALANCES
DESIGNATION OF FUND BALANCE
Portions of the unreserved balances at December 31, 2010 were designated for the subsequent
year's operating budgets as follows:
Fund Balance
Unreserved and Fund Balance
Designated Unreserved and
Total for Subsequent Designated
Fund Balance Year's for Insurance
Fund Unreserved Budget Claims
Fund Balance
Unreserved
Undesignated
Major Governmental Funds
General Fund- Townwide $6,971,540 $1,914,000
Highway Fund 586,899 228,850
Non-Major Funds:
Town Outside Village 657,504 241,000
East West Fire Protection District 6,422 1,500
Southold Wastewater District 255,066 177,385
Fishers Island Sewer District 31,790 4,700
Solid Waste Management District 216,371 107,000
FUND DEFICITS
$1,149,498 $3,908,042
358,049
416,504
4,922
77,681
27,090
109,371
The Capital Projects Fund had a deficit fund balance at December 31, 2010. The Capital Projects
Fund deficit will be eliminated as short-term debt is redeemed or conveded to permanent financing.
26-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
DETAILED NOTES ON ALL FUNDS
1. CASH ANDINVESTMENTS
Cash consists of funds deposited in demand accounts, time deposit accounts, and cedificates of
deposit with maturities of less than three months.
The Town's investments are governed by a formal investment policy. The Town's monies must
be deposited in FDiC-insured commercial banks or trust companies located within the state.
The Town is authorized to use demand accounts and certificates of deposit. Permissible
investments include obligations of the U.S. Treasury, U.S. Agencies and investments made by
the Cooperative Liquid Asset Security System (CLASS).
CLASS is a cooperative investment plan consisting of U.S. Treasury Obligations and repurchase
agreements relating to treasury obligations. Investments are stated at cost, which approximates
market value. CLASS was established as a cooperative investment arrangement organized under
the CLASS Municipal Cooperation Agreement made pursuant to New York General Municipal Law,
Article 3A and 5-G.
Collateral is required for demand deposits and time deposit accounts at 105% of all deposits not
covered by federal deposit insurance. Obligations that may be pledged as collateral include
obligations of the United States and its agencies and obligations of the State and its municipalities
and school districts. The Town's collateral agreements are based on the Town's available balance.
Custodial Credit Risk - Deposits/Investments - Custodial credit risk for deposits exists when, in
the event of the failure of a depository financial institution, a government may be unable to
recover deposits, or recover collateral securities that are in possession of an outside agency.
Custodial credit risk for investments exists when, in the event of the failure of the counterparty, a
government will not be able to recover the value of its investments or collateral securities that
are in possession of an outside party.
Governmental Accounting Standards Board Statement No. 40 directs that deposits be disclosed
as exposed to custodial credit risk if they are not covered by depository insurance, and the
deposits are either:
· Uncollateralized
· Collateralized with securities held by the pledging financial institution, or
· Collateralized with securities held by the pledging financial institution's trust depadment or
agent but not in the Town's name
At December 31, 2010 the Town's cash book balance was approximately $39,500,000. This
amount is inclusive of Fiduciary fund deposits of approximately $18,200,000 but exclusive of petty
cash of approximately $600. The available bank balance was approximately $39,700,000. Of the
bank balance, $1,459,567 was covered by Federal deposit insurance, and approximately
$53,000,000 was covered by collateral held by the Town's agent, a third-party financial institution, in
the Town's name.
- 27-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
DETAILED NOTES ON ALL FUNDS (continued)
INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS
Interfund receivables and payables for the primary government at December 31, 2010 were as
follows:
Amount Amount
Receivable ..__.P~_a~.a ble
Major Governmental Funds:
General Fund - Town wide
Highway Fund
Capital Projects Fund
Non-Major Governmental Funds:
General Fund - Part Town
East-West Fire District
Southold Wastewater District
Fishers Island Sewer District
Solid Waste Management District
$ 2,563 $ 1,982,551
983,329 1,537
135,115 1,825
Total
210,174
151,671
55
515
1~.985,913 $ 1,985~1~
Interfund receivable and payable balances for the primary government at December 31, 2010
are expected to be paid currently.
Interfund transfer balances for the primary government at December 31, 2010 represent primarily
the payment of operating and capital expenditures and are stated as follows:
Transfers Transfers
In Out
Major Governmental Funds:
General Fund - Town wide
Highway Fund
Capital Projects Fund
Non-Major Governmental Funds:
Solid Waste Management District
Total
$ 632,847
632,847
$ 453,613
30,000
149,234
632,847
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
DETAILED NOTES ON ALL FUNDS (continued)
3. CAPITAL ASSETS
Primary ~overnment
Capital assets not being depreciated
Land
Land development rights
Construction in progress
Total capital assets not being depreciated
Depreciable capital assets Buildings
Improvements ether than buildings
Machinery and equipment
Software
Infrastructure
Total depreciable capital assets
Less accumulated depreciation
Buildings
Improvements other than buildings
Machinery and equipment
Software
Infrastructure
Total accumulated depreciation
Total net depreciable capital assets
Total net capital assets
Restated
Balance Balance
1/f/10 Additions Deletions 12/31/10
5,214,093 $ 42,063 $ 5,256,156
93,340,815 6,753,420 100,094,235
3,450,336 1,065,991 $ 3,179,237 1,337,090
102,005,244 7,861,474 3,179,237 106,687,481
12,215,822 3,235,629 2,691,509 12,759,942
15,198,635 212,129 15,410,764
10,643,102 227,907 209,414 10,661,595
548,705 18,447 567,152
73,271,700 322,919 73,594,619
111,877,964 4,017,031 2,900,923 112,994,072
5,610,519 528,181 2,678,505 3,460,195
4,314,635 400,367 4,715,002
7,294,296 715,074 130,276 7,879,094
523,101 12,783 535,884
56,117,771 2,702,231 58,820,002
$ 73,860,322 $ 4,358,636 $ 2,808,781 $ 75,410,177
37,583,895
$ 144,271,376
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
DETAILED NOTES ON ALL FUNDS (continued)
3~ CAPITAL ASSETS (continued)
Discretely presented component units
(Unaudited)
Capital assets not bein9 depreciated
Land
Construction in progress
Total capital assets not being depreciated
Depreciable capital assets
Buildings
Improvements other than buildings
Machinery and equipment
Infrastructure
Total depredable capital assets
Less accumulated depreciation
Buildings
Improvements other than buildings
Machinery and equipment
Infrastructure
Total accumulated depreciation
Total net depreciable capital assets
Total net capital assets
Restated
Balance Balance
1/1/10 Additions Deletions 12/31/10
$ 2,193,353 $ 2,193,353
$ 92,382 92,382
2,193,353 92~382 $ -0- 2,285,735
14,056,681 170,441 14,227,122
2,283,862 52,410 2,336,272
3,450,804 75,250 7,742 3,518,312
2,744,865 59,557 2,804,422
22,536,212 357,658 7,742 22,886,128
2,259,772 448,162 2,707,934
240,144 28,790 268,934
2,654,675 134,792 3,871 2,785,596
1~637~921 95,953 1,733,874
$ 8,792,512 $ 707,697 $ 3,871 7,496,338
15,389,790
$ 17,675~525
4. INDEBTEDNESS
SHORT TERM DEBT
Bond Anticipation Notes (BANs) - Bond anticipation notes (BANs) are used as a temporary
means of financing capital expenditures in the Capital Projects Fund. State law requires that BANs
issued for capital purposes be converted to long-term obligations within five years after the original
issue date. The notes or renewal thereof may not extend more than two years beyond the original
date of issue unless a portion is redeemed within two years and within each 12 month period
thereafter, Liabilities for BANs are generally accounted for in the Capital Projects Fund. BANs are
expected to be paid from the proceeds of future bond issues after renewal of these notes. These
BANs bear interest at various rates from .58% to 1.07% and are due at various dates through 2011.
When BANs are not redeemed with the proceeds of bond issues, but instead paid from budgetary
appropriations, the principal amount paid is recorded as an expenditure in the operating fund and a
financing source is recorded in the Capital Projects Fund.
30-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
DETAILED NOTES ON ALL FUNDS (continued)
4. INDEBTEDNESS (continued)
SHORT TERM DEBT (continued)
These notes are summarized as follows:
Description
Interest
Amount Rate
Various Purposes $ 5,174,000
Various Purposes 244,000
Mattituck Park 5........0..., 0~0(~
Total $ 5,468.000
.58%
1.07%
.58%
A summary of changes in short term BANs for the year ended December 31, 2010 is as follows:
Balance
1/1/10
Primary Government $ 4,119,000
Component Units (Unaudited)__90 000
LONG TERM DEBT
Balance
Increases Reductions 12/31/10
$ 2,100,000 $ 801,000 $ 5,418,000
40 000 ~....~ 50 000
Summary of changes in Iong-term debt transactions for the year ended December 31, 2010 is as
follows:
Non-current
Balance Balance ]iabilities due Non-current
1/1/10 Increases Reductions 12/31/10 wthin one year liabilities
Primary Government:
General obligation bonds $ 33,168,000 $ 1,868,000 $ 31,300,000 $ 1,990,000 $ 29,310,000
Due to Employees Retiremef~t
System -0- $ 312,837 312,837 312,837
Net compensated absences 7,609,735 355,002 420,366 7,544,371 416,000 7,128,371
Claims and judgments 171,772 3,064,520 2,957,553 278,739 278,739
Estimated liability for landfill closure
and pest-closure care costs 1,254,173 260,837 993,336 24,230 969,106
Other postemployment benefits payable 8,719,566 6,624,t 03 1,635,730 13,707,939 13,707,939
Component Units (Unaudited}:
Bond anticipation notes 850,000 750,000 850,000 750,000 750,000
General obligation bonds 2,250,000 175,000 2,075,000 175,000 1,900,000
Net corn pensated absences 204,655 11,554 216,209 54,052 162,157
Claims and judgments 47,664 47,664
Other postern ployment benefits payable 195,887 123,261 17,011 302,137 302,137
The compensated absences and other postemployment benefits payable beginning balances for
the component units have been restated.
General Obligation Bonds - The Town borrows money in order to acquire land, equipment or
construct buildings and improvements. This enables the cost of these capital assets to be borne by
the present and future taxpayers receiving the benefit of the capital assets. These Iong-term
liabilities, which are backed by the full faith and credit of the Town, bear interest at various rates
from 2.00% to 6.375% and have maturity dates in 2011 through 2030.
-31-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
DETAILED NOTES ON ALL FUNDS (continued)
4. INDEBTEDNESS (continued)
LONG TERM DEBT
Future principal and interest payments to maturity for both the primary government
component units are as follows:
Year Endin~ PrinciB._a.[ Interest Totals
2011 $ 2,165,000 $ 1,268,833 $ 3,433,833
2012 2,130,000 1,195,581 3,325,581
2013 1,965,000 1,125,731 3,090,731
2014 1,980,000 1,056,464 3,036,464
2015 2,000,000 984,124 2,984,124
2016-2020 9,125,000 3,816,359 12,941,359
2021-2025 7,270,000 2,188,356 9,458,356
2026-2030 6,740,000 725,791 7,465,791
Totals $ 33~375~000 $ 12,36%239 ~ 45:736:239
and the
Other long-term liabilities for compensated absences, claims and judgments, other
postemployment benefits and the estimated liability for landfill closure and postclosure costs are
to be paid by the fund that gave rise to the liability.
5. RETIREMENT SYSTEM
Plan Description
The Town of Southold participates in the New York State and Local Employees' Retirement System
(ERS) and Local Police and Fire Retirement System (PFRS). This is a cost-sharing multiple-
employer retirement system. The System provides retirement benefits as well as death and
disability benefits.
Obligation 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.
A publicly available annual report containing financial statements and required supplemental
information for the Employees' Retirement System may be obtained by writing to the New York
State Retirement System, Governor Smith State Building, Albany, NY 12244.
Fundinq Policy
The System is noncontributory except for employees who joined the New York State and Local
Employees' Retirement System after July 27, 1976 and who have less than ten years of
membership and less than ten years of credited service with a retirement system under the
provisions of article fourteen or fifteen of the NYSRSSL, who contribute 3% of their salary. Prior to
October 1, 2000, all employees who joined the System after July 27, 1976 were required to
contribute 3% of their salary. Under the authority of the NYSRSSL, the Comptroller shall certify
annually the rates expressed as propodions of payroll of members, which shall be used in
computing the contributions required to be made by employers to the pension accumulation fund.
-32-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
DETAILED NOTES ON ALL FUNDS (continued)
5. RETIREMENT SYSTEM (continued)
Fundin.q Policy (continued)
The Town is required to contribute at an actuarially determined rate. The actual contributions were
equal to the actuarially required amounts and also include additional contributions to fund various
early retirement incentives made available to the Town employees. The credits and miscellaneous
adjustments represent modification made by the ERS for prior year's contributions.
The required contributions, ~rthe primaw government, ~rthe current year and~vo preceding
yeam were:
ERS PFRS
2010 $ 1,265,284 $ 957,407
2009 $ 794,550 $ 861,865
2008 $ 932,918 $ 905,458
The Town's contribution to the system was 100% of the contributions required each year.
Pursuant to Chapter 105 of the Laws of 2010, the New York State Legislature authorized local
governments to make available a retirement incentive program with estimated total costs to the
Town of $312,837. The cost of the program is being billed and paid over five years beginning in
2012 and will include interest at 5.0%. Future principal and interest payments to maturity is as
follows:
Total
Principal
Princi991~ Interest and interest
Foryears ending December31,2012 $ 71,928 $ -0- $ 71,928
2013 53,859 18,069 71,928
2014 57,899 14,029 71~928
2015 62,241 9,687 71,928
2016 66,910
Totals $ ~46.803 $ 359.640
6. OTHER POSTEMPLOYMENT BENEFITS (OBLIGATIONS FOR HEALTH INSURANCE)
In the government-wide financial statements, the cost of postemployment healthcare benefits,
like the cost of pension benefits, generally should be associated with the period in which the
cost occurs, rather than in the future year when it will be paid. In adopting the requirements of
GASB 45, during the year ended December 31, 2008, the Town recognizes the cost of post-
employment healthcare in the year when the employee services are received, reports the
accumulated liability from prior years and provide information useful in assessing potential
demands on the Town's future cash flows. Recognition of the liability accumulated from prior
years will be phased in over 30 years, which commenced with the 2008 liability.
- 33-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31,2010
DETAILED NOTES ON ALL FUNDS (continued)
OTHER POSTEMPLOYMENT BENEFITS (OBLIGATIONS FOR HEALTH INSURANCE)
(continued)
Plan Description:
The Town, as a single-employer defined benefit OPEB plan, per its contracts with employees, will
pay full premium costs for medical (currently provided by the Empire Plan and the Town's self-
funded medical plan) insurance coverage at retirement. For non-police participants, the Town
provides continuation of medical insurance to employees who retire under the NYS Retirement
System or who are at least 55 years old and have 10 years of service with the Town. For police, the
Town provides continuation of medical insurance for employees who have at least 20 years of
service with the Town. The retiree and spouse are eligible for full Medicare premium reimbursement
in the amount of $1,388 each. Healthcare benefits for non-union employees are similar to those of
union employees. Surviving spouses of deceased employees may continue coverage by paying the
premium equivalent for participants. They are also entitled to Medicare part B premium
reimbursement.
The number of participants as of January 1, 2010, the effective date of the OPEB valuation is as
follows. There have been no significant changes in the number or type of coverage since that date.
Active employees 217
Retirees 167
Spouses of retired employees 6
Total 390
Funding Policy:
The Town currently pays for postemployment health care benefits on a pay-as-you-go basis.
Annual Other Postemployment Benefits Cost and Net Obligation:
For the year ended December 31, 2010, the Town's annual other postemployment benefits cost
(expenses) were $6,624,103. Considering the annual expense as well as the payment of current
health insurance premiums, which totaled $1,635,730 for retirees and their beneficiaries, the result
was an increase in the other postemployment benefits liability of $4,988,373 for the year ended
December 31, 2010. The Town's component units annual other postemployment benefits cost
(expenses) were $123,261. Considering the annual expense as well as the payment of current
health insurance premiums, which totaled $17,011 for retirees, the result was an increase in the
other postemployment benefits liability of $106,250 for the year ended December 31,2010.
Benefit Obligations and Normal Cost
Retired employees $ 21,378,329
Active employees
Unfunded actuarial accrued liability (UAAL)
The Town's annual other postemployment benefit cost is calculated based on the annual required
contribution (ARC) of the employer, an amount actuarially determined in accordance with the
parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an
ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial
liabilities (or funding excess) over a period not to exceed thirty years.
- 34-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
DETAILED NOTES ON ALL FUNDS (continued)
6, OTHER POSTEMPLOYMENT BENEFITS (OBLIGATIONS FOR HEALTH INSURANCE)
(continued)
Annual Other Postemployment Benefits Cost and Net Obliqation: (continued)
The Town's annual other postemployment benefits cost, the amount actually paid and changes to
the Town's net other postemployment benefits obligation to the Plan for the year ended December
31,2010 are as follows:
Normal Cost $ 2,815,146
Amortization of unfunded actuarial
liability (UAAL) over 30 years 3,703,231
interest 260,735
Annual required contribution (ARC) 6,779,112
Interest on net other
postemployment benefits obligation 347,749
Adjustment to ARC (502,758)
Annual OPEB cost (expense) 6,624,103
Less: contribution for year ended
December 31, 2010 1
Increase in net OPEB obligation 4,988,373
Net OPEB obligation- beginning of year 8,719,566
Net OPEB obligation- end of year $13~70~939
Percent of annual OPEB cost contributed 11.93%
Funded Status and Fundinq Progress:
The percentage contributed, as it relates to the Town of Southold, for the current year and
preceding year was:
Annual
Annual Contribution Percentage Net OPEB
OPEB Cost Made Contributed .......~.!.i9~i%n
2010 $ 6,624,103 $ 1,635,730 11.93% $ 13,707,939
2009 6,339,666 1,294,979 20.43% 8,719,566
2008 4,798,081 1,123,202 23.41% 3,674,879
The schedule of funding progress presents trend information about whether the actuarial value of
plan assets is increasing or decreasing over time relative to the actuarial accrued liability for
benefits,
The funded status of the plan as of January 1, 2010 is as follows:
Actuarial Accrued Unfunded UAAL as a
Value of Liability AAL Funded Covered
Assets (AAL} ~U__ ~AA~L)_ Ratio Payroll
Town $ *0~ $ 66,597,849 $ 66,597,849 0% $15,492,700
Component Units (unaudited) -0- 1,278,581 1,278,581 0% 1,023,395
Percentage
of
Payroll
429.87%
124.94%
- 35-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
DETAILED NOTES ON ALL FUNDS (continued)
OTHER POSTEMPLOYMENT BENEFITS (OBLIGATIONS FOR HEALTH INSURANCE)
(continued)
Actuarial Methods and Assumptions:
The projection of future benefits for an ongoing plan involves estimates of the value of reported
amounts and assumptions about the probability of occurrence of future events far into the future.
Amounts determined regarding the funded status of a plan and the employer's annual required
contributions are subject to continual revision as actual results are compared with past expectations
and new estimates are made about the future.
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan
as understood by the employer and the plan members) and include the types of benefits provided
at the time of each valuation and the historical pattern of sharing benefit costs between the
employer and plan members to that point. The actuarial methods and assumptions used include
techniques that are designed to reduce the effects of shod-term liability in actuarial accrued
liabilities, consistent with the long-term perspective of the calculations.
In the January 1, 2009 actuarial valuation, the liabilities were computed using the projected unit
credit cost method. The actuarial assumptions utilized a 4% discount rate. The valuation
assumes a 10-12% healthcare cost trend increase for the year, reduced by decrements down to
5% in fiscal year 2015. The remaining amortization period at December 31, 2010 was twenty
seven years.
7. COMPENSATED ABSENCES
Town employees are granted vacation and sick leave and earn compensatory absences in
varying amounts. In the event of termination or upon retirement, an employee is entitled to
payment for accumulated vacation and sick leave and unused compensatory absences at
various rates subject to certain maximum limitations.
Estimated vacation, sick leave and compensatory absences accumulated by governmental fund
type employees have been recorded in the statements of net assets. Payment of vacation time and
sick leave is dependent upon many factors; therefore, timing of future payments is not readily
determinable. However, management believes that sufficient resources will be made available for
the payments of vacation, sick leave and compensatory absences when such payments become
due. As of December 31, 2010, the value of the accumulated vacation time and sick leave was
$7,544,371 for the primary government.
COMMITMENTS AND CONTINGENCIES
Risk Management
in common with other municipalities, the Town receives numerous notices of claims. The Town
established a self-insurance risk management program for general liability and health insurance which
are both accounted for in the Risk Retention Fund.
For the year ended December 31, 2010, the Town has a deductible liability exposure of $50,000 per
claim for General Liability, $25,000 per claim for Automobile Liability, Police Liability and Employee
Benefits, and $10,000 per claim for Public Officials and Employment Practices. Any liability exposure
above the deductible amounts is covered by primary insurance policies up to $1,000,000 per claim for
General Liability, Public Officials, Police and Employment Practices, and Employee Benefits.
Aggregate exposures are $1,000,000 per claim for Public Officials, Police and Employment Practices,
$3,000,000 for Employee Benefits and $5,000,000 for General Liability. After primary policy limits are
exhausted, the excess exposure above the per claim or aggregate limits is covered by an Umbrella
Liability Policy of $10,000,000 per claim and $10,000,000 in the aggregate.
- 36-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
COMMITMENTS AND CONTINGENCIES (continued)
Risk Management (continued)
For insurance for health benefits that are self-insured, the Town has insurance policies which provide
coverage for specific medical cases in excess of $100,000 incurred during the year and paid within
three months after year end, as well as coverage for all other claims in the aggregate. The exposure
to the Town under the aggregate policy is based on monthly enrollment. Considering the changes to
enrollment during 2010, the attachment point for the aggregate policy was $3,616,159.
There have been no significant reductions in insurance coverage as compared to the prior year, and
there were no settlements in excess of insurance coverage over the last three years,
The Risk Retention Fund reserves for general liability claims are determined by a third party
administrator, and are reported when it is probable that a loss has occurred and the amount of that loss
can be reasonably estimated. Claims reserves for general liability claims are re-evaluated periodically to
take into consideration recently settled claims and any new developments and changes.
The Risk Retention Fund liabilities for medical claims outstanding at year end are reported by the third
party administrator and are recorded when the claim has been incurred and paid within 60 days of the
year end.
The Town's discretely presented component units are not included in the Town's self-insurance risk
management program for any claims.
Net assets in the Risk Retention Fund are reserved for future catastrophic losses and are not available
for other uses. Changes in the liability for claims and judgments for the year ended December 31,
2010 and 2009 are as follows:
General
Medical Liability
2010 2009 2010 2009
Unpaid Claims as of December 31,
prior year
Incurred Claims:
Provision for insured events
of the current fiscal year
Increase (decrease) in net provision for
insured events of prior fiscal years
Total Incurred Claims and
Claim adjustments
Payments of:
Claims during the current year
Unpaid Claims as of December 31,
$ 168,376 $ 167,490 $ 3,396 $ 1,088
3,021,789 2,769,328 25,000 4,250
8,075 .......~2_~1§) 9,656 2,308
3,198,240 2,934,~Q.~ ...........~,052 7,646
2,926,~ 2,766,226 ......... ~.~ 4,250
currentyear $ 272,213 $ j683~376
During the year ended December 31, 2010 charges to the operating funds for the self-insurance
programs were made as follows:
...M...e...d..j .c ai~l
General Fund Whole Town
General Fund Part Town
Highway Fund Part Town
Solid Waste District
$ 2,119,841
333,671
958,513
339,71~
3~751.7~2
- 37-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
COMMITMENTS AND CONTINGENCIES (continued)
Risk Management (continued)
General Liability
General Fund Whole Town
General Fund Part Town
Solid Waste District
Total Charges
536,461
15,000
15,000
566,461.
4.318.203
Landfill Closure and Post-Closure Care Costs
State and federal laws and regulations required the Town to place a final cover on its landfill sites and to
perform certain maintenance and monitoring functions at the sites for thirty years after closure. The Town
ceased accepting waste at its Cutchogue landfill as of October 8, 1993. The Town entered into a
stipulation of settlement with the New York State Department of Environmental Conservation in
October of 1994 in which all charges of operational violations at the Cutchogue landfill were dropped.
Under the stipulation, the Town agreed to close and place a final cover over the landfill and to pay a
civil penalty of $650,000 over seven years. Construction of the final cover commenced in the summer
of 2001 and was completed in the fall of 2003.
In addition to placement of the final cover on the landfill, state and federal regulations presently require
the Town to perform certain maintenance and monitoring functions at the site for up to thirty years.
Accordingly, as of December 31, 2010 the Town has recorded a liability of $993,336 which represents the
provision to be made in future budgets for post-closure landfill costs. Actual costs may vary due to
inflation or deflation, changes in technology, or changes in regulations or applicable laws.
Actual costs associated with the placement of the final cover totaled $7,681,719. Financing for closure
activities was provided through a $2,000,000 grant from the New York State Department of
Environmental Conservation with the balance provided with a state subsidized loan through the New
York State Environmental Facilities Corporation. Costs associated with postclosure care will be
covered by charges to future landfill users and future tax revenue.
Lease Commitments and Leased Assets
The Town leases property and equipment under operating leases. Total rental expenditures on such
leases for the year ended December 31, 2010 were $255,466. Future obligations over the primary
terms of the Town's leases as of December 31,2010 are as follows:
2011 $ 225,798
2012 209,139
2013 109,d39
2014 81,318
2015 and thereafter 288,555
Total ~ 913.849
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
CONDENSED FINANCIAL STATEMENTS FOR THE DISCRETELY PRESENTED
COMPONENT UNITS (UNAUDITED)
The following represents condensed financial statements for the discretely presented component units as
of and for the year ended December 31, 2010:
Condensed Statement of Net Assets:
Fishers Islar~d Ferry District
Fishers Island Waste Management District
Cutchogue-New Suffolk Park District
Southold Park District
Orient~East Marion Park District
Mattituck Park District
Orient Mosquito District
Due from Capital Assets Other
Current Primary Net of Current Long-Term Net
Assets Government Depreciation Liabilities Liabilities Assets
$ 732,784 $ 138,354 $ 11,660,211 $ 1,322,851 $ 2,364,294 $ 8,844,204
894,013 109,972 2,857,550 137,181 3,724,354
108,273 27,671 119,280 27,671 227,553
12,130 67,049 903,607 69,828 912,958
5,748 7,290 432,985 7,290 438,733
437,300 92,029 1,690,288 247,261 1,972,356
1,488 17,028 11,604 17,028 13,092
$ 2,191,736 $ 459,393 $ 17,675,525 $ 1,829,110 $ 2~384,294 $ 16,133,250
Condensed Statement of Activities:
Program General Revenue Net Assets
Property {as restated)
Expenses Revenue Net Expense Tax Other Change 1/1/10 12/31/10
$ 3,596,787 $ 2,662,572 $ 934,215 $ 750,000 $ 224,647 $ 40,432 $ 8,803,772 $ 8,844,204
481,184 39,177 442,007 381,950 5,080 (54,977) 3,779,331 3,724,354
Fishers island Ferry District
Fishers island Waste
Management District
Cutch09ue New Suffolk Park
District 138,785
S0uthold Park Distdct 323,136
Orient-East Madon Park Distdct 32,818
Mattituck Park Distdct 322,765
Orien[ Mosquito Distdct 89,137
4,589
138,785 130,000 950 (7,835) 235,388 227,553
318,547 315,000 32,187 28,640 884,318 912,958
32,818 36,136 794 4,112 434,621 438,733
322,765 459,952 37,815 175,002 1,797,354 1,972,356
89,137 80,000 49 (9,088) 22,180 13,092
$ 4,984,612 $ 2,706,338 $ 2,278,274 $ 2,153,038 $ 301,522 $ 176,286 $15,956,964 $16,133,250
2% TRANSFER TAX
In November 1998, the voters of the Town approved a referendum for a 2% transfer tax, which became
effective on April 1, 1999. The transfer tax receipts are recorded in the Community Preservation Fund,
and are used for the purchase and/or preservation of agricultural land, open space, parks, or historic
preservation sites. The tax applies to sales of vacant land worth $100,000 or more or sales or improved
land worth $259,090 or more. Conveyance of real property for open space, parks or historic preservation
purposes are exempt from this tax.
At December 31, 2010, and for the four previous years, the Town has the following 2% transfer tax
revenue which was utilized for the conservation, environmental or historic preservation purposes
expenses of;
Revenues Exper~ditures
Yearend December31,2010 $ 6,588,824 $ 8,731,929
2009 3,040,294 4,599,624
2008 5,251,258 17,624,096
2007 6,071,436 2,423,659
2006 5,823,714 10,969,280
~ 39~
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2010
RESTATEMENT OF NET ASSETS AND CAPITAL ASSETS
During the current year, it was determined that certain capital assets that were previously recorded on the
Fisher's Island Ferry District books were actually owned and operated by the Town. To correct this error,
the beginning net asset balance of $97,474,616, as originally reported, has been increased to
$100,125,466. In addition, beginning capital assets balances of $209,383,842 and beginning accumulated
depreciation balances of $72,011,806, as originally reported, have been increased to $213,883,208 and
$73,860,322, respectively.
SUBSEQUENT EVENTS
The Town issued $13,175,000 Public Improvement Serial Bonds dated June 29, 2011. The issue
included $10,000,000 for Open Space purchases and various town improvements. Interest rates vary
from 2.0% to 4.0% which matures in August 2030.
In February 2011 the New York State Environmental Facilities Corporation has refunded $75,000
Town of Southold 1996A Bonds. interest rates vary from ~8070% to 1.8170% which matures in
December 2014.
In June 2011, New York State enacted Chapter 97, Laws of 2011 Real Property Tax Levy Cap and
Mandate Relief Provisions, which includes a 2% property tax cap for municipalities that affects the
Town and its municipal component units. Beginning in 2012, and lasting through at least June 15,
2016, no local government is authorized to increase its property lax levy by more than 2% or the rate
of inflation (whichever is less); however the permitted increase will not be less than 1%. Local
governments can exceed the tax levy limit by a 60% vote of the governing body, or local law. There
are permitted exceptions and adjustments. The Town is currently evaluating the effect of the cap on
future year's budgets.
NEW PRONOUNCEMENTS
The GASB has issued Statement No. 54, "Fund Balance Reporting and Governmental Fund Type
Definitions." This statement establishes criteria for classifying fund balances into specifically defined
classifications and clarifies definitions for governmental fund types. The requirements of this statement
become effective for the Town for the year ended December 31,2011.
The Town is currently evaluating the impact of the above pronouncement. However, the Fisher's
Island Ferry District has implemented this standard for the year ended December 31, 2010.
- 40-
REQUIRED SUPPLEMENTARY
INFORMATION OTHER THAN
MANAGEMENT DISCUSSION AND
ANALYSIS
TOWN OF SOUTHOLD
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
Year ended December 31, 2010
Original Final
Budget Budg?t
REVENUES
Real property taxes $ 21,532,952 $ 21,532,952
Other real property tax items 65,000 65,000
Non-property tax items 885,000 885,000
Departmental income 395,700 443,200
Intergovernmental charges 382,307 319,034
Use of money and property 210,750 210,750
Licenses and permits 259,730 259,730
Fines and forfeitures 150,500 168,500
Sale of property and compensation for loss 78,100 102,870
Miscellaneous local sources 281,197 243,012
Interfund revenues 30,000 30,000
State aid 1,210,015 1,208,392
Federal aid 159,273
Total Revenues
Act u a I
$ 21,532,952
84,201
885 473
416 600
222 657
306 952
261 339
225 311
300 228
369 402
30,000
1,216,047
231,418
Variance
Positive
(Negative) _
$
19,201
473
(26,600)
(96,377)
96,202
1,609
56,811
197,358
126,390
7,655
72,145
25,481,251 25,627,713 26,082,580 454,867
EXPENDITURES
General government support 6,936,792 6,749,794 5,125,064
Public safety 8,515,737 8,843,595 8,626,229
Public health 33,300 33,800 33,788
Transportation 491,600 473,600 424,568
Economic assistance and opportunity 1,161,050 1,162,320 1,118,864
Culture and recreation 313,210 315,525 282,289
Home and community services 431,951 431,951 402,959
Employee benefits 6,501,730 6,437,790 5,911,381
Debt service - principal and interest 833,000 830,200 824,417
Total Expenditures
Excess (Deficiency) of Revenues
Over Expenditures
1,624,730
217,366
12
49,032
43,456
33,236
28,992
526,409
5,783
25,218,370 25,278,575 22,749,559 2,529,016
262,881 349,138 3,333,021 2,983,883
Other Financing Sources (Uses)
Transfers out (389,000) (465,257) (453,613)
Total Other Financing Sources (Uses) (389,000) (465,257) _ (453,613)
Net Change in Fund Balance
Fund Balance at Beginning of Year
Fund Balance at End of Year
$ (126,119) $ (116,119) 2,879,408
4,543,693
$ 7,423,101
11,644
11,644
$ 2,995,527
See notes to the financial statements,
-41-
TOWN OF SOUTHOLD
HIGHWAY FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCES - BUDGET AND ACTUAL
Year ended December 31, 2010
REVENUES
Real properly taxes
Other mai properly tax items
Intergovernmental Charges
Use of money and property
Licenses and permits
Sale of property and compensation
for loss
State aid
Federal Aid
Total Revenues
Variance
Original Final Positive
Budget Budget Actual (Negative)
$ 4,032,425 $ 4,032,425 $ 4,032,425 $
3,050 3,050 6,477 3,427
250 250
6,000 6,000 5,634 (366)
7,500 7,500 6,914 (586)
3,000 3,000 1,419 (1,581)
326,819 331,819 343,024 11,205
15,000 120,630 105,630
4,378,794 4,398,794 4,516,773 117,979
7,300 7,348 6,884 464
2,985,839 3,005,839 2,959,459 46,380
1,521,725 1,521,677 1,484,619 37,058
99,050 99,050 98,070 980
4,613,914 4,633,914 4,549,032 84,882
EXPENDITURES
General government support
Transportation
Employee benefits
Debt service - principal and interest
Total Expenditures
Excess (Deficiency) of Revenues
Over Expenditures
(235,120) (235,120) (32,259) 202,861
Other Financing Uses
Transfers out
(29!900)
Total Other Financing Uses ~
(29,900)~ (30,000) (100_)..
(29,900). ~ (100)
Net Change in Fund Balance
$ (265,020) $ (265,020) (62,259) $ 202,761
Fund Balance at Beginning of Year
Fund Balance at End of Year
704,725
$ 642,466
See notes to the financial statements,
-42-
TOWN OF SOUTHOLD
COMMUNITY PRESERVATION FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCES - BUDGET AND ACTUAL
Year ended December 31, 2010
REVENUES
Non-property tax items
Use of money and property
Miscellaneous local sources
State aid
Federal Aid
Total Revenues
Variance
Original Final Positive
Budget Budget Actual (Negative)
$ 2,107,000 $ 2,107,000 $ 3,869,750 $ 1,762,750
10,000 16,742 26,102 9,360
100 100
225,828 81,753 (144,075)
2,611,119 2,611,119
2,117,000 2,349,570 6,588,824 4,239,254
EXPENDITURES
General government support 94,591 49,641
Home and community services 4,493,560 17,294,812
Employee benefits 11,349 12,149
Debt service - principal and interest 2,517,500 2,073,622
Total Expenditures
Excess (Deficiency) of Revenues
Over Expenditures
Other Financing Sources (Uses)
Debt proceeds
Total Other Financing Soumes (Uses)
Net Change in Fund Balance
Fund Balance at Beginning of Year
Fund Balance at End of Year
49,641
7,065,293 10,229,519
12,149
1,666,636 406,986
7,117,000 19,430,224 8,731,929 10,698,295
(5,000,000) (17,080,654) (2,143,105) 14,937,549
lO,OOO,OOO _(lO,OOO,OOO
~0~ 10,000,000 -0- (10,000,000)
$(5,000,000) $(7,080,654) (2,143,105) $ 4,937,549
8,145,455
$ 6,002,350
See notes to the financial statements.
-43-
TOWN OF SOUTHOLD
POSTEMPLOYMENT BENEFITS HEALTHCARE COSTS - SCHEDULE OF FUNDING
PROGRESS
Year ended December 31, 2010
Unfunded
Liability as a
Actuarial Actuarial Actuarial Percentage of
Valuation Date Value of Accrued Unfunded Covered
January 1, Assets Liability Liability Funded Ratio Covered Payroll Payroll
2010 $ -0- $ 66,597,849 $ 66,597,849 0.00% $15,492,700 429.87%
2009 -0- 62,493,280 62,493,280 0,00% 14~754,952 423~54%
2008 -0- 45,806,258 45,806,258 0,00% 13,830,871 331,19%
~44~
OTHER SUPPLEMENTARY
INFORMATION
TOWN OF SOUTHOLD
COMBINING BALANCE SHEET
NON-MAJOR GOVERNMENTAL FUNDS
December 31,2010
East*West Fire Southoid Fishers Solid Waste
ASSETS
Cash and investments $ 577,094 $ 19,559 $ 255,011 $ 30,953 $ 291,900 $1,174,517
Accounts receivable 76,900 1,906 132,642 211,448
Due from other funds 210,174 151,671 55 515 502,491 864,905
Stste and federal receivables 58,772 $133,500 192,272
Prep8ids 26,502 28,734 55,236
TotalAssets $ 949,442 $133,500 $ t71,230 $ 255,066 $ 33,374 $ 955,767 $2,498,379
LIABILITIES AND FUND BALANCE
LIABILITIES
Accounts payebie
Deferred revenue
$ 22,816 $133,500 $ 13,137 $ 1,584 $ 176,237 $ 347,274
226,220 151,671 534,425 912316
249,036 133,500 164808 $ -0- 1,584 710,562 1,259,590
FUND BALANCE
Fund Balance - Reserved:
Encumbrances 16,400 16,400
Prepaids 26,502 28734 55,236
Fund Balance - Unreser/ed:
Designated - ensuing years budget 241,0o0 1,500 177,385 4,700 107,000 531,585
Undesignated 416,504 4,922 77,681 27,090 109,371 835,568
Total Fund Balance
Totai Liabilities and Fund Balance
700,406
$ 949,442
-0- 6,422 255,066 31,790 245,105 1,238,789
$133,500 $ 171,230 $ 255,066 $ 33,374 $ 955,767 $2,498,379
TOWN OF SOUTHOLD
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES - NON-MAJOR GOVERNMENTAL FUNDS
For the year ended December 31, 2010
REVENUES
Real properly taxes
Other real properly tax items
Non-property tax items
Depadmental income
Use of money and properb/
Licenses and permits
Sale of properly and compensafion for loss
State aid
Federal aid
EXPENDITURES
General government supped
Publlc safety
Home and commur~ity
Employee benefits
Debt service:
Principal
interest
Excess (Deficiency) of Revenues
Over Expenditures
Other Financing Uses:
Transfers out
Net Change in Fund Balance
Fund Balances (Deficit) at Beginning of Year
East-West Fire
General Fund Special Protection
Part Town Grant District
$ 904,014
300,987
638,420
2,330
9,200
Southold Fishers Solid Waste
Wastewater Island Sewer Management
District District Distdct
$ 246,981
$ 652,565
84
418
4,375 $ 2,184,244 $ 3.745.198
$ 2,422 286 4,245
300,987
1.005 23,017 1,434,388 2,096.830
641 94 5,522 9,005
t35,270 144,470
258 312,192 312,569
188 550 738
9,560 156,581
57,361 304,342
Total Revenues 2,003,544 246,981 653,067 6,279 25,721 4,139,373 7,074,965
45,007
473,004
770,929
559,329
246,981
659,114
Total Expenditures 1~848~269~ 246,981 659,114
155,275
24,793 69,800
1,132,118
4,426 18,871 2,251,246 3,292,453
604,650 1,163,979
2,175 6,000 447,900 456,075
177 6,60I 209,872 216,650
6,778 31,472 3,538,461 6,331,075
(6,047) (499) (5,751)
Total Other Financing Uses -0- -0~ -0- 0- *0-
155,275 (6,047) (499) (5,751)
545,131 12,469 255,565 37,541
600,912 743,890
(149,234) (149~234)
(149,234~ ~149~234)
451,678 594,656
(206,573) 644,t33
FundBalancesatEndofYear $ 700,406 $ -0- $ 6,422 $255,066 $31,790 $ 245,105 $ 1,238,789
46-
DISCRETELY PRESENTED COMPONENT UNITS
ASSETS
Current Assets:
TOWNOFSOUTHOLD
DISCRETELY PRESENTED COMPONENT UNITS
COMBiNiNG STATEMENT OF NET ASSETS
December3%2010
Fishers Fishers Istand Cutchogue Southold Orient East Mattituck Orient
Island Ferry Waste Management New Suffolk Park Marion Park Park Mosqu to
District District Park District District Oistdct District District
(Unaudiled) (Unaudited)__ (Unaudited) __(Unaudited~ ( Ul~audited~ (Unaudited) ~L6La udit ed}
624,683 $ 868r537 $ 108273 $ 12,130 $ 5,748 $ 437.300 $ 1,488 $ 2,058,159
73,374 73.374
138,354 109,972 27,671 67,049 7,290 92,029 !7r028 459,393
4,758 4,758
29,969 25,476 55,445
871.138 ! ,003.985 ! 35,944 79,179 13,038 529329 18~5~6 2,651,129
41,717 517,263 101,!98 588.849 432,985 603,723 2.285,735
11618,494 2,340,287 18,082 3!4.758 1.086,565 11.604 !5,389,790
1 1,660.21 I 2,857,550 119,280 903,607 432,985 1,690,288 i 1,604 17,675,525
!2,531,349 3,861,535 255,224 982,786 446,023 2,219,617 30,120 20,326,654
LIABILITIES
Current Liabilities:
Accounts payable and accrued iiabi i6es 175,555 23.350 2,779 97,687 299,371
Accrued interest payed!e 29,890 95 29,985
Bond antic pa6on notes payable 50,000 50,000
Due to other governments 3,859 3,859
Unearned revenue 138,354 109,972 27,671 67.049 7,290 99,479 17.028 466,843
Non-current liabilities due within one year
General obl{ga8ol' bonds payable 175,000 175,000
Bond anticipatiof~ notes payable 750,000 750,000
Compensated absences payable 54,052 54,052
1.322,851 137:181 27.671 69,828 7,290 247.261 17,028 1729,110
1.900,000 1.900.000
162,157 162.157
302.137 302,137
3,687,145 137,181 27,671 69,828 7,290 247,261 17,028 4,193,404
8,835,211 3,779.331 884r318 1,690,288 I5,189,148
8,993 (54.977) 227.553 28,640 438.733 282,068 13.092 944,102
$ 8,844,204 $ 3,724.354 $ 227,553 $ 912,958 $ 438.733 $ 1,972,356 $ 13.092 $ 16,133.250
Total Net Assets
TOWN OF SOUTHOLD
DISCRETELY PRESENTED COMPONENT UNITS
COMBiNiNG STATEMENT OF ACTIVITIES
Year ended December 31, 2010
REVENUES
Real properly taxes
Other real property tax items
Interest earnings
State Aid
Federal Aid
Other
EXPENSES
General government support
PuNic health
Transpodation
Culture and recreation
Home and community services
Interest on debt
Changes in Net Assets
Net Assets at Beginning of Year, as reported
Prior Period Adjustment
Net Assets at Beginning of Year, as restated
Fishers Fishers Island Cutchogue- Southold
Island Ferry Waste Mana9emef~l New Suffolk Park
Distdct District Park District District
(Unaudited) (Unaudited) (Unaudited)~ (Unaudited)
Orient-East Mat8tuck Odent
Marion Park Park Mosquito
Distdct District District
(Ul~audited)~ (Unaudited) (Unaudited)
Totals
$ 2,662T572 $ 39,177 $ 4,589
750,000 381r950 $ 130,000 315,000
98 50 17
1,835 5,030 933 30,837
4,456
188,395
29,863 1,350
3,637,219 426.207
$ 2,706.338
$ 36.136 $ 459,952 $ 80,000 2,153,038
5 60 10 240
7 3,130 39 41,811
4,456
188,395
782 34,625 66,620
130,950 351,776 36,930 497,767 80,049 5,160,898
156,630
3,336,065
11,375
92,717.
3,596,787
481,184
481,184
(54,977)
3,779,331
3,779,331
$ 3,724,354
138,785 323,136
156,630
89,137 89,137
3,336,065
32,818 322,073 828,187
481,184
692 93,409
138,785 323,136 32,818 322765 89,137 4,984,812
(7,835) 28,640 4,112 I75,002 (9,088) 176,286
235,388 884,318 434,621 1,797,354 22,180 18,775,687
(2,818,723)
235,388 884,318 434,621 1,797,354 22,180 15,956,964
$ 227,553 _$ 912,958 $ 438,733 $ 1,972,356 _$ 13,092 $16,133,250
40,432
11,622,495
(2,818,723)
8,803,772
Net Assets at End of Year $ 8,844,204
-48-
OTHER REPORTS
TOWN OF SOUTHOLD
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Year ended December 31,2010
Federal Grantor/Pass-through Grantor/
?.~ro~ram or Cluster Title
U. S. Department of Housing and Urban Development
Pass-through program from:
Suffolk County, New York
Community Development Block Grant Program
ARRA- Community Development Block Grant Program
U.S. Department of Health and Human Services
Pass-through program from:
Suffolk County, New York
Special Programs for the Aging i Title Ill,
Part C - Nutrition
Nutrition Services Incentive Program
Direct program from:
Early Retiree Reinsurance Program
U.S. Department of Transportation
Pass-through program from:
New York State
Highway Planning and Construction
Pass-through program from:
New York State
Safety Incentive Grants for the Use of Seatbelts
Pass-through program from:
New York State
Selective Traffic Enforcement Program
U,S. Department of Agriculture
Direct program from:
National Resource Conservation Service
Farm and Ranchland Protection Program
U,S. Department of the Interior
Pass-through program from:
New York State
Clean Vessel Act
Federal
CFDA
i~u_~e~_.
14.218
14.253
93.045
93.053
93.546
20.205
20,604
20.600
10.913
15.616
Pass -
Through
Identifying
Number
SCS10000001792
SCS10000001792
C022403/D030245
PT-5259081
U,S, Department of Homeland Security
Pass-through program from:
New York State
Severe Storms and Flooding
Pass-through program from:
New York State and Suffolk County
Homeland Security Grant Program
Total expenditures of federal awards
97.036
97.067
FEMA-1899-DR-NY
See accompanying notes to schedule of expenditures of federal awards
Federal
Expenditures
$ 207,981
39,000
84,813
27,320
31,339
24,959
7,754
3,174
2,608,306
9,517
217,480
5.868
$ 3.267.511
-49-
TOWN OF SOUTHOLD
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
December 31,2010
Note A - Basis of Presentation
The accompanying schedule of expenditures of federal awards includes the federal grant activity of the Town of
Southold and is presented on the modified accrual basis of accounting. The information in this schedule is
presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and
Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts
presented in, or used in the preparation of, the basic financial statements.
Note B - Summary of Significant Accounting Policies
(1)
Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such
expenditures are recognized following the cost principles contained in OMB Circular A-87, Cost Principles
for State, Local and Indian Tribal Governments, wherein certain types of expenditures are not allowable or
are limited as to reimbursement.
(2) Pass-threugh entity identifying numbers are presented where available.
~50~
CERTIFIED PUBLIC ACCOUNTANTS
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MAlq-ERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS
PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Honorable Supervisor and Town Board
Town of Southold
Southold, New York
We have audited the accompanying financial statements of the governmental activities, the discretely presented
component unit, each major fund, and the aggregate remaining fund information of Town of Southold, New York,
as of and for the year ended December 31, 2010, which collectively comprise the Town of Southold, New York's
basic financial statements and have issued our report thereon dated September 22, 2011. We conducted our audit
in accordance with auditing standards generally accepted in the United States of America and the standards
applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of
the United States.
The financial statements of the Town of Southold's discretely presented component units were not audited as of
the report date, nor were we able to satisfy ourselves as to those financial activities by other auditing procedures.
Internal Control Over Financial Reportinq
In planning and performing our audit, we considered Town of Southold, New York's internal control over financial
repoding as a basis for designing our auditing procedures for the purpose of expressing our opinions on the
financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Town of
Southold, New York's internal control over financial reporting. Accordingly, we do not express an opinion on the
effectiveness of the Town of Southold, New York's internal control over financial reporting.
A deficiency in internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct
misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in
internal control such that there is a reasonable possibility that a material misstatement of the entity's financial
statements will not be prevented, or detected and corrected on a timely basis.
Our consideration of internal control over financial reporting was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal control over financial
reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any
deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined
above. However, we identified certain deficiencies in internal control over financial reporting, described in the
accompanying schedule of findings and questioned costs as 2010-01 and 2010-02 that we consider to be
significant deficiencies in internal control over financial reporting. A significant deficiency is a deficiency, or a
combination of deficiencies, in internal control that is less severe than a material weakness, yet important
enough to merit attention by those charged with governance.
PERSONAL SERViCE.TRUSTED ADVICE.
ALBRECHT, V[GGIANO, ZURECK & COMPANY, RC.
245 PARK AVENUE, 24TH FLOOR 25 SUFFOLK COURT
NEW YORK, NY 10167 HAUPPAUGE, NY 11788-3715
T: 212.792.4078 T: 631.434.9500 F: 631.434.9518
www. avz.com
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Town of Southold, 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 other matters that we reported to management of the Town of Southold in a separate letter
dated September 22, 2011.
This report is intended solely for the information and use of management, Town Board, federal awarding agencies
and pass-through entities and is not intended to be and should not be used by anyone other than these specified
parties.
Hauppauge, New York
September 22, 2011
-52-
CERTIFIED PUBLIC ACCOUNTANTS
' E
INDEPENDENT AUDITORS REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAV A
DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER
COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
Honorable Supervisor and Town Board
Town of Southold
Southold, New York
Compliance
We have audited the compliance of Town of Southold, New York's, compliance with the types of compliance
requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance
Supplement that could have a direct and material effect on the Town of Southold, New York's major federal
program for the year ended December 31, 2010. Town of Southold, New York's major federal program is identified
in the summary of auditors' results section of the accompanying schedule of findings and questioned costs.
Compliance with the requirements of laws, regulations, contracts, and grants applicable to its major federal
pro9rams is the responsibility of Town of Southold, New York's management. Our responsibility is to express an
opinion on Town of Southold, New York's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United
States of America; the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local
Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and
perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance
requirements referred to above that could have a direct and material effect on a major federal program occurred.
An audit includes examining, on a test basis, evidence about Town of Southold, New York's compliance with those
requirements and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination
of Town of Southold, New York's compliance with those requirements.
In our opinion, the Town of Southold, New York, complied, in all material respects, with the requirements referred
to above that could have a direct and material effect on its major federal program for the year ended December
31, 2010.
Internal Controls Over Compliance
Management of Town of Southold, New York, is responsible for establishing and maintaining effective internal
control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal
programs. In planning and performing our audit, we considered the Town of Southold, New York's internal control
over compliance with the requirements that could have a direct and material effect on a major federal program to
determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report
on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing
an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on
the effectiveness of the Town of Southold, New York's internal control over compli~eONAL SERWCE. TRUSTED ADVICE.
ALBRECHT, VIGGIANO, ZURECK & COMPANY, RC.
245 PARK AVENUE, 24TH FLOOR 25 SUFFOLK COURT
NEWYORK, NY 10167 HAUPPAUGE, NY 11788w3715
T: 212.792.4075 T: 631.434.9500 F: 631.434.9518
www,avz,com
A deficiency in internal control over compliance exists when the design or operation of a control over compliance
does not allow management or employees, in the normal course of performing their assigned functions, to prevent,
or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely
basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in
internal control over compliance, such that there is a reasonable possibility that material noncompliance with a
type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely
basis.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph
of this section and was not designed to identify all deficiencies in internal control over compliance that might be
deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal
control over compliance that we consider to be material weaknesses, as defined above.
This report is intended solely for the information and use of management, Town Board, others within the Town,
federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone
other than these specified parties.
Hauppauge, New York
September 22, 2011
~54-
TOWN OF SOUTHOLD
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year ended December 31,2010
SUMMARY OF AUDITORS' RESULTS
1. The auditors' report expresses a qualified opinion on the basic financial statements of the Town of
Southold.
Two significant deficiencies in internal control relating to the audit of the financial statements are
reported in the "INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING
S TANDARDS'~
3. No instances of noncompliance material to the financial statements of the Town of Southold were
disclosed during the audit.
No control deficiencies relating to the audit of the major federal award program are reported in the
"INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD
HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON iNTERNAL
CONTROL OVER COMPLANCE IN ACCORDANCE WITH OMB CIRCULAR A-133"
5. The auditors' repod on compliance for the major federal awards programs for the Town of Southold
expresses an unqualified opinion on all major federal programs.
6. There were no audit findings that are required to be reported in accordance with Section 510(a) of
OMB Circular A-133,
7. The program tested as a major programs was:
CFDA Number
Name of Federal Pro~....9.bC..Lu.~!~.r.. ................................
10.913
Farm and Ranch Lands Protection Program
The threshold for distinguishing Types A and B programs was $300,000.
9. The Town of Southold was not determined to be a Iow-risk auditee.
-55-
TOWN OF SOUTHOLD
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year ended December 31, 2010
FINDINGS - FINANCIAL STATEMENTS AUDIT
2010-01 RECEIVER OF TAXES - SEGREGATION OF DUTIES
Condition
We noted that the Receiver of Taxes is the only authorized check signer, prepares the deposit slips, brings the
deposit to the bank, receives the bank statements, and reconciles the bank accounts.
Criteria
internal controls should be in place to provide for segregation of duties within accounting functions relating to
cash receipts, check signing and bank reconciliations to reduce the risk of potential errors and fraud.
Effect
Intentional or unintentional errors could be made and not detected.
Recommendation
We recommend that the Receiver of Taxes separates these duties relating to the cash receipts and reconciliation
cycle to another employee so that no one person handles all elements of a single transaction. We recommend
that the Receiver of Taxes' duties of preparing the bank deposit, depositing the funds and reconciling the bank
statement be assigned to some other employee in order to establish a proper segregation of duties over cash
receipts.
Management's Response
Due to the small size of the Tax Receivers office, the Tax Receiver will evaluate the functions in his
department and segregate the duties as best as possible given the small size of his staff.
2010-02 TOWN CLERK -SEGREGATION OF DUTIES
Conditioq
We noted that the Deputy Town Clerk counts the cash, prepares the deposit slips, brings the deposits to the
bank, posts the cash receipts into the system, receives and reconciles the bank accounts.
Criteria
Internal controls should be in place to provide for segregation of duties within accounting functions relating to
cash receipts, cash depositing and bank reconciliations to reduce the risk of potential errors and fraud.
Intentional or unintentional errors could be made and not detected.
Recommendation
We recommend that the Deputy Town Clerk separates these duties relating to the cash receipts and reconciliation
cycle to another employee so that no one person handles all elements of a single transaction. We recommend
that the Deputy Town Clerk's duties of preparing the bank deposit, depositing the funds and reconciling the
bank statement be assigned to some other employee in order to establish a proper segregation of duties over
cash receipts.
Management's Response
The Southold Town Clerk's Office is a small office with only four clerks who are responsible for certain areas of
expertise. They all wait on the counter and issue permits, licenses, and receive money in order to provide the
best service possible to our constituents. The Town Clerk's office will address and create financial segregation
of duties and develop written policies outlining those functions.
-56-
TOWN OF SOUTHOLD
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year ended December 31, 2010
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARD PROGRAMS AUDIT
PROGRAMS
DEPARTMENT OF COMMERCE
NATIONAL OCEANIC ADMINISTRATION AWARD
COASTAL ZONE MANAGEMENT ADMINISTRATION AWARD - CFDA No. 11.419
2009-01 NO FORMAL WRITTEN OFFER TO PROPERTY OWNER
A written offer letter of the appraised value was not made to the property owner.
It was noted that a formal offer letter was not sent to the property owner.
Effect
The appraised value of the property should be made known to the property owner to ensure that they are
receiving reasonable compensation.
R ~.c..g.m_m_e.n d a t i.____o_n
The Town should ensure that property owners are notified in writing what the offer price is for their property.
Questioned Cost
Unknown
Management's Response
The Town has a system in place to ensure that formal written offer letters are made to the property owners, In
this particular case, the Town had been in negotiations with the property owner for a long period of time and
when an amount was agreed on, the purchase went into contract where the property owner and the Town
agreed on the purchase price,
_C_ .u..r. ~..n_t.....S_t~..tU..s.
This finding has been resolved by the Town.
-57~
ACCOUNTING&FINANCE DEPT. ®� S® �®1 TOWN HALL ANNEX
John A.Cushman,Town Comptroller ® 54375 Main Road
Telephone(631)765-4333 P.O.Box 1179
Fax(631)765-1366 ® Southold,NY 11971-0959
E-mail:accounting@town.southold.ny.us http://southoldtown.northfork.net/
Own
TOWN OF SOUTHOLD
OFFICE OF THE SUPERVISOR
To: Town Board
Town Clerk Elizabeth Neville
Superintendent of Highways Peter Harris
cc: Town Attorney Martin Finnegan
From: John Cushman
Date: October 17, 2011
Re: 2010 Audit
As part of the 2010 audit, our auditors have prepared the following for your review and action
as necessary:
• Communication of Significant Deficiencies for the year ended December 31, 2010
• Management Comment Letter for the year ended December 31, 2010
• SAS 114 letter "Communication with Those Charged with Governance" for the year
ended December 31,•2010
Feel free to contact me should you require any additional information.
71
CERTIFIED PUBLIC ACCOUNTANTS
To the Town Board
Town of Southold
Southold, New York
We have audited the financial statements of the governmental activities, each major fund, and the
aggregate remaining fund information of the Town of Southold for the year ended December 31, 2010,
and have issued our report thereon dated September 22, 2011. Professional standards require that
we provide you with the following information related to our audit.
Our Responsibility under U.S. Generally Accepted Auditing Standards
As stated in our engagement letter dated November 18, 2009, our responsibility, as described by
professional standards, is to express an opinion about whether the financial statements prepared by
management with your oversight are fairly presented, in all material respects, in conformity with U.S.
generally accepted accounting principles. Our audit of the financial statements does not relieve you
or management of your responsibilities.
Planned Scope and Timing of Audit
We performed the audit according to the planned scope and timing previously communicated to you in
our engagement letter and communicated with the Town Comptroller and Town Board about planning
matters during April 2011.
Significant Audit Findings
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. In
accordance with the terms of our engagement letter, we will advise management about the
appropriateness of accounting policies and their application. The significant accounting policies used
by the Town of Southold are described in Note A to the financial statements. No new accounting
policies were adopted and the application of existing policies was not changed during 2010. We noted
no transactions entered into by the governmental unit 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.
PERSONAL SERVICE.TRUSTED ADVICE. — �—
ALBRECHT,VIGGIANO,ZURECK&COMPANY, PC.
245 PARK AVENUE,24TH FLOOR 25 SUFFOLK COURT
NEW YORK, NY 10167 HAUPPAUGE, NY 11788-3715
T:212.792.4075 T.631.434.9500 F. 631.434 9518
www avz.com
INDEPENDENT MEMBER OF BKR INTERNATIONAL
t
e
Town Board
Town of Southold
Page 2
Accounting estimates are an integral part of the financial statements prepared by management and
are based on management's knowledge and experience about past and current events and
assumptions about future events. Certain accounting estimates are particularly sensitive because of
their significance to the financial statements and because of the possibility that future events affecting
them may differ significantly than those expected. The most sensitive estimates affecting the financial
statements were:
Management's estimate of depreciation expense of $4,358,636 is based on the estimation of the
` useful lives of the fixed assets determined by the Town. We evaluated the key factors and
assumptions used to develop the depreciation expense in determining that it is reasonable in relation
to the financial statements taken as a whole.
Management's estimate of the compensated absences liability of $7,544,371 is based on what the
Town will be expected to pay in vacation and sick time when an employee terminates their
employment with the Town. We evaluated the key factors and assumptions used to develop the
compensated absences liability in determining that it is reasonable in relation to the financial
statements taken as a whole.
Management's estimate for landfill closure and post-closure care costs of$993,336 is based on what
the Town expects to pay for the monitoring and maintenance costs of their landfill over thirty years
based on an estimate provided by engineers. We evaluated the key factors and assumptions used to
develop the landfill closure and post-closure care costs in determining that it is reasonable in relation
to the financial statements taken as a whole.
Management's estimate of other post-employment benefits payable of$13,707,939 and the unfunded
actuarial accrued liability of $66,597,849 is based on what the Town expects to pay in medical
insurance costs and benefits to retired employees currently and over the next thirty years, respectively,
based on certain assumptions provided by an actuary. We evaluated the key factors and assumptions
used to develop the other post-employment benefits liability in determining that it is reasonable in
relation to the financial statements taken as a whole.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing
our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during
the audit, other than those that are trivial, and communicate them to appropriate level of management.
We did not detect any misstatements that were material, either individually or in the aggregate, to the
financial statements taken as a whole.
Disagreements with Management
For purposes 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 or the auditor's report. We are
pleased to report that no such disagreements arose during the course of our audit.
�9
Town Board
Town of Southold
Page 3
Management Representations
We have requested certain representations from management that are included in the management
representation letter dated September 22, 2011.
Management 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 Town's financial statements or a determination of
the type of auditor's opinion that may be expressed on those statements, our professional standards
req, ire 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.
Other Audit Findings or Issues
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 Town's auditors. However,
these discussions occurred in the normal course of our professional relationship and our responses
were not a condition to our retention.
This information is intended solely for the use of the Town Board and management of Town of
Southold and is not intended to be and should not be used by anyone other than these specified
parties.
Very truly yours,
Albrecht, Viggiano, Zureck& Co., P.C.
Hauppauge, New York
September 22, 2011
f S
CERTIFIED PUBLIC ACCOUNTANTS
September 22, 2011
To Honorable Supervisor and Town Board
Town of Southold
Southold, New York
In planning and performing our audit of the financial statements of the governmental activities, each
major fund, the aggregate discretely presented component units and the aggregate remaining fund
information of the Town of Southold as of and for the year ended December 31, 2010, in accordance with
auditing standards generally accepted in the United States of America, we considered the Town of
Southold's internal control over financial reporting (internal control) as a basis for designing our auditing
procedures for the purpose of expressing our opinions on the financial statements, but not for the
purpose of expressing an opinion on the effectiveness of the Town of Southold's internal control.
Accordingly, we do not express an opinion on the effectiveness of the Town of Southold's internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph
and was not designed to identify all deficiencies in internal control that might be significant deficiencies or
material weaknesses and therefore there can be no assurance that all such deficiencies have been
identified. However, as discussed below, we identified certain deficiencies in internal control that we
consider to be significant deficiencies.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct misstatements on a timely basis. A material weakness is a deficiency or combination
of deficiencies in internal control, such that there is a reasonable possibility that a material misstatement
of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We
did not identify any deficiencies in internal control that we consider to be material weaknesses.
A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less
severe than a material weakness, yet important enough to merit attention by those charged with
governance. We consider the following deficiencies in the Town of Southold's internal control to be
significant deficiencies.
PERSONAL SERVICE.TRUSTED ADVICE. —�-
ALBRECHT,VIGGIANO,ZURECK&COMPANY, P.C.
245 PARK AVENUE,24TH FLOOR 25 SUFFOLK COURT
NEW YORK, NY 10167 HAUPPAUGE, NY 11788-3715
T 212 792.4075 T 631.434.9500 F.631.434.9518
www.avz.COm
INDEPENDENT MEMBER OF BKR INTERNATIONAL
' o
Town of Southold
September 22, 2011
Page 2
RECEIVER OF TAXES—SEGREGATION OF DUTIES
Observation
During our audit, we noted that the Receiver of Taxes is the only authorized check signer, prepares the
deposit slips, brings the deposit to the bank, receives the bank statements, and reconciles the bank
accounts.
Recommendation
We recommend that the Receiver of Taxes separates these duties relating to the cash receipts and
reconciliation cycle to another employee so that no one person handles all elements of a single
transaction. We recommend that the Receiver of Taxes' duties of preparing the bank deposit, depositing
the funds and reconciling the bank statement be assigned to some other employee in order to establish a
proper segregation of duties over cash receipts.
TOWN CLERK—SEGREGATION OF DUTIES
Observation
During our audit, we noted that the Deputy Town Clerk is counting the cash, preparing the deposits slip,
brings the deposit to the bank, posts the cash receipts into the system, receives the bank statements, and
reconciles the bank accounts.
Recommendation
We recommend that the Deputy Town Clerk separates these duties relating to the cash receipts and
reconciliation cycle to another employee so that no one person handles all elements of a single
transaction. We recommend that the Deputy Town Clerk's duties of preparing the bank deposit,
depositing the funds and reconciling the bank statement be assigned to some other employee in order to
establish a proper segregation of duties over cash receipts.
This communication is intended solely for the information and use of management of the Town Board, and
others within the organization, and is not intended to be and should not be used by anyone other than these
specified parties.
Very truly yours,
CM
aw
D .
Albrecht, Viggiano, Zureck, & Co., P.C.
Hauppauge, New York
September 22, 2011
}
o ,
AA
CERTIFIED PUBLIC ACCOUNTANTS
September 22, 2011
Honorable Supervisor and Town Board
Town of Southold
Southold, New York
In planning and performing our audit of the financial statements of the Town of Southold (the"Town")for
the year ended December 31, 2010, we considered the Town's internal control in order to determine our
auditing procedures for the purpose of expressing an opinion on the financial statements and not to
provide assurance on internal control.
However, during the audit we became aware of several matters that are opportunities for
strengthening internal controls and operating efficiency. The memorandum that accompanies this
letter summarizes our comments and suggestions regarding those matters. A separate report dated
September 22, 2011 contains our report on significant deficiencies in the Town's internal control. This
letter does not affect our report, dated September 22, 2011 on the financial statements of the Town of
Southold.
The accompanying memorandum is intended solely for the information and use of the Town of
Southold, management, and others within the administration and is not intended to be and should not
be used by anyone other than these specified parties.
We will review the status of these comments during our next engagement. We have already
discussed many of these comments and suggestions with various Town personnel, and we will be
pleased to discuss them in further detail at your convenience, perform any additional study of these
matters, or assist you in implementing the recommendations.
Very truly yours,
VWX
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Albrecht, Viggiano,, Zureck& Company, P.C.
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PERSONAL SERVICE.TRUSTED ADVICE. —�—
ALBRECHT,VIGGIANO,ZURECK&COMPANY,P.C.
245 PARK AVENUE,24TH FLOOR 25 SUFFOLK COURT
NEW YORK, NY 10167 HAUPPAUGE,NY 11788-3715
T.212.792 4075 T•631.434.9500 F:631 434.9518
www.avz com
INDEPENDENT MEMBER OF BKR INTERNATIONAL
Town of Southold
September 22, 2011
Page 2
DEVELOP AN INFORMATION TECHNOLOGY DISASTER RECOVERY PLAN (REPEAT FINDING)
Observation
During our audit, we noted the Town does not have a written/formal disaster recovery plan in the
event of a disaster affecting its data processing capability. At present, a backup site has not been
determined and a contingency plan has not been formalized. The extent to which the Town would
define its contingency plan procedures will typically vary depending on the size of the Town, the
amount of downtime that could be expected in the event of a disaster, and the likely effect of such
downtime on the Town's daily business processes and its citizens. We believe that some formal
planning should occur in most instances. Areas that should be addressed in a disaster recovery plan
include the following:
• Definition of threats and risks (including likely effects on the Town).
• Operational security.
• Processing priorities.
• Disaster recovery planning (as appropriate).
• Insurance coverage available or desirable.
• Testing procedures of alternative processing sites (as appropriate).
Recommendation
We recommend that formal contingency planning be performed and that related policies and
procedures be developed. As of May 2011, the Town has prepared and implemented a disaster
recovery plan.
CASH DISBURSEMENTS/PURCHASING AND PROCUREMENT(REPEAT FINDING)
Observation
New York State General Municipal Law requires purchases of similar items to be aggregated to
determine if they meet the threshold for formal competitive bidding or required price quotes. Although
the Town has a system in place to provide accurate historical information to be used to estimate
future purchases, during the course of the audit, we noted several instances where the Police, Buildings
and Grounds, Solid Waste and Highway departments did not obtain and/or retain verbal or written quotes
as required by the Town's adopted Procurement Policy. In addition, there was no evidence that these
departments had secured quotes to document that it was receiving the lowest price for goods or services
purchased. We also noted several instances where the Town did not go out to bid on certain purchases
exceeding the competitive bidding limits for expenditures incurred by the Police, Solid Waste and Human
Resource departments.
It was also noted that there were no vendor signatures on fourteen disbursements.
Recommendation
We recommend that the Board ensure that these departments are complying with Board adopted
policies and the requirements of General Municipal Law. We further recommend that to properly
document such compliance, the departments should solicit and retain competitive quotations gathered
from a sufficient number of vendors, as required by the policy and attach all documentation to the
completed voucher packet. We also recommend that all vendor signatures are in place before
payment.
Town of Southold
September 22, 2011
Page 3
JUSTICE COURT-STALE DATED CHECKS (REPEAT FINDING)
Observation
During our audit, we noted that certain outstanding checks for Justice Court accounts were more than
one year old.
Recommendation
To aid in the preparation of bank reconciliations and to reflect an accurate cash balance in the
financial statements, all checks outstanding more than six months old should be investigated and
written-off as and disposed of in accordance with NYS Comptroller guidance.
JUSTICE COURT REPORT FILINGS (REPEAT FINDING)
Observation
During our audit of the Justice Court, we noted that three reports were filed late with the NYS
Comptroller's Office. According to the Office of the New York State Comptroller's Handbook for Town
and Village Justices and Court Clerks, "Reports are due between the 1St and the 10th of the month, for
every month that you hold office. Reports that are received after the 10th of the month are considered
late even if they are mailed on or before the 10th of the month. Reports that are received prior to the
1St are premature and may be incomplete if additional cases were heard during that month and were
not included in the report."
Recommendation
The Justice Court should report to Office of the New York State Comptroller timely.
LANDFILL—REVENUES RECORDED ON CASH BASIS (REPEAT FINDING)
Observation
During our audit, we noted that landfill revenues recorded monthly are on the cash basis. At the end of
the year, an accrual is made for revenues earned but have not been received.
Recommendation
We recommend that the Comptroller's office, in conjunction with the landfill and the Town Clerk's office,
establish a procedure to ensure that the sales on account is posted through the Town Clerk's office on a
daily basis along with the cash collections. If this is done, the monthly reports provided to the
Comptroller's office will provide accurate revenue earned by the landfill.
LANDFILL—DEPOSIT BAGS
Observation
During our audit, we noted that the Friday deposits and other weekend shifts are left in the safe until
Monday. All scale operators have access to the safe. It was noted that during the weekend, the scale
operators will occasionally make change with these deposits.
Town of Southold
September 22, 2011
Page 4
Recommendation
We recommend increasing the amount of cash in the drawers thus eliminating the need for the scale
operators to access the cash in the safe. The deposits from Friday should be deposited or locked in the
safe in the office with limited access to certain individuals in order to ensure these deposits are protected
against theft or loss.
LANDFILL—REVIEW OF VOID REPORTS
Observation
During our audit, we noted that there are no formal procedures in place to review void reports which are
generated as a result of incorrect weight, a non-chargeable item such as leaf disposal, etc.
Recommendation
We recommend the Department Head reviews and approve all void reports in order to ensure that the
void activity for the day is accurate and reasonable.
TOWN CLERK—CASHIER SIGNATURES
Observation
During our audit, we noted that 3 of the 4 cashier reports did not have documentation that shows two
signatures indicating that the cash was double counted.
Recommendation
We recommend that the Town Clerk's office document that all cash draws are double counted by the
cashier attending to the drawer and a supervisor in order to ensure that all the transactions recorded by
that draw are accounted for with the funds received by the cashier.
TOWN CLERK—REVIEW OF BANK RECONCILIATIONS (REPEAT FINDING)
Observation
During our audit, we noted that the bank reconciliations prepared by the Town Clerk's office are not
reconciled to the general ledger or reviewed on a monthly basis. We also noted that these bank
reconciliations are provided to the Comptroller's office only at year end.
Recommendation
We recommend that the Town Clerk forward the bank reconciliations along with the bank statements to
the Comptroller's office monthly in order for the Comptroller to review the reconciliation and to agree the
cash balance to the general ledger. This will allow the Comptroller to isolate the reconciling items so they
can be addressed on a timely basis.
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Town of Southold
September 22, 2011
Page 5
CAPITAL PROJECTS AUTHORIZATION
Observation
During our audit, we noted that in one instance funds were committed through purchase orders for a
capital project which had not yet been authorized by the Town Board. As a result, projects may occur
without the knowledge and authorization of the Town Board and the Comptroller's office. Without
knowledge of all capital projects, required funding may not be available and expenditures cannot be
controlled.
Recommendation
We recommend that all capital projects expenditures be monitored to ensure that the authorization is
in place before funds are committed and expended.
LOG-INS AND PASSWORDS
Observation
The Town currently does not require that user passwords be changed on a regular basis due to
limitations in IT personnel and shared directories being maintained on the IBM servers. Due to the
two types of servers being utilized and two different types of operating systems, this would currently
be cumbersome and labor intensive for the limited IT staff.
Recommendation
We recommend that the IT department review the possibility of requiring that passwords be changed
on a regular basis, in order to reduce the risk of access to computer files by unauthorized personnel.
Security could be improved if an "intruder lockout" feature were added to the network so that three or
more incorrect log in attempts would suspend the users account. The IT department would then be
required to reset the account.