HomeMy WebLinkAbout2010 FIFDMarien +
124 New London Turnpike
Norwich, Connecticut 06360
Tel: 860.886.1750
Fax: 860.886.0280
www. MarienCPAs~com
Communication with the Board of Commissioners
To the Board of Commissioners
Fishers Island Ferry District
Fishers Island, New York
We have audited the financial statements of the Fishers Island Ferry District (the entity) for the
year ended December 31, 2010, and have issued our report thereon dated August 26, 2011.
Professional standards require that we provide you with the following information related to our
audit:
lB
Our Responsibility under Generally Accepted Auditin9 Standards and
Government Auditino Standa~f~ - As communicated in our engagement letter, our
responsibility, as described bY professional standards, is to plan and perform our audit to
obtain reasonable, but not absolute, assurance that the financial statements that are the
responsibility of management with your oversight, are presented fairly, 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 respective responsibilities.
Our responsibility, as prescribed by professional standards, is to plan and perform our audit
to obtain reasonable, rather than absolute, assurance about whether the financial
statements are free of material misstatement. An audit of financial statements includes
consideration of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the entity's internal control over financial reporting.
Accordingly, as part of our audit, we considered the internal control of the Fishers Island
Ferry District solely for the purpose of determining our audit procedures and not to provide
any assurance concerning such internal control.
We are also responsible for communicating significant matters related to the audit that are,
in our professional judgment, relevant to your responsibilities in overseeing the financial
reporting process. However, we are not required to design procedures for the purpose of
identifying other matters to communicate to you.
We have provided our comments regarding significant control deficiencies and material
weaknesses, if applicable, in the back of the financial statements. These are in the
document called "Schedule of Findings".
Member Firm Of
MGI
Communication with the Board of Commissioners Page 2 of 3
m
m
Planned $cop~ and Timing of the Audit- We conducted our audit consistent with the
planned scope and timing we previously communicated to you.
Significant Account/n9 Po//c/es - Management has the responsibility to select and use
appropriate accounting policies. A summary of the significant accounting policies adopted
by the Fishers Island Ferry District is included in Note 1 to the financial statements. As
described in Note 1 to the financial statements, during the year, the entity changed its
method of accounting by adopting Governmental Accounting Standards Board (GASB)
Statements as follows:
· #54 - Fund Balance Reporting, Government Fund Type Definitions, and
· #59- Financial Instruments Omnibus
Accordingly, the cumulative effect of the accounting change as of the beginning of the year
has been reported in the Statement of Activities, if applicable.
Accounting Est/mates- Accounting estimates are an integral part of the financial
statements prepared by management and are based on management's current judgments.
Those judgments are normally based on 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 markedly from management's
current judgments. Of the various estimates made by management, we believe the
following had a significant effect on the financial reporting of the Fishers Island Ferry
District:
Management's estimate of the depreciation expense is based on the capitalization
threshold and estimated useful life. 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.
Significant Biff'/cult~es Encountered durin9 the Audit- We encountered no difficulties
in dealing with management relating to the performance of the audit. They were very
helpful every step of the way.
t/ncorr~cted and Cormcted I~isstaternent~- For purposes of this communication,
professional standards require us to accumulate all known and likely misstatements
identified during the audit, other than those that we believe are trivial, and communicate
them to the appropriate level of management. Uncorrected misstatements consisted of only
trivial amounts.
None of the misstatements identified by us as a result of our audit procedures and corrected
by management were material, either individually or in the aggregate, to the financial
statements taken as a whole or applicable opinion units.
· ' Communication with the Board of Commissioners Page 3 of 3
Disagreements with ~lanagement- 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.
Representations Requested from I~anagement- We have requested certain written
representations from management, these are included in the Management Representation
Letter. We can provide a copy to you if you would like.
klanagement'~ Consultations with Other Accountants - In some cases, management
may decide to consult with other accountants about auditing and accounting matters.
Hanagement informed us that, and to our knowledge, there were no consultations with
other accountants regarding auditing and accounting matters.
lO. Other Significant Findings or Issues- In the normal course of our professional
association with the Fishers Island Ferry District, we generally discuss a variety of matters,
including the application of accounting principles and auditing standards, operating and
regulatory conditions affecting the Fishers Island Ferry District, and operational plans and
strategies that may affect the risks of material misstatement. None of the matters discussed
resulted in a condition to our retention as the entity's auditors.
This information is intended solely for the use of the Board of Commissioners and management
of the entity and is not intended to be and should not be used by anyone other than these
specified parties.
August 26, 2011
Fishers Island Ferry District
A Component Unit of
the Town of Southold, New York
Financial Statements
Internal Control Reports
and Compliance Reports
For the Year Ended December 31, 2010
201'
Marien +
Company ;
124 New London Turnpike Norwich, Connecticut 06360
Tel: 860.886.1750 Fax: 860.886.0280
www. MarienCPAs.com
Fishers Island Ferry District
Financial Statements
For the Year Ended December 31, 20:10
Table of Contents
Page No.
Independent Auditors' Report ............................................................................................... 1
Management's Discussion and Analysis .................................................................................. 3
Basic Financial Statements;
Exhibit
Government-Wide Financial Statements:
:~ Statement of Net Assets ........................................................................... 10
2 Statement of Activities ............................................................................. 1!
Fund Financial Statements:
3 Balance Sheet - Governmental Funds ........................................................ 12
4 Statement of Revenues, Expenditures and Changes in Fund Balances -
Governmental Funds ........................................................................ 13
Notes to the Financial Statements ..................................................................... 14
Required Supplementary Information:
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget
and Actual (Budgetary Basis) - General Fund ............................................. 33
Combining and Individual Fund Financial Statements:
Statement
Fund Descriptions ............................................................................................ 35
Special Revenue Funds:
1 Combining Balance Sheet ......................................................................... 36
2 Combining Statement of Revenues, Expenditures and
Changes in Fund Balances ................................................................ 37
Internal Control and Compliance Reports:
Government Auditing Standards Report ..................................................................... 38
Schedule of Findings ................................................................................................ 40
Marien +
!
124 New London Turnpike
Norwich, Connecticut 06360
Tel: 860.886.1750
Fax: 860.886.0280
www. MarienCPAs,com
Board of Commissioners
Fishers Island Ferry District
Fishers Island, New York
Independent Auditors' Report
We have audited the accompanying financial statements of the governmental activities, each
major fund and the aggregate remaining fund information of the Fishers Island Ferry District, a
component unit of the Town of Southold, New York as of and for the year ended
December 31, 2010, which collectively comprise the Fishers Island Ferry District's basic financial
statements as listed in the table of contents. These financial statements are the responsibility
of the Fishers Island Ferry District's management. Our responsibility is to express opinions on
these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditin 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 flee 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 the significant estimates made by
management, as well as evaluating the overall financial statement oresentaUon. We believe
that our audit provides a reasonable basis for our opinions.
Because of the pervasiveness of the internal control and reconciliation ~ssues over the revenues,
we were unable to obtain sufficient audit evidence to satis~ ourselves as to the completeness
of the Ferry Operations revenue.
In our opinion, except for the effects of such adjustments, if any, as might have been
determined to be necessary had we been able opine on the completeness of the Ferry
Operations revenue, the financial statements referred to above present fairly, in all material
respects, the respective financial position of the governmental activities, each major fund, and
the aggregate remaining fund information of the Fishers Island Ferry District as of
December 31, 2010, and the respective changes in financial position thereof for the year then
ended in conformity with accounting principles generally accepted in the United States of
America (GAAP).
Member Firm Of
Firm Exnort,~o e....ll '~.~ ~ ....... aWotldwideA~,~lallonofln~e~.n
Independent Auditors' Report (Continued)
As described in Note 1, the Ferry District has implemented authoritative accounting
pronouncements promulgated by the Governmental Accounting Standards Board (GASB)
Statement 54, Fund Balance Report/n£, Governmental Fund Type De/in/Eons and Statement 59,
F/nanc/a/Instruments Oran/bus. Tn addition, the Ferry District made a number of corrections to
the opening balances in these financial statements. This is also included in Note 1.
Tn accordance with Government Auditing Standards, we have also issued our report dated
August 26, 2011 on our consideration of the Fishers Island Ferry District's internal control over
financial reporting and our tests of its compliance with certain provisions of laws, regulations,
contracts and other 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 Auditinq Standards and should be read in conjunction with this report in
considering the results of our audit.
Accounting principles generally accepted in the United States of America require that
Management's Discussion and Analysis and budgetary comparison information be presented to
supplement the basic financial statements. Such information, although not a part of the basic
financiat statements, is required by the Governmental Accounting Standards Board, who
considers it to be an essential part of financial reporting for placing the basic financial
statements in an appropriate operational, economic, or historical context. We have applied
certain limited procedures to the required supplementary information in accordance with
auditing standards generally accepted in the United States of America, which consisted of
inquiries of management about the methods of preparing the information and comparing the
information for consistency with management's responses to our inquiries, the basic financial
statements, and other knowledge we obtained during our audit of the basic financial
statements. We do not express an opinion or provide any assurance on the information because
the limited procedures do not provide us with evidence sufficient to express an opinion or
provide any assurance.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the Fishers Island Ferry District's basic financial statements. The
combining and individual fund financial statements and supplementary schedules are presented
for purposes of additional analysis and are not a required part of the basic financial statements.
Such combining and individual fund financial statements and supplementary schedules have
been subjected to the auditing procedures applied in the audit of the basic financial statements
and, in our opinion, are fairly presented in all material respects in relation to the basic financial
statements taken as a whole.
August 26, 201!
Fishers Island Ferry District
Management's Discussion and Analysis
December 31~ 2010
Our discussion and analysis of Fishers ]~sland Ferry District's (the Ferry District) financial
performance provides an overview of the Ferry District's financial activities for the fiscal year
ended December 31, 2010. Please read it in conjunction with the Ferry District's financial
statements, which begin with Exhibit 1.
FINANCIAL HIGHLIGHTS
· The Ferry District's net assets increased $40,432 in 20:[0 compared to a decrease in
2009 of $349,740.
· The Ferry District's unrestricted net assets increased from a deficit of $309,278 in 2009
to a positive $8,993 in 20:[0.
· Fund balance, a measure of the Ferry District's short term health, increased by $356,453
in 2010.
· Total ferry fees were back to the 2007 and 2008 levels after a significant drop revenue
in 2009, representing lost revenue of 9.2%.
USING THIS ANNUAL REPORT
This annual report consists of a series of financial statements. The Statement of Net Assets and
the Statement of Activities (Exhibits :[ and 2) provide information about the activities of the
Ferry District as a whole and present a longer~term view of the Ferry District's finances. Fund
financial statements start with Exhibit 3. 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 Ferry District's operations in more detail than the
government-wide statements by providing information about the Ferry District's most significant
funds.
Reporting the Government as a Whole
Our analysis of the Ferry District as a whole begins with Exhibit :[. One of the most important
questions asked about the Ferry District's finances is, "Ts the Ferry District 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 Ferry District as a whole and about its
activities in a way that helps answer this question. These statements include all assets and
liabilities using the a£crua/bas/s of account/n_q, which is similar to the accounting used by most
private-sector companies. 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 Ferry District's net assets and changes in them. You can think
of the Ferry District's net assets--the difference between assets and liabilities--as one way to
measure the Ferry District's financial health, or #nanc/a/pos/t/on. Over time, /ncreases or
decreases in the Ferry District's net assets are one indicator of whether its financ/a/hea/th is
improving or deteriorating. You will need to consider other nonfinancial factors, however, such
as changes in the Ferry District's property tax base and the condition of the Ferry District's
assets, to assess the overa//hea/th of the Ferry District.
3
Fishers :Island Ferry District
Hanagement's Discussion and Analysis
December 31, 2010
In the Statement of Net Assets and the Statement of Activities, the Ferry District shows the
following activity:
· Governmental activities--The Ferry District's basic services are reported here. Ferry fees,
property taxes, state and federal grants, and rental fees finance most of these activities.
Reporting the Ferry District's Host Significant Funds
Our analysis of the Ferry District's major funds begins in the section titled "The Ferry District's
Funds". The fund financial statements begin with Exhibit 3 and provide detailed information
about the most significant funds--not the Ferry District as a whole. Some funds are required to
be established by State law and by bond covenants. However, the Board of Commissioners
establishes other funds to help it control and manage money for particular purposes or to show
that it is meeting legal responsibilities for using certain taxes, grants, and other money.
Governmenta/funds-The Ferry District'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 viewof the Ferry District'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 Ferry District'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 at the bottom of the fund financial statements.
THE FERRY DZSTRZCT AS A WHOLE
The Ferry District's combined net assets increased by $40,432 from a year ago - increasing
from $8,803,772 to $8,844,204. Last year (2009) the net assets decreased by $349,740. Our
analysis below focuses on the net assets (Table 1) and changes in net assets (Table 2) of the
Ferry District.
The $40,432 increase in net assets was after $579,655 of depreciation. Depreciation is a non-
cash expenditure. The cash generated this year was $621,797 ($42,142 plus $579,655). This
was used to pay down the principal on long-term debt in the net amount of $2:[1,882 and to
increase the balance of cash in the bank by $376,197 (included in current and other assets).
Fishers Island Ferry District
Management's Discussion and Analysis
December 31, 2010
Table 1
Change in Net Assets (on Exhibit 1)
Current and other assets
Capital assets
Total assets
Long-term debt outstanding
Other liabilities
Total liabilities
Net assets:
Invested Jn capital assets,
net of related debt
Unrestricted
Total net assets
Change Durin9 Year
2010 Dollars Percent 2009
$ 871,138 $ 272,452 45.51% $ 598,686
11,660,211 (552,839) -4.53% 12,213,050
12,531,349 (280,387) -2.19% 12,811,736
3,373,236 (211,882) -5.91% 3,585,118
313,909 1,436 0.46% 312,473
3,687,145 (210,446) -5.40% 3,897,591
8,835,211 (277,839) -3.05% 9,113,050
8,993 3:[8~271 -:[02.91% (309,278)
8,844,204 $ 40,432 0.46% $ 8,803,772
AS discussed earlier, the Ferry District increased its net assets by $40,432 in 2010 when in 2009
the net assets decreased by $349,740. Below is a comparison of the income statements
between the two years:
Table 2
Change in Net Assets (on Exhibit 2)
Revenues
Program revenues:
Charges for services
Operating grants and contributions
General revenues: Property taxes
Interest and investment earnings
Gain (loss) on disposal of equipment
Miscellaneous revenues
Total revenues
Program expenses
General government
Ferry operations
Airport
Theater
Rental activities
Interest on long-term debt
Total expenses
Increase (decrease) in net assets
Change During Year
2010 Dollars Percent, 2009
$ 2,662,572 $ 333,434 14.32% $ 2,329,138
192,851 109,899 132.49% 82,952
750,098 159,978 27.11% 590,120
1,835 743 68.04% 1,092
(2,846) (2,846) 0.00%
32,709 12~182 59.35% 20,527
3,637,219 613~390 20.29% 3,023~829
156,630 30,362 24.05% 126,268
3,099,484 102,531 3.42% 2,996,953
214,250 111,773 109.07O/o 102,477
11,375 (7,373) -39.330/o 18,748
22,331 13,950 166.45O/o 8,381
92,717 (28~025) -23.21O/o 120~742
3,596,787 223~218 6.62%. 3,373,569
40,432 $ 390,172 111.56% $ (349,740)
Fishers Tsland Ferry District
Management's Discussion and Analysis
December 31, 2010
Management took a number of steps to make sure that the 2010 year would be better than the
2009 year. These included:
· The property tax levy was increased by $160,000 going from $590,000 to $750,000.
This was done to partially protect against another bad year.
Charges for services increased by $333,434. lin 2009 the ferry fees were down $229,052
or 9.2% from 2008. This is believed to be due to lower ridership in the poor economy.
Although the passenger count was still down in 2010, the Ferry district received $99,444
for a one-time asphalt paving proiect (shown in grey in the chart below).
Below is a comparison of the total ferry fees received in each of the last four years. The
increase in revenue in 2010 is due to the one time asphalt paving project (shown in
grey). It is expected to decrease again in 2011.
Comparison of Ferry Revenues
Although operating grants and contributions increased by $109,899, the grant expenditures also
increased. These ar(] included in the program expenses for the airport. This did not have a
significant effect on the net income between the two years.
Governmental Activities
Table 3 presents the cost of each of the Ferry District's governmental programs as well as each
governmental program's net cost (total cost less revenues generated by the activities). The net
cost shows the financial burden that was placed on the Ferry District's taxpayers by each of
these functions.
Fishers Tsland Ferry District
Management's Discussion and Analysis
December 31, 2010
Table 3
Governmental Type Activities
Total Cost Net Cost (Zncome from)
of Services :[ncr, of Services :[ncr.
2010 2009 Decr. 2010 2009 Decr.
Governmental Activities
General Government $ 156,630 $ 126,268 24.05% $ 148,347 $ 126,268 17.49%
Ferry Operations 3,099,484 2,996,953 3.42% 518,049 738,975 -29.90%
Airport 214,250 I02,477 109.07% 21,399 17,825 20~05%
Theater 11,375 18,748 -39.33% 3,177 9,514 -66.61%
RentalActivities 22,331 8,381 :[66.45% (42,325) (5:[,845) -18.36%
Interest on Long-Term Debt 92~717 120~742 -23.2:[% 92~7:[7 I20~742 -23.21%
Totals $ 3r596,787 $ 3~373,569 6.62% $ 741~364 $ 961~479 -22.89%
The most significant changes in the total cost of services are with the airport. You can see that
the total cost increased significantly, but the net cost did not. This is because these costs are
supported by grant revenue. That is not shown when calculating the total cost, but is shown
when calculating the net cost.
The most significant changes in the net cost of services are with the ferry operations. As
discussed earlier, charges for ferry services increased dramatically while the costs were
relatively stable. This caused the net cost of services to drop 29.90% from $738,975 to
$518,049.
THE GOVERNMENT'S FUNDS
While the year showed a $40,432 increase in net assets on Exhibit 2, it showed a much larger
increase in fund balance of $356,453 in the governmental funds as presented in Exhibits 3 and
4. The difference for this is primarily the treatment of long-term debt and capital assets. In
the fund balance principal payments on long-term debt are a reduction in fund balance when
the payments on the debt are made. Debt payments are never a direct reduction in net assets
on the government-wide statements. Likewise, purchases of capital assets are a reduction in
fund balance when the purchase is made. Capital asset purchases are never a direct reduction
in net assets on the government-wide statements.
General Fund Budgetary Highlights
Over the course of the year, the Board of Commissioners can revise the Ferry District budget
with additional appropriations and budget transfers. Additional appropriates increase the total
budget. Transfers do not increase the total budget, but instead pull appropriations from one
department that needs additional funding from other departments that might have excess
funding. Below is a summarized view of the final budget and actual results for the General
Fund:
7
Fishers Island Ferry District
Management's Discussion and Analysis
December 31, 2010
Table 4
General Fund - Budget Summary
Final
Revenues Budget Actual Variance
Ferry $ 2,352,425 $ 2,581,435 $ 229,010
Property Tax 750,000 750,098 98
Property Management 73,000 72,854 (146)
Other 10~638 10~638
Total Revenues 3~175~425 3,415,025 239,600
Expenditures
General Government 271,200 247,784 23,416
Transportation 2,126,150 2,077,592 48,558
Miscellaneous 12,000 11,375 625
Employee Benefits 372,000 342,374 29,626
Debt Service 375~075 374~739 336
Total Expenditures 3~I56~425 3~053~864 102~561
Increase (Decrease)
in Fund Balance
19,000 $ 361~161 $ 342,161
The original budget called for expenditures of $2,853,000. During the year $303,425 of
additional appropriations were made. Of the additional appropriations, $239,425 came from the
additional expected ferry revenues. The budgeted revenues for the ferry fees were $2,705,000
in 2009. These were dropped to $2,075,000 in the original 2010 year because at the time the
budget was prepared, the ridership on the ferry was down approximately 20%. The remaining
$64,000 of additional appropriated would be financed from fund balance.
If the Ferry District's revenue and expenditures were to have hit the budget numbers exactly,
the Ferry District would have increased its fund balance by $19,000. Instead, after establishing
an ad-hoc finance/budget committee to monitor the figures carefully, revenues exceeded the
budget by $239,600. Expenditures were $112,473 less than the budget. As a result, the Ferry
District added $361,161 to its fund balance.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
At the end of this year, the Ferry District had $17,824,107 invested government activity capital
assets before accumulated depreciation. This amount represents a net increase (including
additions and deductions) of $22,946 from last year. More detailed information about the Ferry
District's capital assets is presented in Note 5 to the financial statements.
Fishers :Island Ferry District
Management's Discussion and Analysis
December 31, 2010
Debt
At year end, the Ferry District had $2,825,000 in bonds outstanding. This is a decrease of
$275,000 from last year. The Ferry District issues bonds through the Town of Southold.
Southold's general obligation bond rating continues to carry an Aa2 rating. More detailed
information about the Ferry District's long-term liabilities is presented in Note 7 to the financial
statements.
ECONOMI'C FACTORS AND NEXT YEAR'S BUDGET
The Ferry District's elected and appointed officials considered many factors when setting the
fiscal-year 2011 budget and rates including trying to keep the taxes stable, anticipating an
accurate level of ridership, and keeping expenditures in line.
CONTACTI'NG THE FERRY DI'STRI'CT'S F~'NANCI'AL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, investors and
creditors with a general overview of the Ferry District's finances and to show the Ferry District's
accountability for the money it receives. If you have questions about this report or need
additional financial information, contact:
Board of Commissioners
Fishers Island Ferry District
P.O. Drawer H
Fishers ]'sland, NY 06390
Basic Financial Statements
Fishers Island Ferry District
Statement of Net Assets
December 31, 2010
Assets
Cash and cash equivalents
Receivables, net of allowance for collection losses
Prepaid expenses
Capital assets, net of accumulated depreciation:
Nondepreciable
Depreciable, net of accumulated depredation
Total assets
Liabilities
Accounts payable
Accrued wages and benefits
Deferred revenue
Noncurrent liabilities:
Due within one year
Due in more than one year
Total liabilities
Net Assets
fnvested in capital assets, net of related debt
Unrestricted net assets
Total net assets
The notes to the financial statements are an integral part of this statement.
10
Governmental
Activities
$ 624,683
216,486
29,969
41,717
11,618,494
12,531,349
132,298
43,257
138,354
1,025,953
2,347,283
3,687,145
8,835,211
8,993
$ 8,844,204
Exhibit 1
Fishers Island Ferry District
Statement of Activities
For the Year Ended December 31, 2010
Exhibit 2
Functions/Programs
Governmental activities:
General government
Ferry operations
Airport
Theater
Rental activities
Interest on long-term debt
Total primary government
Expenses
Program Specific Revenues
Charges
for Grants and Contributions
Services Operatin9 Capital
Net(Expense)
Revenue
Tota I
Government
Activities
$ 156,630 $ 8,283 $ $
3,099,484 2,581,435
214,250 192,851
11,375 8,198
22,331 64,656
92,717
(148,347)
(518,049)
(21,399)
(3,177)
42,325
(92,717)
3,596,787 2,662,572 192,851
(741,364)
General revenues:
Property taxes, payments in lieu of taxes, interest and liens
Interest and investment earnings
Gain (loss) on disposal of equipment
Miscellaneous
Total general revenues
Changes in net assets
Net assets, beginning of the year
Net assets, end of the year
750,098
1,835
(2,846)
32,709
781,796
40,432
8,803,772
$ 8,844,2O4
The notes to the financial statements are an integral part of this statement.
Assets
Cash and cash equivalents
Receivables
Due from other governmental funds
Prepaid expenditures
Total assets
Liabilities and fund balance
Liabilities
Accounts payable
Accrued payroll
Deferred revenue
Due to other governmental funds
Total liabilities
Fund balance
Nonspendable
Assigned
Unassigned
Total fund balance
Total liabilities and fund balance
Fishers Island Ferry District
Balance Sheet
Governmental Funds
December 31, 2010
Exhibit 3
Other Total
General Governmental Governmental
Fund Funds Funds
$ 615,153 $ 9,530 $ 624,683
211,728 4,758 216,486
5,304 5,304
29,969 29,969
$ 862,154 $ 14,288 $ 876,442
125,346 $ 6,952 $ 132,298
43,257 43,257
163,285 163,285
5~304 5,304
331,888 12,256 344,144
29,969 29,969
9,530 9,530
500,297 (7,498) 492,799
530,266 2,032 5321298
$ 862~154 $ 14~288
Reconciliation of net assets to fund balances - total governmental funds:
Less: Long-term liabilities not due and payable in current period:
Bonds, notes, capital leases payable and unamortized premiums on bond costs
Compensated absences and special termination benefits
Other post-employment benefits
Accrued interest payable
Plus:
Deferred revenue not available to pay for current period expenditures
Net capital assets used in governmental activities are not financial resources and,
therefore, are not reported in the funds
Net intangible assets used in governmental activities are not financial resources and,
recorded as deferred revenue in the funds
Net assets reported on the government-wide financial statements (Exhibit
The notes to the financial statements are an integral ~rt of this statement.
(2,825,000)
(216,,209)
(302,,137)
(29,,890)
24,,931
11,660,,211
8,844,204
Exhibit 4
Fishers Tsland Ferry District
Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds
For the Year Ended December 31, 2010
Revenues
Ferry revenues
Property taxes
Property management
Grants
Other
Expenditures
Current expenditures:
General government
Transportation
Hiscellaneous
Employee Benefits
Capital outlay
Debt service
General
Fund
Other Total
Governmental Governmental
Funds Funds
2,581,435
750,098
72,854
10~638
3,415~025
$ $ 2,881,435
750,098
72,854
192,851 192,851
81283 181921
201,134 31616,159
247,784 247,784
1,797,225 1,797,225
11,375 5,493 16,868
342,374 342,374
280,367 200,349 480,716
1,124,739 11124f739
3,8031864 205,842 4,009,706
Excess (deficiency) ofrevenues over expenditures
Other financing sources (uses)
Proceeds from Iong-termdebt
Excess (deficiency) of revenues over expenditures
and other financing sources (uses)
Fund balance, beginning of the year
Fund balance, end of the year
(388,839) (4,708) (393,547)
750,000 750~000
750,000 750,000
361,161 (4,708) 356,453
169,105 6,740 175,845
530,266 $ 2,032 $ 532,298
Reconciliation of the statement of revenues, expenditures and changes in fund balance (above) to
the statement of activities (Exhibit 2)
Net change in fund balances - total governmental funds (above)
Transactions involving the treatment of capital outlays:
Plus: Capital outlays treated as expenditures here, but capitalized on Exhibit 2
Less: Depreciation/Amortization expense in Exhibit 2, but not in the fund statements
Net effects of various transactions involving fixed assets:
Plus: Gain or (Loss) on disposal of fixed assets not reported in this statement
Less: Gross proceeds from the disposal of fixed assets not included in Exhibit 2
Transactions involving the treatment of long-term debt:
Less: Long-term debt issued or incurred:
Issuance of general obligation bonds
Plus: Principal repayments:
General obligation bonds
Changes in other items not requiring the use of current financial resources:
Compensated absences benefits payable
Accrued interest payable
Reduction in judgment payable
Post-employment benefits
Revenue in the Statement of Activities (Exhibit 2) that is deferred in this statement
Insurance reimbursement
Changes in net assets of governmental activities (Exhibit 2)
The notes to the financial statement are an integral part of this statement,
13
356,453
30,688
(579,655)
(2,846)
(1,025)
(750,000)
1,025,000
(11,554)
7,026
47,664
(106,250)
24,931
40,432
Fishers Island Ferry District
Notes to the Financial Statements
For the Year Ended December 31, 2010
Note ! - Summary of Significant Accounting Policies
The Fishers i'sland Ferry District was created in 1947 by a special act of legislation within the
State of New York, known as the Ferry District Enabling Act. As a "district", much like a school
district or fire district, the ferry is allowed to levy and collect taxes in addition to collecting fares,
in order to offset its expenses. The tax levy is assigned to the property owners of Fishers Island
and the collections are kept separate from Southold Town funds. Although the Ferry District
income and expenses are handled separately from the town's general fund, the Southold Town
Supervisor is the fiscal officer of the Ferry District and along with the Town Board, reviews,
approves and executes all of the Ferry District's financial obligations, including payroll.
The Ferry District is controlled by a five member Board of Commissioners. Each Commissioner
is elected independently from the populace of Fishers Island and serves a five year term. A
chairman is elected on an annual basis. ~[t is the duty of the Commission to oversee the
operational, fiscal and administrative matters of the District. As the governing body of the
District, all final decisions are resolved by the Board. The r4anager is responsible for the
administrative and fiscal matters of the District, including personnel associated with those
matters. The Marine Operations Administrator and the Marine Operations Supervisor are
responsible for the operation of the ferry system and the personnel associated with that
operation.
A. Reporting entity
Accounting principles generally accepted in the United States of America require that the
reporting entity include (1) the primary government (or stand-alone entity), (2) organizations
for which the primary government (or stand-alone entity) is financially accountable and (3)
other organizations for which the nature and significance of their relationship with the primary
government are such that exclusion would cause the reporting entity's financial statements to
be misleading or incomplete. The criterion, provided by the Government Accounting Standards
Board (GASB), has been considered and there are no agencies or entities which should be
presented with this government, although, the Fishers Island Ferry District is a component unit
of the Town of Southold, New York.
B. Government-wide and fund financial statements
The _qovemrnent-w/de #nanc/a/statements (Exhibits 1 and 2) report information on all of the
non-fiduciary activities of the primary government. For the most part, the effect of interfund
activity has been removed from these statements. Fiduciary funds are excluded from the
government-wide financial statements. Govemmenta/act/v/t/es, which normally are supported
by taxes and intergovernmental revenues, are reported separately from bus/ness-type act/v/t/es
(if any), which rely to a significant extend on fees and charges for support.
14
Fishers :Island Ferry District
Notes to the Financial Statements
For the Year Ended December 31, 2010
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment are offset by program revenues. D/rect expenses are those that are clearly
identifiable with a specific function or segment. When an expense is incurred for purposes for
which both restricted and unrestricted resources are available, the Ferry District's policy is to
use its restricted resources first. Program revenues include 1) charges to customers or
applicants who purchase, use, or directly benefit from goods, services, or privileges provided by
a given function or segment and 2) grants and contributions that are restricted to meeting the
operational or capital requirements of a particular function or segment. Taxes and other items
not properly included among program revenues are reported instead as genera/revenues.
Separate fund #nanc/a/statements are provided for governmental funds and fiduciary funds (if
any) (Exhibits 3, 4 and 5, if applicable). Governmenta/act/v/t/es, activities which normally are
supported by taxes and intergovernmental revenues, are reported in the governmental funds.
Major individual governmental funds are reported as separate columns in the fund financial
statements. Fiduciary funds are used to report assets held in a trustee or agency capacity for
others and therefore cannot be used to support the governments own programs.
C. Measurement focus, accounting basis~ and financial statement presentation
The government-wide financial statements are reported using the economic resources
measurement focus and the accrua/basis of accounting, as are the fiduciary fund financial
statements. Revenues are recorded when earned and expenses are recorded when a liability is
incurred, regardless of the timing of related cash flows. Property taxes are recognized as
revenues in the year for which they are levied. Grants and similar items are recognized as
revenue as soon as all eligibility requirements imposed by the provider have been met.
Governmental fund financial statements are reported using the current financ/a/ resources
measurement focus and the modified accrua/ basis of accounting. Revenues are recognized as
soon as they are both measurable and available. Revenues are considered to be ava//ab/e when
they are collectible within the current period or soon enough thereafter to pay liabilities of the
current period. For this purpose, the Ferry District considers revenues to be available if they are
collected within 60 days of the end of the current fiscal period.
Property taxes, grant income, ferry fees, rent, and interest associated with the current fiscal
period are all considered to be susceptible to accrual and so have been recognized as revenues
of the current fiscal period. All other revenue items are considered to be measurable and
available only when cash is received by the Ferry District.
Expenditures generally are recorded when a liability is incurred, as under accrual accounting.
However, debt service expenditures, as well as expenditures related to compensated absences
and claims and judgments, are recorded only when payment is due.
15
Fishers Island Ferry District
Notes to the Financial Statements
For the Year Ended December 31, 2010
The Ferry District reports the following major governmental funds:
The Genera/Fund is the Ferry District's primary operating fund. It accounts for all
financial resources of the general government, except those required to be accounted for
in another fund,
Private-sector standards of accounting and financial reporting issued prior to December 1, 1989,
generally are followed in the government-wide financial statements to the extent that those
standards do not conflict with or contradict guidance of the Governmental Accounting Standards
Board. Governments also have the option of following subsequent private-sector guidance for
their business-type activities and enterprise funds, subject to this same limitation. The Ferry
District has elected not to follow subsequent private-sector guidance.
D, Assets, liabilities, and net assets
The Ferry District's cash and cash equivalents are considered to be cash on hand, demand
deposits, and short-term investments with original maturities of three months or less from
the date of acquisition. Investments for the Ferry District are generally reported at fair
value. Nonparticipating, interest-earning investment contracts, if any, are generally reported
at cost plus accrued earnings.
Custodial Credit Risk- Custodial credit risk is the risk that, in the event of a bank failure, the
Ferry District's deposits may not be returned to it. The Ferry District's policy for custodial
credit risk is to invest in obligations allowable under the New York General Municipal Law
Article 10. In general this includes deposits in allowable banks.
Credit Risk- Credit risk is the risk that an issuer or other counterparty will not fulfill its
specific obligation even without the entity's complete failure. The Ferry District does not
have a formal credit risk policy.
lnterestRate Risk -Interest rate risk is the risk that the government will incur losses in fair
value caused by changing interest rates. The Ferry District does not have a formal
investment policy that limits investment maturities as a means of managing its exposure to
fair value losses arising from changing interest rates.
Concentration of Credit Risk - Concentration of credit risk is the risk attributed to the
magnitude of a government's investments in a single issuer. The Ferry District does not
have a formal credit risk policy.
2.1 Receivables
Property taxes are assessed on property values as of July 1st. The tax leW is divided into
two billings - the following December 1~ and Hay 31~. This is used to finance the calendar
year,
16
Fishers :Island Ferry District
Notes to the Financial Statements
For the Year Ended December 31, 2010
The billings are considered due on those dates, however, the actual due date for each
respective billing is January 10th and May 31st. After this, the bill becomes delinquent and
the applicable property is subject to lien, penalties and interest.
At May 31st, the county pays any unpaid taxes to the tax receiver and continues the
collections process in the individual accounts.
Taxes collected in advance of the calendar year that they are levied to finance are
considered unearned until that year starts. They are reported on the balance sheet as
deferred revenue.
All receivables are shown net of an allowance for uncollectibles. The allowance is calculated
using a formula based on prior experience.
Activity between funds
Activity between funds that are representative of lending/borrowing arrangements
outstanding at the end of the fiscal year are referred to as "due to/from other funds" (i.e.
the current portion of interfund loans) or "advances to/from other funds" (i.e. the non-
current portion of interfund loans). All other outstanding balances between funds are
reported as "due to/from other funds".
Advances between funds, as reported in the fund financial statements, are offset by a fund
balance reserve account in appropriate governmental funds to indicate that they are not
available for appropriation and are not expendable financial resources.
4) ]nventories and prepaid items
All inventories are valued at cost using the first-in/first-out (FYFO) method. Inventories of
governmental funds are recorded as expenditures when consumed rather than when
purchased.
Certain payments to vendors reflect costs applicable to future accounting periods and are
recorded as prepaid items in both government-wide and fund financial statements.
5) Capital assets
Capital assets, which include property, plant, equipment, and infrastructure assets (docks,
wharfs, parking lots and similar items), are reported in the governmental activities columns
in the government-wide financial statements. Capital assets are defined by the Ferry District
as assets with an initial, individual cost of more than the capitalization threshold for that
asset type and an estimated useful life in excess of two years. Such assets are recorded at
historical cost or estimated historical cost if purchased or constructed. Donated capital
assets are recorded at estimated fair market value at the date of donation.
17
Fishers Island Ferry District
Notes to the Financial Statements
For the Year Ended December 31, 2010
The costs of normal maintenance and repairs that do not add to the value of the asset or
materially extend assets lives are not capitalized. Major outlays for capital assets and
improvements are capitalized as projects are constructed.
Land is considered inexhaustible and, therefore, not depreciated. Property, plant, and
equipment of the Ferry District is depreciated using the straight line method over the
following estimated useful lives:
Capitalization
Assets Years Threshold
Land N/A $ 5,000
Buildings and improvements 20 to 40 $ 5,000
Ferries 10 to 40 $ 5,000
Vehicles 10 $ 5,000
Other equipment 5 to 10 $ 5,000
Infrastructure 20 $ 5,000
Compensated absences
Tt is the Ferry District's policy to permit employees to accumulate earned but unused
vacation and sick pay benefits. There is a liability for unpaid accumulated sick leave since
the Ferry District has a policy to pay any amounts when employees separate from service
with the Ferry District. All vacation pay is accrued when incurred in the government-wide
financial statements. A liability for these amounts is reported in governmental funds only if
they have matured, for example, as a result of employee resignations and retirements.
Long-term obligations
In the government-wide financial statements long-term debt and other long-term obligations
are reported as liabilities in the applicable governmental activities statement of net assets.
Bond premiums and discounts, as well as issuance costs, are deferred and amortized over
the life of the bonds using the effective interest method. Bonds payable are reported net of
the applicable bond premium or discount. Bond issuance costs are reported as deferred
charges and amortized over the term of the related debt.
In the fund financial statements, governmental fund types recognize bond premiums and
discounts, as well as bond issuance costs, during the current period. The face amount of
debt issued is reported as other financing sources. Premiums received on debt issuances
are reported as other financing sources while discounts on debt issuances are reported as
other financing uses. l'ssuance costs, whether or not withheld from the actual debt
proceeds received, are reported as debt service expenditures.
18
Fishers Tsland Ferry District
Notes to the Financial Statements
For the Year Ended December 31, 2010
Fund equity
Fund equity for government-wide statements (Exhibit i and 2) is called Net Assets and is
displayed in three components:
Invested in Capital Assets, Net of Related Debt - this consists of capital assets,
indudin9 restr/cted capital assets, net of accumulated depreciation and reduced by the
outstanding balances of any bonds, mortgages, notes, or other borrowings that are
attributable to the acquisition, construction, or improvement of those assets.
Restricted Net Assets - these are reported when constraints placed on net asset use
are either (a) externally imposed by creditors (such as through debt covenants),
grantors, contributors, or laws or regulations of other governments or, (b) imposed by
law through constitutional provisions or enabling legislation.
Unrestricted Net Assets - is the residual classification of Net Assets.
Fund equity for governmental funds (Exhibit 3 and 4) is called Fund Balance and is reported
in classifications that comprise a hierarchy based primarily on the extent to which the
government is bound to honor constraints on the specific purposes for which amounts in
those funds can be spent:
Nonspendable Fund Balance - includes amounts that cannot be spent because they
are either (a) not in spendable form or (b) legally or contractually required to be
maintained intact.
Restricted Fund Balance - includes amounts that have constraints placed on the use
of resources. These constraints must be either (a) externally imposed by creditors (such
as through debt covenants), grantors, contributors, or laws or regulations of other
governments; or (b) imposed by law through constitutional provisions or enabling
legislation.
Committed Fund Balance - includes amounts that can only be used for specific
purposes pursuant to constraints imposed by formal action of the government's highest
level of decision-making authority and cannot be used for any other purpose unless the
government removes or changes the specified use by taking the same type of action it
employed to previously commit those amounts.
Assigned Fund Balance - are amounts that are constrained by the government's
/ntentto be used for specific purposes, but are neither restricted nor committed. ]'ntent
should be expressed by (a) the governing body itself or (b) a body (a budget or finance
committee, for example) or official to which the governing body has delegated the
authority to assign amounts to be used for specific purposes.
19
Fishers Tsland Ferry District
Notes to the Financial Statements
For the Year Ended December 31, 2010
Unassigned Fund Balance - unassigned fund balance is the residual classification for
the general fund. This classification represents fund balance that has not been assigned
to other funds and that has not been restricted, committed, or assigned to specific
purposes within the general fund.
E. Estimates
The preparation of financial statements in conformity with generally accepted accounting
principles (GAAP) requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
F. Subsequent Events
Subsequent events have been evaluated through the date of this report, August 26, 2011. This
date represents the date the financial statements were available to be issued.
G. Changes in Financial Statements
Correction of Errors - The Ferry District made a number of corrections to its previously
issued financial statements as summarized below:
FUND BALANCE AGENCY
General Special Recreation FUND NET
Fund Aid Fund Assets ASSETS
Corrected Beginning Balance
Balance per Prior Audit Report $ 205,084 $ (850,000) Omitted $ 28,762 $ 11,622,491
Corrections to Application of GAAP:
Reclassify BANS to Long Term Debt 850,000
Record Recreation Fund 6,740 6,740
Reclassify District Cash to General Fund 28,762 (28,762) 28,762
Remove improvements not owned by District (4,499,366)
Remove related accumulated depreciation 1,848,516
To record OPEB In the amount on actuaries report (98,787)
Corrections to Balances Reported:
Correct balance of accrued interest payable (8,081)
To correct balance in Automated Teller Machine (6,340) (6,340)
To report rent receivable 636 635
TO remove fees posted to ATM machine in error (273) (273)
Record balance due on Fish ladder (30,000) (30,000)
To correct the balance of compensated absences (31,758)
Remove one sided due from other fund ent~ (28,763) (28~767)
$ 169,105 $ $ 6,740 $ $ 8~803,772
2O
Fishers ]Island Ferry District
Notes to the Financial Statements
For the Year Ended December 31, 2010
New Statements Tmplemented
Accounting Standards Board (GASB):
The Ferry District implemented Governmental
Statement 54 - Fund Ba/ance Reporting and Governmenta/ Fund Type Definitions-
This statement provides clearer fund balance classifications that can be more
consistently applied. This resulted in no adjustment to beginning equity.
Statement 59 - F/nanc/a/ ,rnstrument$ Oran~bus- This statement updates and
improves existing standards regarding financial reporting and disclosure
requirements of certain financial instruments and external investment pools. This
resulted in no adjustments to beginning equity.
Note 2 - Budgeting
A, Budget Basis
A formal, legally approved, annual budget is adopted for the General Fund only. This budget is
adopted on a basis consistent with Generally Accepted Accounting Principles (modified accrual
basis) with the following exception:
Long-Term Debt and Lease Financing - Revenues and expenditures from refunding
or renewing long-term debt or issuing lease financing are included in the budget as the
net revenues or expenditures expected.
B. Budget Calendar
The Board of Commissioners prepares detailed estimates of the revenues and expenditures for
the next calendar. These estimates are reviewed at a public hearing held on or about August
20th each year. After the public hearing, the Board of Commissioners meets to increase or
decrease the annual estimates and prepares final budget estimates.
The Fishers fsland Ferry District's Board of Commissioners submits its budget estimates for the
subsequent calendar year to the Town of Southold, New York's Supervisor on or before
September 20th. The Town Supervisor adds estimates of debt service and incorporates the
Fishers Island Ferry District budget into his Tentative Budget and files this with the Town of
Southold, New York's Town Clerk no later than September 30th. The Town Clerk presents the
Tentative Budget to the Town of Southold, New York's Town Board on or before October 5th.
The Town Board makes revisions and prepares a Preliminary Budget.
The Town Board holds a public hearing by the Thursday following the November election. The
Town Board then considers the estimates and any other matters brought to their attention at a
public meeting held subsequent to the public hearing and prior to the budget adoption. The
Town Board adopts the budget no later than November 20th.
21
Fishers Island Ferry District
Notes to the Financial Statements
For the Year Ended December 31, 2010
C. Budget Control
As a rule, no expenditure may be made, or any liability incurred, unless an amount has been
appropriated for the particular purpose. If, during the year, the Board of Commissioners or
Town Board determines that sufficient revenues will not be generated to finance the total
appropriations provided for in the original budget, the Board of Commissioners (subject to the
approval of the Town Board) generally may reduce appropriations to prevent making
expenditures of money available. An appropriation may not be reduced below the minimum
amount required by law, nor generally be reduced by more than the unexpended balance less
the outstanding and unpaid claims chargeable to it.
The Fishers Island Ferry District (subject to the approval of the Town Board) may make
supplemental appropriations These may be provided by transfer from the unexpended balance
of an appropriation, from the appropriation for contingencies within a fund (if any), or by
borrowing pursuant to the Local Finance Law. The expected unreserved fund balance at the
end of the current year may be utilized for this purpose.
During the year $64,000 of additional appropriations were made.
Note 3 - Deposits and Investments
A. Cash and Cash Equivalents
At the end of the year, the Ferry District had $626,393 in cash and cash equivalents.
B. Custodial Credit Risk on Deposits
As of December 31, 2010, the carrying amount of the Ferry District's deposits with financial
institutions was $624,683. The bank balance of the deposits was $609,869 and was exposed to
custodial credit risk as follows:
Covered by Federal Depository Insurance
Uninsured, but collateralized
Total Deposits
$ 263,898
345t971
_$ 609,869
22
Fishers Island Ferry District
Notes to the Financial Statements
For the Year Ended December 31, 2010
Note 4 - Receivables
Receivables as of year end for the Ferry District's individual major funds and nonmajor in the
aggregate, including the applicable allowances for uncollectible accounts, are as follows:
General Special
Fund Aid Fund
Next year's property taxes held by Southold $ ::[38,354
Ferry fees 44,496
Insurance reimbursement 24,931
Fuel tax reimbursement 14,239
Rent 832
Grant revenues 4,7,58
Gross receivables 222,852 4,758
Less: allowance for uncollectibles (11,124)
Net total receivables $ 211,728 $ 4,758
Governmental funds report deferred revenue in connection with receivables for revenues that
are not considered to be available to liquidate liabilities of the current period. Governmental
funds also defer revenue recognition in connection with resources that have been received, but
not yet earned. At the end of the current fiscal year, the various components of deferred
revenue and unearned revenue reported in the governmental funds were as follows:
Unavailable Unearned
Taxes paid in advance $ $ 138,354
Insurance reimbursement not received in 60 days 24~931
Total deferred/unearned revenue for governmental funds $ 24,93! $ 138~354
Note 5 - Capital Assets
Capital asset activity for the year was as follows:
Capital assets not being depreciated;
Land
Capital assets being depreciated:
Buildings and improvements
Ferries, machinery and equipment
Infrastructure
Less: Accumulated depreciation:
Capital assets, net
Beginning Ending
Balance Increases Decreases Balance
$ 41,717 $ $ $ 41,717
12,583,229 12,583,229
2,871,692 30,688 (7,742) 2,894,638
2,304,523 2,304,823
:17,759,444 30,688 (7,742) 17,782,390
(5,588,112) (579,655) 3,871 (6,163,896)
12,171,332 (548,967) (3,871) 11,618,494
$ 12,213,049 $ (548,967) $ (3~871) $ 11,660,211
23
Fishers :Island Ferry District
Notes to the Financial Statements
For the Year Ended December 31, 2010
Depreciation expense in the amount of $579,655 was charged to Ferry Operations,
Note 6 - Interfund Activities
Due to/from other funds
At year end, the Special Aid Fund owed the General Fund $5,304 in temporary borrowings
between funds. These are either expected to be paid off within one year or have no agreed
payment terms.
Note 7 - Long-Term Debt
A. Changes in long-term liabilities
Long-term liability activity for the year December 31, 2010, was as follows:
General Obligation Bonds:
Ferry Terminal/Wharf Bonds
Ferry Terminal/Wharf BANs
Total bonds payable 3,100,000
Accrued Interest on Bonds 36,912
Other Post Employment Benefits 195,887
Compensated Absences 204,655
3 ud gm ent 47,664
Opening Ending Due Within
Balance Additions Reductions Balance One Year
$2,250,000 $ $ (175,000)$2,075,000 $ 175,000
850,000 750,000 (850,000) 750,000 750,000
750,000 (1,025,000) 2,825,000
99,780 (106,802) 29,890
123,261 (17,011) 302,137
11,554 216,209
(47,664)
$ 3,585,118 $ 984,595 $ (1,196,477) $ 3,373,236
925,000
29,890
17,011
54,052
$ 1,025,953
B. General Obligation Bonds
The Town of Southold, on behalf of the Ferry District, issues general obligation bonds to provide
funds for the acquisition and construction of major capital facilities. General obligation bonds
are direct obligations and pledge the full faith and credit of the Town of Southold. These bonds
generally are issued as 20 year serial bonds with equal amounts of principal maturing each year.
Payments on these bonds have been made out of the General Fund and are all charged to
expenditures.
Bond anticipation notes have been, or are expected to be, rewritten when due at a market rate
of interest. The bonds outstanding at year end were rewritten, in the amount of $650,000 at an
annual interest rate of .85%, on June 3, 2011.
24
Fishers Island Ferry District
Notes to the Financial Statements
For the Year Ended December 31, 2010
General obligation bonds and bond anticipation notes currently outstanding are as follows:
Original Interest Year End
Purpose Amount Matures in Rates Balance
New London Ferry Terminal/Wharf $ 3,000,000 2021 3.75-4.00% $ 2,075,000
New London Ferry Terminal/Wharf $ 750,000 2011 0.97% $ 750,000
$ 2,825,000
Annual debt service requirements to maturity for general obligation bonds and bond anticipation
notes are as shown in the following schedule.
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Total
Principal
$ 925,000
175000
175 000
175 000
175 000
200 000
200 000
200 000
200 000
200 000
200tO00
$ 2,825,000
Interest
$ 85,788
71,950
65,388
58,825
52,263
45,700
38,200
30,700
23,200
15,600
8,000
$ 495,614
C. Other Post Employment Benefits
Other post employment benefits (OPEB) are generally insurance benefits earned by employees
for service to the Fishers Island Ferry District, but paid after the employee leave or retires from
the Ferry District. These are discussed in Note 10.
D, Compensated Absences
Compensated absences includes vacation and compensatory time earned by employees and
carried over to the next calendar year. A maximum of 8 days is allowed to be carried into the
next calendar year. Compensated absences also includes sick time that may be paid in cash
when an employee leaves. Employees hired prior to May 1, 2009 are eligible for payment on up
to 120 days of accumulated sick time. Employees hired after May 1, 2009 are eligible for
payment on up to 40 days of accumulated sick time. Each of these benefits is describe more
fully in the Ferry District's Employee Benefit Package.
25
Fishers Zsland Ferry District
Notes to the Financial Statements
For the Year Ended December 31, 2010
E. Claims and .ludgments
Tn 2007, the Fishers Island Ferry District settled a claim on a civil suit by making annual
payments for four years. The final payment, in the amount of $47,664.44, was paid on March
:~, 2010. The claim was dismissed with prejudice in April 2010 after full payment.
F. Debt Limitations
The New York State Constitution sets debt limits for most classes of local government, and
establishes numerous other conditions related to the issuance and repayment of debt. Tn
addition, the Local Finance Law (LFL) regulates the issuance of debt by local governments.
Under the LFL, a local government, including the Fishers Island Ferry District, must authorize
debt through a resolution of its local board. The Town of Southold's Town Board must also
authorize debt issued on behalf of the Fishers Island Ferry District though a resolution of the
Town Board, which is subject to permissive referendum at the District level. Furthermore, a
local government must comply with certain regulations and statutory provisions for the private
or public sale of its debt. Other provisions set limits on the use of bond proceeds, refunding
protocols, and the maximum number of years that certain projects, goods or services can be
debt-financed based upon probable useful life.
Note 8 - Equity
A. Nonspendable Fund Balance
At year end, the General Fund had $29,969 in nonspendable fund balance. This was the
balance of prepaid expenses that was not in spendable form.
B. Assigned Fund Balance
At year end, the Recreation Fund had $9,530 in assigned fund balance. This was monies that
are earmarked for employee health and welfare needs.
C. Deficit Fund Balances
The Special Aid fund had a deficit fund balance of $7,498.
Note 9 - Employee Retirement Systems And Pension Plan
A. Plan Description
The Fishers l'sland Ferry District, a component unit of the Town of Southold, participates in the
New York Employees' Retirement System, and the Public Employee's Group Life Insurance Plan
(Systems). These are cost-sharing multiple-employer retirement systems. The Systems provide
retirement benefits as well as death and disability benefits.
26
Fishers Tsland Ferry District
Notes to the Financial Statements
For the Year Ended December 31, 2010
The New York State Retirement and Social Security Law (NYSRSSL) govern obligations of
employers to contribute benefits to employees. As set forth in the NYSRSSL, the Comptroller of
the State of New York serves as sole trustee and administrative head of the Systems. The
Comptroller shall adopt and may amend rules and regulations for the administration and
transactions of the business of the Systems and for the custody and control of their funds.
The Systems issue a publicly available financial report that includes financial statements and
required supplementary information. That report may be obtained by writing the New York
State and Local Retirement System, Gov. Alfred E. Smith State Office Building, Albany, NY
12244.
B. Funding Policy
The Systems are noncontributory except for employees who joined the New York State and
Local Employees' Retirement System after July 27, 1976, contribute 3% of their salary. Under
the authority of the NYSRSSL, the Comptroller shall certify annually the rates expressed as
proportions of payroll of members which shall be used in computing the contributions required
to be made by employers to the pension accumulation fund.
The Fishers Island Ferry District is not a separate employer under this plan. The Ferry District is
included in the plan as a part of the Town of Southold. There are no separate financial statistics
available for the Ferry District. The Ferry District contributes at an actuarially determined rate.
The District's contributions made to the Systems were equal to 100% of the contributions
required for each year. The district's portion of the contribution was $108,814 in 2010.
Since 1989, the Systems' billings have been based on Chapter 62 of the Laws of 1989 of the
State of New York. This legislation requires participating employers to make payments on a
current basis, while amortizing existing unpaid amounts relating to the Systems' fiscal years
ending March 31, 1988, and 1989, (which otherwise were to have been paid on June 30, 1989,
and 1990, respectively) over a 17-year period, with an 8.75% interest factor added. Local
governments were given the option to prepay this liability. The Town elected to make the full
payment on December 15, 1993, by issuing serial bonds to replace this debt.
Note 10 - Other Post Employment Benefits (OPEB)
A. Plan Description
The Fishers Island Ferry District Other Post Employment Benefit Program is a single-
employer defined benefit plan administered by the Fishers Island Ferry District. The
benefits have been established by the Board of Commissioners. The plan does not issue a
separate financial statement and is unfunded.
27
Fishers Island Ferry District
Notes to the Financial Statements
For the Year Ended December 31, 2010
Eligibility
Cost Sharing
The district provides medical, prescription drug and behavioral health
to retirees and their covered dependents. The District pays a portion
of the cost for retirees, disabled retirees, spouses and dependents.
All active employees who retire or are disabled directly from the
District and meet the eligibility criteria will participate. Eligibility
criteria is age 55 and 10 years of service with the District (20 years if
hired after 3uly 1, 2003.)
Retirees contribute 10% of the premiums
B. Actuarial Assumptions and Methods
Latest Actuarial Date
Actuarial Cost Method
Discount Rate
Medical inflation
Amortization Method
Remaining amortization
Healthy Mortality
Turnover
Retirement
Disability
January 1, 2010
Projected Unit Credit
4.25%
Initial rate of 10% in 2009 grading down to an ultimate
inflation rate of 5% after 2015.
Level percentage of projected payroll
27 years, closed
Based on male and female pre-retirement mortality' rates
provided.
Based on male and female rates for age and years of service
provided.
Based on male and female rates for age and years of service
provided.
Not assumed.
C, Schedule of Funding Progress
There is no requirement for funding and the plan has not been funded. The District has not
established a formal funding plan or a trust at this time.
Below is a schedule of funding progress. (Data in the table below is only presented since the
year of transition.)
Actuarial Actuarial Actuarial Unfunded Funded Covered UAL as a %
Valuation Value of Accrued Accrued Liability Ratio Payroll of Covered
Date Assets (a) Liability (b) (UAL) (b-a) (a/b) (c) Payroll ((b-a)/c)
1/1/2010 ~ $ 1,278,581 $ 1,278,581
0.00% $ 1,023,395 124.94%
28
1/1/2009 ~ $ 1,146,345 $ 1,146,345 0.00% $ 974,567 117.63%
Fishers Island Ferry District
Notes to the Financial Statements
For the Year Ended December 31, 2010
D. Schedule of Employer Contributions
The schedule of employer contributions is as follows. (Data in the table below is only
presented since the year of transition):
Annual Actual
Year Ended Required Contributions Percentage
December 31 Contributions Made Contributed
2010 $126,611 $ 0%
2009 $115,897 $ 0%
2008 $112,446 $ 0%
E. Annual Required Contribution (ARC)
The Annual Required Contribution (ARC) for the OPEB program consists of two pieces:
Past Service Cost (a catch-up accrual to amortize the Unfunded Accrued Liability). The
amortization period is 30 years starting on January 1, 2009. The ARC is assumed to be paid
at the beginning of the fiscal year. Interest is also calculated on the Unfunded Accrued
Liability and added to the Annual Required Contribution.
Normal Cost is the present value of the portion of the projected benefit attributable to the
current year (the cost of benefits earned each year should be accrued in that year), plus
The ARC represents a level of funding that, if paid on an ongoing basis, is projected to
cover normal costs each year and amortized any unfunded actuarial liabilities (or funding
excess) over a period not to exceed 30 years.
The annual calculation of Annual Pension Cost (APC) and Net Pension Obligation (NPO) is as
follows. (Data in the table below is only presented since the year of transition):
Past Service Cost
Normal Cost
Interest
Annual Required Contribution (ARC)
73,095
48,354
5,162
126~6~!
29
Fishers Island Ferry District
Notes to the Financial Statements
For the Year Ended December 31, 20:[0
F. Annual OPEB Cost and Net OPEB Obligation
The following table shows the components of the annual OPEB cost for the year, the
amount actually contributed to the plan, and the changes in the Town's net OPEB obligation
(asset):
Annual required contribution (ARC)
Interest on ne~ OPEB obligation
Adjustment to annual required contribution
Annual OPEB cost
Contributions made
Increase (decrease) in net OPEB obligation
Net OPEB obligation (asset), beginning of year
Net OPEB obligation (asset), end of year
$ 126,611
8,325
(11,675)
123,261
17lOll
106,250
195,887
$ 302,137
The Net OPEB Obligation histow is as follows. (Data in the table below is only presented
since the year of transition):
Fiscal Annual Actual Percentage Net Pension
Year OPEB Contribution of APC Obligation
Ended Cost Nade Contributed (Asset)
12/31/2010 $ 123,261 $ 17,011 13.8% $ 302,137
12/31/2009 $ 114,335 $ 17,235 15.1% $ 195,887
12/31/2008 $ 112,446 $ 13,659 12,1% $ 98,787
G. Other Disclosures
The calculations are based on the benefits provided under the terms of the substantive plan
in effect at the time of each valuation and on the pattern of sharing costs between the
employer and plan members to that point. The actuarial valuations involve estimates of the
value of reported amounts and assumptions about the probability of events far into the
future. Actuarially determined amounts are subject to continual revision as results are
compared to past expectations and new estimates are made about the future. The actuarial
methods and assumptions used include techniques that are designed to reduce short-term
volatility in actuarial accrued liabilities and the actuarial value of assets.
Note ll - Risk Management
The Ferry District is exposed to various risks of loss related to torts; theft of, damage to, and
destruction of assets; errors and omissions; and natural disasters for which the Ferry District
carries commercial insurance. There have been no significant reductions in insurance coverage.
Settlement amounts have not exceeded insurance coverage for the current year or three prior
years.
3o
Fishers Island Ferry District
Notes to the Financial Statements
For the Year Ended December 31, 2010
Note 12 - Contingent Liabilities
A. Grants
Amounts received or receivable from grant agencies are subject to audit and adjustment by
grantor agencies, principally the federal government. Any disallowed claims, including amounts
already collected, may constitute a liability of the applicable funds. The amount, if any, of
expenditures that may be disallowed by the grantor cannot be determined at this time, although
the Ferry District expects such amounts, if any, to be immaterial.
Note 13 - Commitments
In its December 22, 2010 Board of Commissioners meeting, the Fishers Island Ferry District
committed to appropriate up to $10,000 per year for the next three years to the Fishers Island
Habitat proposal for the airport properties.
Note 14 - Subsequent Events
Article 2, Section 3-c of the New York General Municipal Finances has established a limit upon
real property tax levies. This will be effective for the 2012 year. Essentially, this law will limit
the tax levy to the prior year's tax levy times an allowable levy growth factor.
Note 15 - GASB Pronouncements :Issued, But Not Yet Effective
The Governmental Accounting Standards Board (GASB) is the standard setting board for
governmental entities. The following are statements which have been approved by GASB, but
are not yet effective:
GASB Statement 60 - Accounting and Financial Reporting for Service Concession
Arrangements. This statement provides guideance for governments that are either
transferors or operators of service concession arrangements. A service concession
arrangement is one in which the transferor conveys to an operator the right and related
obligation to provide services through the use of infrastructure or another public asset in
exchange for significant considerations, and the operator collects and is compensated
by fees from third parties. This statement is effective for periods beginning after
December 15, 2011.
GASB Statement 61 - The Financial Reporting Entity: Omnibus- This statement
modifies certain requirements for inclusion of component units in the financial reporting
entity, amends the criteria for reporting component units, and clarifies the reporting of
equity interests in legally separate organizations. This statement is effective for periods
beginning after June 15, 2012.
31
Fishers ~[sland Ferry District
Notes to the Financial Statements
For the Year Ended December 31, 2010
GASB Statement 62 -Codification of Accounting and Financ/a/ Reporting Gu/dance
Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements - This
statement incorporates certain authoritative literature into the GASB codification. This
statement is effective for periods beginning after December 15, 2011.
32
Supplementary Information
Fishers Island Ferry District
Schedule of Revenues, Expenditures and Changes in Fund Balance
Budget and Actual (Budgetary Basis)
General Fund
For the Year Ended December 31, 2010
Revenues
Ferry Revenues
Ferry operations
Charters
U.S. mail
Property Tax Revenues
Properb/taxes
Interestand penalties-reales,ate taxes
Property Management Revenue
Rental income
Theater
Other Revenues
Interest earnings
ATN commissions
Other
Transfers and
Original Additional Final
Budget Appropriations Budget
Actual Variance
$ 2,075,000 $ 239,428 $ 2,314,425 $ 2,539,280 $ 224,855
14,000 0 14,000 17,326 3,326
24~000 0 24,000 241829 829
2~113~000 239~425 21352,425 215811435 2291010
780,000
750,000 750,000
98 98
750,000
73,000
750f000
73,000
731000
73,000
750~098 98
64,656 (8,344)
8,198 8,198
72,854 (146)
1,835 1,835
7,332 7,332
1,471 1,471
10,638 10,638
Total revenues
2,936,000 239,425 3,175,425 3,415,025 239,600
Expenditures
General Government
Accounting and finance
Legal fees
Insurance
Insurance claims
Property taxes
MTA payroll tax
Transportation
Elizabeth airport
Dock repairs, capital
Ferry operations, personal services
Ferry operations, equipment
Ferry operations, contractual expense
Office expense, contractual expense
Commissioner fees
U.S. mail, contractual expense
Miscellaneous
Theater, contractual expense
Employee Benefits
NYS retirement
Social security
Unemployment insurance
Medical insurance
10,000 10,000 20,000 18,400 1,600
66,000 13,000 7%000 77,367 1,633
82,000 31,000 113,000 98,751 14,249
5,000 5,000 2,979 2,021
50,000 50,000 46,132 3,868
41000 200 41200 4,155 45
217,000 54,200 2711200 2471784 231416
19,000 5,000 24,000 13,901
78,000 10,700 85,700 74,859
1,200,000 39,300 1,239,300 1,239,277
140,000 65,700 205,700 205,508
428,000 121,050 549,050 523,388
8,000 8,000 6,259
6,000 100 6,100 6,100
8,000 300 8,300 8,300
1,884,000 242,150 2,126,150 2,077,592
5,000 7,000 12,000 11,375
51000 7,000 12,000 11,375
135,000
92,000
5,000
140,000
372~000
10,099
10,841
23
192
25,662
1,741
48,558
625
625
135,000 108,814 26,186
92,000 90,414 1,586
5,000 3,301 1,699
140,000 139,845 155
372,000 342,374 291626
Total general government expenditures
2,478,000 303,350 2,7811350 2f679,125 102,225
See Accountants' Report
33
Fishers ~'sland Ferry District
Schedule of Revenues, Expenditures and Changes in Fund Balance
Budget and Actual (Budgetary Basis)
General Fund
For the Year Ended December 31, 2010
Debt Service
Principal:
Serial bond
Bond Anticipation Note
Interest:
Serial bond
Bond Anticipation Note
Transfers and
Original Additional Final
Budget Appropriations Oudget
Actual Variance
175,000 175,000 175,000
lOOlO00 lOOtO00 100~000
275,000 275,000 275,000
85,000 75 85,075 85,075
15,000 15,000 14,664 336
100,000 75 1001075 99,739 336
Total debt service 375,000 75 375~075 374~739 336
Total expenditures
2,8531000 303,425 3,1561425 3,053,864 102t561
Excess (deficiency) of revenues
over expenditures
$ 83,000 $ (641000) $ 19,000 361,I61 $ 342,161
Adjustments to Generally Accepted Accounting Principles (GAAP):
Bond Anticipation Note proceeds netted with retirement of Bond Anticipation Note
Retirement of Bond Anticipation Note netted with Bond Anticipation Note proceeds
750,000
(750,000)
Excess (deficiency} of revenues and other financing sources over
expenditures and other financing (uses) ~ GAAP basis
$ 361,161
Notes to Required Supplementary ]Information: A formal, legally approved, annual budget is adopted for the General Fund only.
This budget is adopted on a basis consistent with Generally Accepted Accounting Principles (modified accrual basis) with the following
exceptions: (1) Revenues and expenditures from refunding or renewing long-term debt or issuing lease financing are included in the
budget as the net revenues or expenditures expected.
See Accountants' Report
34
Fishers Island Ferry District
Fund Descriptions
Special Revenue Funds:
Special Aid Fund - This fund is used to account for Federal and State funding for
improvements to the Elizabeth Airport property.
Recreation Fund - This fund uses the revenue from two vending machines, one on
the ferry and one in the New London terminal, to fund employee welfare and benefit
activities.
35
Assets
Cash and cash equivalents
Receivables
Total assets
Liabilities and fund balance
Liabilities
Accounts payable
Due to other governmental funds
Total liabilities
Fund balance
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total fund balance
Total liabilities and fund balance
Fishers Island Ferry District
Combining Balance Sheet
Governmental Funds
December 31, 2010
Statement
Special
Aid
Fund
Recreation
Fund
Total
Other
Governmental
Funds
$ 9,530 $
4,758
9,530
4,7513_.
4,758 $ 9,530 $ 14,288
$ 6,952 $
5,304
6,952
5,30't
12,256
12,256
(7t498)
(7,498)
9,530
9~530
9,530
(7,498)
2~032
$ 4~758 $ 9,530 $ 14,288
See Accountants' Report
36
Statement 2
Fishers l'sland Ferry District
Combining Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds
For the Year Ended December 31, 2010
Revenues
Grants
Other
Expenditures
Current expenditures:
Miscellaneous
Capital outlay
Debt service
Total
Special Other
Aid Recreation Governmental
Fund Fund Funds
192,851 $ $ 192,851
8,283 8,28:3
192,851 8~283 201,13,4
5,493 5,49:3
200,349 200,349
200,349 5,493 205,842
Excess(deficiency) ofrevenues
over expenditures
Fund balance, beginning of the year
Fund balance, end of the year
(7,498) 2,790 (4,708~_
6,740 6,740
(7,498) $ 9,530 $ 2,032
See Accountants' Report
37
Marien +
!
124 New London Turnpike
Norwich, Connecticut 06360
LLC
Tel: 860.886.1750
Fax: 860.886.0280
www. MarienCPAs.com
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 Auditinq Standards
Board of Commissioners
Fishers Island Ferry District
Fishers Island, New York
We have audited the financial statements of the Fishers Island Ferry District as of and for the
year ended December 31, 2010 and have issued our report thereon dated August 26, 2011.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States.
Internal Control over Financial Reporting
In planning and performing our audit, we considered the Fishers Island Ferry District's internal
control over financial reporting as a basis for designing our auditing procedures for the purpose
of expressing our opinions on the financial statements, but not for the purpose of expressing an
opinion on the effectiveness of the Fishers Island Ferry District's internal control over financial
reporting. Accordingly, we do not express an opinion on the effectiveness of the Fishers Island
Ferry District's internal control over financial reporting.
Our consideration of the 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 and therefore, there can be no assurance that all deficiencies, significant
deficiencies, or material weaknesses have been identified. However, as discussed in the
accompanying schedule of findings, we identified certain deficiencies in internal control that we
consider to be material weaknesses and others deficiencies 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 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 consider the deficiencies described in the accompanying
schedule of findings as items ivlW-10-1, MW-10-2, MW-10-3, MW-10-4, MW-10-5, MW-10-6 and
MW-10-7 to be material weaknesses.
MGI
38
Big Firm Expertise, Small Firm Service
Government Auditinq Standards Report (Continued)
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Fishers Island Ferry District's
financial statements are free of material misstatement, we performed tests of its compliance
with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance
with which could have a direct and material effect on the determination of financial statement
amounts. However, providing an opinion on compliance with those provisions was not an
objective of our audit, and accordingly, we do not express such an opinion. The results of our
tests disclosed instances of noncompliance or other matters that are required to be reported
under Government Auditinq Standards and which are described in the accompanying schedule
of findings as items NC-10-1, NC-10-2 and NC-10-3.
We noted certain other matters that we reported to management of the Fishers Island Ferry
District in two separate reports on irregularities dated _lune 30, 2011.
This report is intended for the information and use of the management, Board of
Commissioners, others within the Fishers Island Ferry District, and federal and state awarding
agencies and pass-through entities and is not intended to be and should not be used by anyone
other than these specified parties.
August 26, 2011
39
Fishers l'sland Ferry District
Schedule of Findings
For the Year Ended December 31, 20:[0
Findinqs on Internal Controls
MW-lO-1 - Entity Level Controls
Condition: Tnternal controls are a coordinated set of policies and procedures that
management uses to achieve their objectives and meet their fundamental
responsibilities for effectiveness, efficiency, compliance and financial reporting. The
literature recognizes five sections of internal control published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO Report) in Internal
Control - Tnteqrated Framework. These five interrelated components include:
Contro/Environment- A favorable control environment exists when management
is knowledgeable about controls (entity wide and specific), is committed to
establishing controls and communicates its support for internal controls to all
individuals involved.
Risk Assessment- This involves management's continual identification and
assessment of the potential risks that might prevent management from fulfilling
its responsibilities and achieving its objectives.
]nformation and Communication Systems- These are the systems used to
assure that appropriate individuals have timely and accurate information to carry
out their responsibilities.
Contro/Activities- These are management's response to the risks identified.
These are the specific policies and procedures that are put in place to alert
management of undesired actions in a timely manner.
Nonitoring- There is a responsibility of management to follow up on the
controls that have been put in place to assure that they continue to function and
function properly, effectively and efficiently.
The Fishers Island Ferry District does not have a framework established to deal with
each of the interrelated entity level controls over and above the specific control policies
and procedures that have been developed.
Recommendation: We recommend that as part of developing an accounting manual,
the Fishers :Island Ferry District consider the entity wide controls as discussed above.
4o
Fishers Island Ferry District
Schedule of Findings
For the Year Ended December 31, 2010
MW-10-2 - Double Entry Accounting System and Proper Balancing
Condition: A double entry system of accounting, when used properly, assures that the
records are complete and balanced. Although the Town of Southold keeps a double
entry accounting system in summary, the detailed records providing information to the
Town are not balanced as a double entry system.
For example, the Fishers Tsland office maintains the detailed records for accounts
receivable:
These records post the charges for each customer from the ferry booking
system. The totals for the month between the two systems are not reconciled.
These records post the cash received from each customer on their accounts.
However, the cash account is not balanced to assure that all transaction are
included and are included only once.
Recommendation: The Ferry District has a double entry accounting system, but is
just not using it and balancing it appropriately. We recommend procedures be
established to have this system complete and properly balanced.
MW-10-3 - Segregation of Duties - Revenues
Condition: The Ferry District does not maintain an adequate segregation of duties for
proper internal control over the financial transactions in certain areas. Proper internal
control relies on the following three aspects of processing transactions being performed
by separate individuals: authorizing transactions, custody of assets, and record keeping.
This weakness in internal controls could lead to funds being expended in a manner not
consistent with the intentions of management. These weaknesses were noted in the
following areas:
· Ticket Sales - Sales that are "no charge" are authorized and recorded by the
same individual.
· Ticket Books - Ticket Books have the same individuals able to authorize the
purchase, have custody of the physical books and cash collected and do the
record keeping for the sale.
· Freight Sales - Freight is not always counted by the freight agent. This is not
noted and corrected at the other end. Cash payments are collected and
recorded by the same individual. Individuals are able to collect payment, record
transactions and delete transactions from the system.
· Recording Revenues - :Individuals are able to collect payment, record
transactions and delete transactions from the system or write off transactions in
the system.
41
Fishers Island Ferry District
Schedule of Findings
For the Year Ended December 31, 2010
Recommendation: The Ferry District should review the segregation of duties involved
in all the cash receipts functions. The duties of the individuals involved should be
analyzed and restructured as necessary to provide for a better system of checks and
balances. A segregation of duties is not the only tool used in internal controls, where a
segregation of duties is not possible, alternate internal control tools should be
implemented. Once a better system has been devised, it should be written, approved by
the Board of Commissioners and distributed to the individuals involved.
MW-lO-4 - Controls over the Automated Teller Machine (ATM)
Condition: The Ferry District has an Automated Teller Machine. No controls have
been implemented over the large quantity of cash that is handled for the machine.
Cash, as the most liquid of assets, can easily be missing without a trail of who has it and
when it went missing.
Recommendation: Controls should be implemented over the Automated Teller
Machine. Because this is such a high risk area, all ATM machines are designed to assist
with a segregation of duties, but the user must recognize the need and implement the
controls.
MW-10-5 - Interim Reporting
Condition: The reporting from the Town of Southold is established by New York State
Law and is less informative than the Board of Commissioners need for proper
management. Tnstead of adapting the accounting system at Fishers Island for the
Board of Commissioners needs, a third Excel based reporting system has been
developed. By not using the accounting system to generate reports directly, the
controls are even further weakened.
Recommendation: The accounting system in Fishers Island should be adapted to
meet the needs of the Board of Commissioners and to translate into the accounts
required to be maintained by New York State Law. As much as possible, this system
should be used for all accounting and reporting to strengthen controls, increase the
accuracy of data and to be more efficient, Extra schedules prepared in Excel or other
programs should be avoided as much as possible.
42
Fishers :Island Ferry District
Schedule of Findings
For the Year Ended December 31, 2010
MW-10-6 - Segregation of Duties - Expenditures
Condition: Once the Board of Commissioners approves invoices to be paid, the cash is
transferred from the Fishers Island account and put into the Town of Southold's
account. The Town of Southold prints the checks with the authorized signature printed
on the checks at the same time. The same individual(s) that prints the checks can also
reconcile the bank statement. Although there has been no issues noted, one individual
could write an unauthorized check and it might not be noticed in a timely manner.
Recommendation: We recommend that the checks be issued from the Town of
Southold in the same manner that they currently are, except written on the Fishers
Island Ferry District's account directly. The bank statements and checks clearing should
then be reviewed by the Ferry District personnel in a timely manner.
MW-10-7 - Documentation of the Components of [nternal Control over Processes
Condition: The Fishers island Ferry District has numerous internal controls in place
over significant processes and accounts. Not all of these controls are formally
documented, it is possible for controls to change over time or not be completely
understood by the individuals involved in the processes.
Recommendation: We recommend that the Fishers Island Ferry District make a
listing of its significant processes and accounts. Controls in each area should be
documented in a procedures manual. Each of the procedures should be reviewed to
determine if controls are adequate.
Findinns on Comoliance
NC-10-1 Non-collusion Statements
The enabling act states in Section 13:
All contracts for public work and all purchase contracts shall be let to the lowest responsible bidder
after advertisement for bids where so required by section one hundred three of the general
municipal law.
Section 103-d of the New York General Municipal Law requires a statement of non-
collusion in bids and proposals to political subdivision of the state. Currently, the Fishers
fsland Ferry District does not have a policy to obtain, nor does it obtain, any statements
of non-collusion in its bids and proposals.
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Fishers ~[sland Ferry District
Schedule of Findings
For the Year Ended December 3:[, 20:[0
NC-:[0-2 Payroll for Salaried Employees
Currently, salaried employees are paid their annual salary in 26 bi-weekly installments.
Salaried employees get a full paycheck on payday if they are employed on payday. If
they are not employed on payday they do not get a paycheck at all. The salaried
paycheck is not associated with any pay period and not prorated for any pay period. At
termination of employment, his could lead to confusion by the employee on if they were
paid for the specific days worked or not.