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Home My WebLink About2011All Numbers in This Report Have Been Rounded To The Nearest Dollar ANNUAL FINANCIAL REPORT UPDATE DOCUMENT For The FIRE DISTRICT of Southold County of Suffolk For the Fiscal Year Ended 12/31/2011 AUTHORIZATION ARTICLE 3, SECTION 30 of the GENERAL MUNICPAL LAW: 1. ***Every Municipal Corporation *** shall annually make a report of its financial condition to the Comptroller. Such report shall be made by the Chief Fiscal Officer of such Municipal Corporation *** 5. All reports shall be certified by the officer making the same and shall be filed with the Comptroller *** It shall be the duty of the incumbent officer at the time such reports are required to be filed with the Comptroller to file such report *** State of NEW YORK Office of The State Comptroller Division of Local Government and School Accountability Albany, New York 12236 Page 1 FIRE DISTRICT OF Southold *** FINANCIAL SECTION *** Financial Information for the following funds and account groups are included in the Annual Financial Report filed by your government for the fiscal year ended 2010 and has been used by the OSC as the basis for preparing this update document for the fiscal year ended 2011: (A) GENERAL (H) CAPITAL PROJECTS (K) GENERAL FIXED ASSETS (TA) AGENCY (W) GENERAL LONG-TERM DEBT All amounts included in this update document for 2010 represent data filed by your government with OSC as reviewed and adjusted where necessary. *** ARRA SECTION *** The American Recovery and Reinvestment Act (ARRA) section of your Annual Financial Report is designed to report revenues and expenditures of federal stimulus money for the current fiscal year ended. *** SUPPLEMENTAL SECTION *** The Supplemental Section includes the following sections: 1) Statement of Indebtedness 2) Schedule of Time Deposits and Investments 3) Bank Reconciliation 4) Local Government Questionnaire 5) Schedule of Employee and Retiree Benefits 6) Schedule of Energy Costs and Consumption 7) Schedule of Other Post Employment Benefits (OPEB) All numbers in this report will be rounded to the nearest dollar. Page 2 (A) GENERAL Balance Sheet Assets Cash Accounts Receivable Due From Other Funds Prepaid Expenses Cash, Special Reserves Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 391,180 A200 437,932 3,397 A380 1,079,929 A391 23,694 A480 14,612 A230 1,300,695 Page 3 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 (A) GENERAL Balance Sheet Liabilities Accounts Payable Accrued Liabilities Due To Other Funds 51,304 A600 52,428 46,968 A601 74,324 253 A630 Reserve For Encumbrances Capital Reserve Miscellaneous Reserve (specify) Unreserved Fund Balance Appropriated Assigned Unappropriated Fund Balance Additional Description Encumbrances Unreserved Fund Balance Unappropriated Unassigned Fund Balance 6,669 1,079,929 23,694 120,000 A821 A878 1,300,695 A889 A910 A915 23,072 169,383 A911 A917 302,720 Page 4 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 (A) GENERAL Results of Operation Revenues Real Proper~y Taxes 1,735,231 A1001 1,746,449 Interest And Earnings 4,556 A2401 2,084 Rental of Real Property 20,614 A2410 21,232 Sales of Equipment 8,000 A2665 15,165 Insurance Recoveries 3,670 A2680 Unclassified (specify) 320 A2770 492 Page 5 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 (A) GENERAL Results of Operation Expenditures Payment of Mta Payroll Tax,contr Expend 749 A19804 428 Fire, Pers Serv Fire, Equip & Cap Outlay Fire, Contr Expend 235,853 A34101 229,528 124,465 A34102 177,685 527,562 A34104 487,787 State Retirement System Local Pension Fund, Empl Bnfts Social Security, Employer Cont Worker's Compensation, Empl Bnfts Hospitat & Medical (dental) ins, Empl Bnff 14,400 A90108 20,244 340,000 A90258 386,791 18,600 A90308 17,231 52,331 A90408 47,007 24,356 A90608 26,446 Debt Principal, Serial Bonds 125,000 A97106 125,000 Debt Interest, Serial Bonds 45,150 A97107 40,463 Page 6 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 (A) GENERAL Changes in Fund Equity ANALYSIS OF CHANGES IN FUND EQUITY Fund Equity-Beginning of Year Restated Fund Equity - Beg of Year ADD - REVENUES AND OTHER SOURCES DEDUCT - EXPENDITURES AND OTHER USES Fund Equity-End of Year 1,135,750 A8021 '1,399,675 1,135,750 A8022 1,399,675 1,508,466 1,558,610 1,399,675 A8029 1,626,487 Page 7 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 (A) GENERAL Budget Summary Estimated Revenues Est Rev - Real Property Taxes Est Rev - Use of Money And Property 1,746,443 21,856 A1049N A2499N 1,780,782 22,493 Page 8 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 (A) GENERAL Budget Summary Appropriations App - Public Safety App - Employee Benefits App - Debt Service App ~ Inter~und Transfer 873,456 509,381 165,462 220,000 A3999N A9199N A9899N A9999N 914,957 502T543 185,775 200,000 Page 9 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 (H) CAPITAL PROJECTS Balance Sheet Assets Due From Other Funds 253 H391 Cash Special Reserves 1,079,676 H230 Page 10 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 (H) CAPITAL PROJECTS Balance Sheet Liabilities Due To Other Funds 1,079,929 H630 Page 11 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 Results of Operation Page 12 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 Results of Operation Page 13 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 (H) CAPITAL PROJECTS Changes in Fund Equity ANALYSIS OF CHANGES IN FUND EQUITY Fund Equity - Beginning of Year Restated Fund Equity - Beg of Year Fund Equity - End of Year H8021 H8022 H8029 Page 14 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 (K) GENERAL FIXED ASSETS Balance Sheet Assets Land Buildings Machinery & Equipment 258,752 K101 258,752 3,176,358 K102 3,225,565 3,089,301 K104 3,172,130 Page 15 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 (K) GENERAL FIXED ASSETS Balance Sheet Fund Equity Total Non-Current Govt Assets 6,524,411 K159 6,656,447 Page 16 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 (TA) AGENCY Balance Sheet Assets Service Award Program Assets 2,777,525 TA461 2,894,204 Page 17 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 (TA) AGENCY Balance Sheet Liabilities Service Awards 2,777,525 TA13 2,894,204 Page 18 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 (w) GENERAL LONG-TERM DEBT Balance Sheet Total Non-Current Govt Liabilities 1,025,000 W129 900,000 Page 19 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 (W) GENERAL LONG-TERM DEBT Balance Sheet General Long Term Debt Bonds Payable 1,025,000 W628 900,000 Page 20 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Financial Comments For the Fiscal Year Ending 2011 Page 21 Southold FIRE DISTRICT Statement of Indebtedness For the Fiscal Year Ending 2011 Indebtedness Not Exempt From Constitutional Debt Limit Bond N~i 20030~0001 - -- IMon, th. and Year of Issue 'Purpose of Issue [~urr_ent Interest Rate Outstanding Beginning of Year ~Year Adjustment ~lssued During the Fiscal Year EDP~ODEJ ~ !i 12/1/2002 ements to existing FHj -~ 3.75oo1 -~P18771 1,025,000 -~P18773 :: ~ (do not include renewals here) C) IPaid During the Fiscal Year . ! ~(~ n--~'~n c-lud~ here)- ~ 125, ,Outstand ng End of the Fiscal Year .~2P18777 900,00(~ !F!~a~l Maturity Date ~otal Bond !~%g Beginning of Year- Prior Year Adjustment Issued During Fiscal Year Paid During Fiscal Year ~Outstanding End of Year 12/1/2017! 1,025,00( £ 125,00£ 900,00(~ Total of All Indebtedness Includes Total of Bonds and Notes - Exempt and Not Exempt Tota~ Bond ~ ~ ~F iO~ist~an~nn~ Beg~ ~e~r .... __~-- ,Prior Year Adjustment ........ ~ ~lssued During Fiscal Year iP_a_id~.During. Fiscal Year oi 125,oool ,--Outstanding End of Year Page 22 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Schedule of Time Deposits and Investments For the Fiscal Year Ending 2011 CASH: On Hand Demand Deposits Time Deposits Total COLLATERAL: - FDIC Insurance Collateralized with securities held in possession of municipality or its agent Total EDP Code Amount 9Z2001 $16.00 9Z2011 $819,419.00 9Z2021 $926,440.00 $! ,745,875~0.0 9Z2014 $250,000.00 9Z2014A $1,920,0~4_4.. 00 $2,170,044.00 INVESTMENTS: - Securities (450) Book Value (cost) Market Value at Balance Sheet Date Collateralized with securities held in possession of municipality or its agent 9Z4501 9Z4502 9Z4504A - Repurchase Agreements (451) Book Value (cost) Market Value at Balance Sheet Date Collateralized with securities held in possession of municipality or its agent 9Z4511 9Z4512 9Z4514A Page 23 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Bank Reconciliation For the Fiscal Year Ending 2011 Include All Checking, Savings and C.D. Accounts Bank Add: Less: Adjusted Account Bank Deposit Outstanding Bank Number Balance In Transit Checks Balance ..... -5531 $25,056 $0 . $7,248 $17,808 ..... -9843 $500,206 $0 $0 __ $50(~,206 ..... -1352 $294,157 $0 $0 $294,157 ..... -0001 $346,204 $0 $220,000 $126,204 ..... -0002 $549,188 $220,000 $0 $769,188 ..... -0003 $31,048 $0 . $0 $31,048 Total Adjusted Bank Balance $1,738,611 Petty Cash $16.00 Adjustments $.00 Total Cash 9ZCASH $1,738,627 Total Cash Balance All Funds 9ZCASHB $1,738,627 * Must be equal Page 24 OSC Municipality Code 471179008000 Southold FIRE DISTRICT Fire District Questionnaire For the Fiscal Year Ending 2011 '~) Has your district adopted a written procurement prolicy and is it complied with? 2) Has your district contracted to have an independent audit of its financial statements? If not, has the Board of Fire Commissioners performed an internal audit of the Treasurer's records and repot/s? 3) Does your district have a written travel policy and is it complied with? 4) Are monthly bank reconciliations performed? 5) What is your district's statutory spending limitation margin (amount) for the next fiscal 6) Does your district have a Length of Service Award Program (LOSAP) for volunteer firefighters? If so, how are the LOSAP funds invested? Marketable Securities Annuities Life Insurance Other (describe) Response Y Y Y Y $2,256,855 Y Y Y 7) Has your Fire District adopted an investment policy as required by General Municipal Law, Section 39? Y Page 25 Southold FIRE DISTRICT Employee and Retiree Benefits For the Fiscal Year Ending 2011 Totai Full Time Employee;: 11t # of Full- / Time Employees Account Code 9010~ Description State Retirement System 9015t Police and Fire Retirement Total Expenditures (All Funds) 9025t' 904~_19030 $20,244.01 $386,79~.0~¢ Local Pension Fund Social Security $17,231.0£ Worker's Compensation $47,0070~C Insurance I '----~ Life Insurance 90501 Unemployment Insurance I ~055~, Disability Insurance I ' 90608 Hospital and Medical ! $26,446 00 (Dental) Insurance 90706 Union Welfare Benefits 9085 Supplemental Benefit Payment to , Disabled Fire Fighters I 9189C Other Employee Benefits I Computed Total From Financial 'Section (comparative purposes only) 2 21 # of Part Time Employees # of Retirees 11 i Page 26 OSC Municipality 471179008000 Southold FIRE DISTRICT Energy Costs and Consumption For the Fiscal Year Ending 2011 Energy Type Total Total Volume Units Of Alternative Expenditures Measure Unite Of Measure ~L Natural Oas I $15 711~, Z~;0,589I. ~ ~ubic ~;et '[ .... , iElectricity [ $26 548I' 10¢~4[ ~lowa~ts Page 27 OSC Municipality 471179008000 Southold FIRE DISTRICT Schedule of Other Post Employment Benefits (OPEB) For the Fiscal Year Ending 2011 Page 28 FIRE DISTRICT DEMOGRAPHICS Postal or Mailing Address: ~PO Box 908 Street Address or PO Box i631 ) 765-4305 Fire District Telephone Number ~outhold City State Zip Ii631) 765-5076 Fire District Fax Number ]southoldfd com Official Emaii Address Website Physical Address: (If Different From Postal Address) ¢~5135 Main Road iSouthofd !NY 111971 Street Address City State Zip BOARD DEMOGRAPHICS CHIEF FISCAL OFFICER IKaren Hehnskl ~:Te ~ s~Te-r ......................... Name Title !~ox 908 jSouthold INy 111971 Street Address or PO Box City State Zip ~8~i) 765-4305 1(63t) 765-5076 Telephone Number Fax Number ] ! 12/31/2011 EmailAddress Term End Date CHAIRMAN OF THE BOARD ~homas Grattan Sr IChairman of the Board Name ~tle i~"(~'~'~ ~~)~ .............. [Southold NY~-~ Street Address or PO Box City State Zip (631)765-4305 t(631 )765-5076 Telephone Number Fax Number I 12/31/2011 Email Address Term End Date I, IKaren Helinski hereby cedify that I am the Chief Fiscal Officer of the ISouthold Fire District , and that the information provided in the annual financial repod of the rSouthold Fire District , for the fiscal year ended i12/31/2011 , is true and correct to the best of my knowledge and belief By entebng the personal identification number assigned by the Office of the State Comptroller to me as the Chief Fiscal Officer of the t~'~l~'~)i~d~~'l~'~'i;'i~' ................................ , and adopted by me as my signature for use in conjunction with the filing of the ISouthold Fire District 's annual financial report, I am evidencing my express intent to authenticate my certificafion of the ISouthold Fire District "s annual financial report report for the fiscal year endedi12/31/2011 and filed by means of electronic data transmission ICullen & Danowski, LLP Name of Report Preparer if different than Chief Fiscal Officer i i 02/28/2012 Personal Identification Number Date of Chief Fiscal Officer I I I I ! I I I I I I I I I I I I I I Southold Fire District Financial Statements (Regulatory Basis) with Independent Auditor's Report December 31, 2011 I 1 SOUTHOLD FIRE DISTRICT Table of Contents December 31, 2011 I I I I I I I I I I I I I I I I I Independent Auditor's Report Basic Financial Statements (Regulatory Basis} Balance Sheet - Governmental Funds and Account Groups Statement of Revenues, Expenditures and Changes in Fund Balance - Governmental Funds Statement of Fiduciary Net Assets - Fiduciary Funds Notes to Financial Statements Other Supplementary Information Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Page 1 4 5 6 19 20 I I I I I I I I I I I I I I I I I I I CULLEN & DANOWSKI, LLP CERTIFIED PUBLIC ACCOUNTANTS VINCENT D. CULLEN, CPA [AMES E DANOWSKI, CPA I'EI ER F. RODRiGUEZ. CPA Jill S SANDERS. CPA DONALD I HOFFMANN CPA CHRISTOPHERM REINO. CPA ALAN YU, CPA INDEPENDENT AUDITOR'S REPORT To the Board of Fire Commissioners Southold Fire District Southold, New York We have audited the accompanying financial statements of the Southold Fire District (District), as of and for the year ended December 31, 2011, as listed in the table of contents. These financial statements are the responsibility of the District's management. Our responsibility is to express opinions on the financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes 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 District's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. As described more fully in Note 1, the Southold Fire District has prepared these financial statements using accounting practices prescribed and permitted by the New York State Office of the State Comptroller, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. The effects on the financial statements of the variances between these regulatory accounting practices and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets, liabilities and fund balances of each fund of the Soutbold Fire District, as of December 31, 2011, and their respective revenues and expenditures for the year then ended, in conformity with the basis of accounting described in Note 1. As described in Note 2, "Changes in Accounting Principles", the District has adopted the provisions of GASB Statement No. S4, Fund Balance Reporting? and Governmental Fund Type Definitions, as of December 31, 2011. 1650 ROUTE 112, PORT JEFFERSON STATION, NEW YORK 11776 3060 PHONE: 631-473-3400 ' FAX: 631-473-4863 - WWW. CDI.I.P.N ET I I I I I I I I I I I I I I I I I I In accordance with GovernmentAuditin~] Standards, we have also issued our report dated May 31, 2012, on our consideration of the Southold Fire District's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in assessing the results of our audit. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Southold Fire District's basic financial statements. The other supplementary information on page 19 is presented for purposes of additional analysis and is not a required part of the basic financial statements. The other supplementary information has not been subjected to auditing procedures applied in the audit of the basic financial statements, and, accordingly, we express no opinion on it. This report is intended solely for the use and information of the Board of Fire Commissioners and management of the Southold Fire District and the New York State Office of the State Comptroller and is not intended to be and should not be used by anyone other than these specified parties. May 31, 2012 I ! I I I I I I I I I I i I I I I ! I I SOUTHOLD FIRE DISTRICT Balance Sheet- Governmental Funds and Account Groups December 31, 2011 ASSETS Cash Unrestricted Restricted Prepaid expenditures Land and buildings Equipment Amount to be provided for retirement of long-term debt Total Assets Fund Account Group General Fixed Long-Term General Assets Debt Total $ 437,932 $ $ $ 437,932 1,300,695 1,300,695 14,612 14,612 3,484,317 3,484,317 3,172,130 3,172,130 900,000 900,000 $ 1,753,239 $ 6,656,447 $ 900,000 $ 9,309,686 $ 52,427 $ $ $ 52,427 74,324 74,324 900,000 900,000 126,751 900,000 1,026,751 LIABILITIES Accounts payable Accrued liabilities Bonds payable Total Liabilities FUND BALANCE Investment in general fixed assets Restricted: Capital Assigned: Unappropriated fund balance Unassigned: Fund balance 6,656,447 6,656,447 1,300,695 1,300,695 23,072 23,072 302,721 302,721 Total Fund Balance 1,626,488 6,656,447 8,282,935 $ 1,753,239 $ 6,656,447 $ 900,000 $ 9,309,686 Total Liabilities and Fund Balance See Notes to Financial Statements -3- I I I I I I I I I I I I ! i I I I I i SOUTHOLD FIRE DISTRICT Statement of Revenues, Expenditures and Changes in Fund Balance - Governmental Funds For the Year Ended December 31, 2011 REVENUES Real property taxes Interest and earnings Rentals Sale of equipment Miscellaneous Total Governmental General Funds $ 1,746,449 $ 1,746,449 2,084 2,084 21,232 21,232 15,165 15,165 492 492 1,785,422 1,785,422 Total Revenues EXPENDITURES Personal services Equipment and capital outlay Fire protection State retirement system Service award program Social security Workers' compensation Medical and accident insurance Debt service - principal Debt service - interest 229,528 229,528 177,686 177,686 488,213 488,213 20,244 20,244 386,791 386,791 17,231 17,231 47,007 47,007 26,446 26,446 125,000 125,000 40,463 40,463 Total Expenditures 1,558,609 1,558,609 226,813 226,813 1,399,675 1,399,675 $ 1,626,488 $ 1,626,488 Net Change in Fund Balances Fund Balance - Beginning of Year Fund Balance - End of Year See Notes to Financial Statements -4- ! ! I I I I I I I I I i I i I I I I i ASSETS Service award program assets Total Assets LIABILITIES Service awards Total Liabilities See Notes to Financial Statements SOUTHOLD FIRE DISTRICT Statement of Fiduciary Net Assets - Fiduciary Funds December 31, 2011 Trust and Agency $ 2,894,204 $ 2,894,204 $ 2,894,204 $ 2,894,204 -5- ! I SOUTHOLD FIRE DISTRICT Notes to Financial Statements I i I i I I I I I I I I ! I ! I I 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Southold Fire District (District), have been prepared using accounting practices prescribed and permitted by the New York State Office of the State Eomptroller, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America (GAAP} as applied to governmental units. The financial statements of the District have been prepared using only the modified accrual bas/s of accounting. This method differs from GAAP, which requires the preparation of additional financial statements using the accrual basis of accounting. The accrual basis financial statements require the capitalization and depreciation of property and equipment and the recording of long-term liabilities. Under the modified accrual basis of accounting, property and equipment are recorded as an expenditure when purchased and long-term liabilities are recognized to the extent that the liabilities mature during the year. In addition, GAAP requires the financial statements to be prepared in accordance with the Governmental Accounting Standards Board (GASB) No. 34, Basic Financial Statements - and Management's Discussion and Analysis -for State and Local Governments. GASB 34 financial statements require the presentation of government-wide financial statements and management's discussion and analysis. The accounting practices used to prepare these financial statements do not require compliance with GASB 34. The significant accounting policies of the District are described below: A. Financial Reporting Entity The District is a district corporation and political subdivision of the state of New York, distinct from the municipalities in which it is located. In general, the District is governed by an elected board of commissioners (Board) and is required to have a treasurer and a secretary. The District has the legal authority to levy taxes on real property and to borrow in its own name. The District is governed by General Municipal Law and other laws of the state of New York and its subdivisions. The scope of activities included in the accompanying financial statements is the transactions which comprise the District's operations. The primary function of the District is to provide fire-protection, rescue and emergency services to the community. Services such as firefighting, fire prevention and public education support the primary function. The financial reporting entity includes all funds, functions and organizations over which the District's Board exercises oversight responsibility. Oversight responsibility is determined on the basis of financial interdependency, selection of governing authority, designation of management, ability to significantly influence operations and accountability for fiscal matters. B. Basis of Presentation Fund Financial Statements The District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to assist management by segregating transactions related to certain government functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. -6- ! ! SOUTHOLD FIRE DISTRICT Notes to Financial Statements (Continued) I I I ! I I I I I i I I I ! I I I The District records its transactions in the fund types described below: Governmental Funds Governmental funds are those through which most governmental functions are financed. The acquisition, use and balances of expendable financial resources and the related liabilities are accounted for through governmental funds. The measurement focus of the governmental funds is based upon determination of financial position and changes in financial position. The following are the District's governmental fund types: General Fund - the general fund is the principal operating fund of the District. It is used to account for all financial resources except those required to be accounted for in another fund. Capital Projects Fund - is used to account for financial resources used for the acquisition, construction or major repair of capital facilities and equipment. Fiduciary Funds Fiduciary Funds are used to account for assets held by the District in a trustee or custodial capacity. Trust and Agency Fund - the trust and agency fund is used to account for money (and/or property) received and held in the capacity of trustee, custodian, or agent. Account Groups Account Groups are used to establish accounting control and accountability for the District's general fixed assets and general long-term obligations. The two account groups are not 'funds'. They are accounting entities, not fiscal entities, and are concerned only with the measurement of financial position, and not with the results of operations. General Fixed Assets Account Group - the general fixed assets account group is used to account for land, buildings, improvements and equipment owned by the District. General Long-Term Debt Account Group - the general long-term debt account group is used to account for all long-term debt and other obligations of the District. C. Basis of Accounting and Measurement Focus Basis of accounting refers to when revenues and expenditures and the related assets and liabilities are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus. Measurement focus is the determination of what is measured (i.e., expenditures or expenses). All governmental funds are accounted for using a current financial resources focus. With this measurement focus, only current assets and current liabilities are included on the balance sheet. Operating statements present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in fund balance. -7- I I SOUTHOLD FIRE DISTRICT Notes to Financial Statements (Continued) I I I I I I I I I I I I I I I I I Modified Accrual Basis - All governmental funds are accounted for using the modified accrual basis of accounting. Under this basis of accounting, revenues are recorded when measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Revenues are considered to be available if collected within 60 days after the end of the calendar year. Expenditures are recorded when the related liability is incurred except that expenditures for prepaid expenses and inventory-type items are recognized at the time the goods and services are consumed, and principal and interest on indebtedness and compensated absences, such as vacation and sick leave which vests or accumulates, are not recognized as expenditures until due and payable. D. Property Taxes Real property taxes are levied annually by the District no later than November 1st and become a lien on December Ist. The District's tax levy is collected by the Town of Southold and then remitted to the District from January to June. The County of Suffolk is responsible for all uncollected taxes. E. lnterfund Transactions The operations of the District include transactions between funds. These transactions may be temporary in nature, such as with interfund borrowings. The District typically loans resources between funds for the purpose of providing cash flow. These interfund receivables and payables are expected to be repaid within one year. Permanent transfers of funds include transfers to provide financing for the acquisition, construction or major repair of capital facilities. A detailed disclosure by individual fund for interfund receivables, payables, transfers in and transfers out is provided subsequently in these Notes to Financial Statements. F. Use of Estimates The preparation of financial statements in conformity with a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates. G. Cash Cash consists of cash on hand, demand deposits and short-term investments with original maturities of three months or less from date of acquisition. H. Prepaid Items Prepaid items represent payments made by the District for which benefits extend beyond year end. These payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in the financial statements. A current asset for the prepaid amounts is recorded at the time of purchase and an expenditure is reported in the year the goods or services are consumed. -8- I ! SOUTHOLD FIRE DISTRICT Notes to Financial Statements (Continued) I I I I I I i I I I I I I I I I I I. General Fixed Assets The financial statements of the District report the District's capital assets at original cost. Capital thresholds, the dollar value above which asset acquisitions are added to the capital asset accounts are reported as follows: Capitalization Threshold Buildings and improvements Site improvements Furniture and equipment 1,000 1,000 1,000 J. Long-Term Obligations The liabilities reported in the general long-term debt account group represent the District's liability for serial bonds. K. Fund Balance During the year ended December 31, 2011 the District implemented GASB 54, (see Note 2 "Changes in Accounting Principles" for additional information). Under GASB 54, the fund balance in governmental funds now consists of five classifications; however, the District only utilizes the following three: Restricted - Consists of amounts that are subject to externally enforceable legal purpose restrictions imposed by creditors, grantors, contributors, or laws and regulations of other governments; or through constitutional provisions or enabling legislation. Restricted fund balances, generally referred to as reserves in accordance with New York State law, are created to satisfy legal restrictions, plan for future expenditures or relate to resources not available for general use or appropriation. These reserve funds are established through Board action or voter approval and a separate identity must be maintained for each reserve. Earnings on the invested resources become part of the respective reserve funds; however, separate bank accounts are not necessary for each reserve fund. Fund balance reserves currently in use by the District include the following: Capital Reserve A Capital Reserve (General Municipal Law Section 6-g) is used to finance all or part of the costs of construction, reconstruction, or acquisition of "specific" or "type" capital improvements or equipment. Prior to January 1, 2007, establishment of a capital reserve required action (resolution) of the board of fire commissioners. Effective January 1, 2007, the establishment of any capital reserve is subject to mandatory referendum (voter approval). Expenditures from a "specific" reserve require a resolution by the board of fire commissioners. Expenditures from a "type" reserve require a resolution by the board of fire commissioners, subject to permissive referendum. Assigned - Consists of amounts that are subject to a purpose constraint that represents an intended use established by the District's Board of commissioners. The purpose of the assignment must be narrower than the purpose of the general fund, and in funds other than the general fund, assigned fund balance represents the residual amount of fund balance. Assigned fund balance includes an amount appropriated to partially fund the subsequent year's budget, as well as the following reserve permitted by New York State. Assigned fund balance also includes encumbrances not classified as restricted or committed at the end of the fiscal year. ! I SOUTHOLD FIRE DISTRICT Notes to Financial Statements (Continued) I I I I I ! I I I I I I I I I I I Assigned fund balance also includes encumbrances not classified as restricted or committed at the end of the fiscal year, Unassigned - represents the residual classification for the District's general fund and could report a surplus or deficit. In funds other than the general fund, the unassigned classification should be used only to report a deficit fund balance resulting from overspending for specific purposes for which amounts had been restricted, committed, or assigned. Fund Balance Classification Any portion of fund balance may be applied or transferred for a specific purpose either by voter approval if required by law or by formal action of the Board of Commissioners if voter approval is not required. Amendments or modification to the applied or transferred fund balance must also be approved by formal action of the Board of Commissioners. The Board of Commissioners shall retain the authority to assign fund balance. In circumstances where an expenditure is incurred for a purpose for which amounts are available in multiple fund balance classifications (e.g., expenditures related to reserves) the expenditure is to be spent first from the restricted fund balance to the extent that an approved permissive referendum is in place or the reserve has been appropriated by the Board of Fire Commissioners, and then from the unrestricted fund balance. Expenditures incurred in the unrestricted fund balances shall be applied first to the assigned fund balance to the extent that there is an assignment and then to the unassigned fund balance. 2. CHANGES IN ACCOUNTING PRINCIPLES In February 2009, GASB released GASB Statement No. 54 (GASB 54), Fund Balance Reporting and Governmental Fund Type Definitions, which was implemented by the District during the year ended December 31, 2011. GASB 54 requires local governments to focus on the constraints imposed upon resources when reporting fund balance in governmental funds. The new fund balance components will indicate the level of constraints placed upon how resources can be spent and identify the sources of these constraints. In addition, GASB 54 abandons the reserved and unreserved classifications of fund balance and replaces them with five new classifications: nonspendable, restricted, committed, assigned and unassigned. 3. STEWARDSHIP. COMPLIANCE AND ACCOUNTABILITY A. Budgets The District administration prepares a proposed budget for approval by the Board for the general fund, the only fund with a legally adopted budget. Budgets are adopted annually on a basis consistent with the accounting method used to prepare the Annual Financial Report Update Document. Appropriations are adopted at the program line item level. Appropriations established by the adoption of the budget constitute a limitation on expenditures (and encumbrances) that may be incurred. Appropriations authorized for the year are increased by the amount of encumbrances carried forward from the prior year. Appropriations lapse at the end of the fiscal year unless expended or encumbered. Encumbrances will lapse if not expended in the - 10- ! I SOUTHOLD FIRE DISTRICT Notes to Financial Statements (Continued) I I I I I I I I I I I I ! I I I I subsequent year. Appropriations authorized for the current year are increased by the planned use of specific reserves, and budget amendments approved by the Board as a result of selected new revenue sources not included in the original budget (when permitted by law). These supplemental appropriations may occur subject to legal restrictions, if the Board approves them because of a need that exists which was not determined at the time the budget was adopted. During the year, the Board of Fire Commissioners approved a supplemental appropriation for the purchase of a bus. A summary of the general fund budget is as follows: Budget approved by the Board of Fire Commissioners Encumbrances from prior year Additional appropriations funded by prior year unassigned fund balances: Bus purchase $ 1,768,300 6,669 120,000 $ 1,894,969 Final Budget B. Encumbrances Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of monies are recorded for budgetary control purposes to reserve that portion of the applicable appropriations, is employed as a control in preventing over expenditure of established appropriations. Open encumbrances are reported as reservations of fund balances since they do not constitute expenditures or liabilities and will be honored through budget appropriations in the subsequent year. Expenditures for such commitments are recorded in the period in which the liability is incurred. 4. DEPOSITS WITH FINANCIAL INSTITUTIONS AND INVESTMENTS The District's investment policies are governed by state statutes and District policy. Resources must be deposited in Federal Deposit Insurance Corporation (FDIC) insured commercial banks or trust companies located within the state. Permissible investments include obligations of the U.S. Treasury and U.S. Agencies, repurchase agreements and obligations of New York State or its localities. Collateral is required for demand and time deposits and certificates of deposit not covered by FDIC insurance. Obligations that may be pledged as collateral are obligations of the Dnited State and its Agencies and obligations of New York State and its municipalities. Investments are stated at fair value. Custodial credit risk is the risk that in the event of a bank failure, the District's deposits may not be returned to it. GASB directs that deposits be disclosed as exposed to custodial credit risk if they are not covered by depository insurance and the deposits are as follows: A. Uncollateralized, B. Collateralized by securities held by the pledging financial institution, or C. Collateralized by securities held by the pledging financial institution's trust department or agent but not in the District's name. None of the District's aggregate bank balances, not covered by depository insurance, were exposed to custodial credit risk as described above at year end. The District did not have any investments at year end or during the year. Consequently, the District was not exposed to any material interest rate risk. -11- ! ! SOUTHOLD FIRE DISTRICT Notes to Financial Statements (Continued) I I I I I I I i I I I I I I I I I Investment pool: The District participates in a multi-municipal cooperative investment pool agreement pursuant to New York State General Municipal Law Article S-G, §119-O, whereby it holds a portion of the investments in cooperation with other participants. The investments are highly liquid and are considered to be cash equivalents. Total investments of the cooperative as of December 31, 2011 are $325,386,511, which consisted of $141,619,250 in repurchase agreements, $4,499,464 in U.S. Government Guaranteed Securities, $129,267,797 in U.S. Treasury Securities and $50,000,000 in collateralized bank deposits, with various interest rate and due dates. The following amounts are included as cash in the District's funds: Carrying Fund Amount General fund $ 126,204 Capital projects fund 800,236 $ 926,440 The above amounts represent the cost of the investment pool shares, and are considered to approximate market value. The investment pool is categorically exempt from the New York State collateral requirements. Additional information concerning the cooperative is presented in the annual report of MBIA, Inc. 5. GENERAL FIXED ASSETS During the current year, the District obtained an independent appraisal of its land, buildings and equipment. Capital assets are valued at original cost. Capital assets balances and activity for the year ended December 31, 2011, were as follows: Balance Balance December 31, December 31, 2010 Additions Deletions 2011 Land $ 258,752 $ $ $ 258,752 Buildings 3,176,358 49,207 3,225,565 Equipment 3,089,301 156,848 (74,019) 3,172,130 $ 6,524,411 $ 206,055 $ (74,019) $ 6,656,447 6. INTERFUND TRANSACTIONS The District transfers from the general fund to the capital projects fund in accordance with permissive referendums approved throughout the year. There were no interfund transfers in the current year. -12- I I SOUTHOLD FIRE DISTRICT Notes to Financial Statements (Continued) I I I I I I I I I I I I I I I I I 7. CAPITAL RESERVES Activity for the general fund capital reserves during the year under audit is as follows: Building Equipment Reserve Reserve Total Reserve Balance - Beginning of Year Additions to Reserve: Board approved transfers: Planned budget increase Interest $ 31,285 $ 1,048,644 $ 1,079,929 220,000 220,000 16 750 766 $ 31,301 $ 1,269,394 $ 1,300,695 Reserve Balance- End of Year 8. PENSION PLANS A. New York State and Local Employees' Retirement System Plan Description The District elected to participate in the New York State and Local Employees' Retirement System (ERS). This system is a cost-sharing, multiple-employer, defined benefit pension plan. The system offers retirement and disability benefits, annual cost of living increases, and death benefits to plan members and beneficiaries. The ERS is established pursuant to the New York State Retirement and Social Security Law to provide benefits for the state, local governments, and their employees. ERS plan benefits are guaranteed by state constitution. The system issues publicly available financial reports that include financial statements and required supplementary information. These reports may be obtained by writing to the following location: NYS and Local Retirement Systems, Gov. Alfred E. Smith State Office Building, 110 State Street, Albany, NY 12244. Funding Policy The system is noncontributory except for employees who joined the retirement system after July 27, 1976, with less than ten years of service, who contribute 3% of their salary; or joined the system on or after January 1, 2010 who contribute 3% of their salary throughout active membership. Regardless of start date, all members may elect to make member contributions. The New York State Comptroller shall annually certify the rates expressed as proportions of the members' payroll, which shall be used in computing the contributions required to be made by employers to the pension accumulation fund. The District is required to contribute on an annual basis. Contributions are generally made to the ERS on December 15, for the period April I to March 31 ofthe following year based on estimated eligible employees' salaries. Contributions are adjusted in the following year based on actual salaries. - 13 - ! I SOUTHOLD FIRE DISTRICT Notes to Financial Statements (Continued I I I I I I I i I I I I I I I I I The following represents the District's regular penston contribution to the system based on annual covered payroll: 2011 2010 2009 District contributions $ 20,244 $ 15,659 $ 10,523 The District's contribution to the system is actuarially determined and is established and may be amended by the ERS Board of Trustees. B. Length of Service Award Program (LOSAP) The District established a defined benefit LOSAP for the active volunteer firefighters of the Southold Fire Department. The program took effect on January 1, 1993. The program was established pursuant to Article ll-A of the General Municipal Law. The program provides municipally-funded pension-like benefits to facilitate the recruitment and retention of active volunteer firefighters. The District is the sponsor of the program. The information contained in this note is based on information for the Length of Service Award Program for the plan year ending on December 31, 2011. Program Descrivtion Participation, Vesting and Service Credit Active volunteer firefighters who have reached the age of 18 and who have completed 1 year of firefighting service are eligible to participate in the program. Participants acquire a non forfeitable right to a service award after being credited with 5 years of firefighting services or upon attaining the program's entitlement age. The program's entitlement age is 62. In general, an active firefighter is credited with a year of firefighting service for each calendar year after the establishment of the program which he or she accumulates fifty points. Points are granted for the performance of certain activities in accordance with a system established by the sponsor on the basis of a statutory list of activities and point values. A participant may also receive credit for 5 years of firefighting service rendered prior to the establishment of the program, provided the total entitlement does not exceed the maximum dollar amount established by the Plan. Benefits A participant's benefit under the program is life annuity with ten years certain; or equal to $20 multiplied by the person's total number of years of firefighting service. The number of years of firefighting service used to compute the benefit cannot exceed forty. Benefits are not payable until the Plan anniversary date of the month after the participant's 62"d birthday, except in the case of disability or death. The program provides statutorily mandated death and disability benefits. Fiduciary Investment and Control Service credit is determined by the governing board of the sponsor, based on information certified to the governing board by each fire company having members who participate in the program. Each fire company must maintain all required records on forms prescribed by the governing board. - 14- SOUTHOLD FIRE DISTRICT Notes to Financial Statements (Continued) I I I I I I I i I I I I I I I I I The governing board of the sponsor has retained and designated Hometown/RSA Consultants to assist in the administration of the program. The designated program administrator's primary responsibility is to administer the plan for the exclusive benefit of the participants and their beneficiaries. Such duties include, but are not limited to, determining eligibility of firefighters to participate in the plan, compute participant entitlement, authorize disbursements to participants, compute necessary contribution amounts, maintain all necessary records and consult with the sponsor and the trustee on long-term investment plans. Disbursements of program assets for the payment of benefits or administrative expenses must be reviewed by the trustee (i.e. the Board of Fire Commissioners) and signed by at least two board members prior to being disbursed by the administrator. Program assets are required to be held in trust by LOSAP legislation, for the exclusive purpose of providing benefits to participants and their beneficiaries or for the purpose of defraying the reasonable expenses of the operation and administration of the program. The trust agreement is dated February 8, 2005, and the trustee is the Board of Fire Commissioners. Authority to invest program assets is vested in the administrator, with the Board of Fire Commissioners' prior written approval. Subject to restrictions in the program document, program assets are invested in accordance with a statutory "prudent person" rule. The program document calls for all investment decisions to be chosen and approved by the trustee, the Board of Fire Commissioners, prior to being invested by the administrator. The sponsor is required to retain an actuary to determine the amount of the sponsor's contributions to the plan. The actuary retained by the sponsor for this purpose is Harbridge Consulting Group, LLC. Portions of the following information are derived from a report prepared by the actuary dated April 2012. Program Financial Condition Assets and Liabilities Actuarial Present Value of Benefits at December 31, 2011 $ 4,161,053 Less: Assets Available for Benefits %oftotal Trust Annuity Insurance contracts 5.03% 145,558 73.89% 2,138,512 21.08% 610,134 Total Net Assets Available for Benefits 2,894,204 Total Unfunded Benefits 1,266,849 Less: Unfunded Liability for Prior Service (1,266,849) Unfunded Normal Benefits -15- I I SOUTHOLD FIRE DISTRICT Notes to Financial Statements (Continued) I I I I I I I I I I I I I I I I I Prior Service Costs Prior service costs are being amortized over a range of 15 to 10 years at a discount rate of 5.25%. Receipts and Disbursements Plan Net Assets, Beginning of Year $ 2,777,525 Changes during the year + Plan contributions + Investment income earned +/- Changes in fair market value of investments - Plan benefit withdrawals + Administrative and other fees/charges 357,391 73,050 18,579 (336,741) ~400 116,679 $ 2,89{204 $ 358,067 313,630 357,391 $ ~400 Plan Net Assets, End of Year Con tributions Maximum amount of sponsor's contribution recommended by actuary: Minimum amount of sponsor's contribution recommended by actuary: Amount of sponsor's actual contribution: Administration Fees Fees paid to designated program administrator Fees paid to trustee Fees paid for investment management (if separate from fee paid to trustee) Fee paid to actuary Other administration fees (list) Normal Costs The actuarial valuation methodology used by the actuary to determine the sponsor's contribution is the unit credit cost method. The assumptions used by the actuary to determine the sponsor's contribution and the actuarial present value of benefits are: -16- I I SOUTHOLD FIRE DISTRICT Notes to Financial Statements (Continued) I I I I I I I I I I I I I I I I I Assumed rate of return on investment Mortality tables used for Withdrawal Disabiliw Retirement Death (actives) Death (inactives) 5.25% None None 1994 Group Annuity - Male None None Other None 9. LONG-TERM LIABILITIES Long-term liability balances and activity for the year are summarized below: Balance December 31, 2010 Additions Reductions Balance Amounts December 31, Due Within 2011 One Year Long-term debt: Bonds payable $ 1,025,000 $ $ 125t000 $ 900~000 $ 150,000 The general fund has typically been used to liquidate long-term liabilities. Bonds payable are comprised of the following: Outstanding at Issue Final Interest December 31, Description Date Maturity Rate 2011 Serial bond 6/24/2002 7/9/2017 3.%4.2% $ 900,000 The following is a summary of debt service requirements for bonds payable: Fiscal Year Ending December 31, Principal Interest Total 2012 $ 150,000 $ 35,775 $ 185,775 2013 150,000 30,150 180,150 2014 150,000 24,450 174,450 2015 150,000 18,450 168,450 2016 150,000 12,450 162,450 2017 150,000 6,300 156,300 Total $ 900,00~~0 $ 127,575 $ 1,027,575 Interest on long-term debt for the year was $40,463. -17- I I SOHTHOLD FIRE DISTRICT Notes to Financial Statements (Continued} I I I I I I I I I I I I I I I I I 10. COMMITMENTS AND CONTINGENCIES A. Encumbrances All encumbrances are classified as either restricted or assigned fund balance. At December 31, 2011, the District encumbered the following amounts: Assigned: Unappropriated Fund Balance General Fund Equipment and capital outlay $ 23,072 B. Risk Management The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; injuries to employees; errors and omissions; and natural disasters, etc. These risks are covered by commercial insurance purchased from independent third parties. Settled claims from these risks have not exceeded commercial insurance coverage for the past three years. 11. SPENDING LIMITATION The District did not exceed the statutory spending limitation imposed by New York State Law for the year ended December 31, 2011, and the budget for the year ending December 31, 2012. -18- I I I I I I I I I I I I I I I I I I I REVENUES SOUTHOLD FIRE DISTRICT Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund For the Year Ended December 31, 2011 Real property taxes Interest and earnings Rentals Sale of equipment Miscellaneous To~lRevenues EXPENDITURES Personal services Equipment and capital outlay Fire protection State retirement system Service award program Social security Workers' compensation Medical and accident insurance Debt service - principal Debt service - interest Total Expenditures OTHER USES Planned increase to capital reserve Total Other Uses Total Expenditures and Other Uses Net Change in Fund Balances Fund Balance- Beginning of Year Fund Balance- End of Year Board- Approved Final Budget Budget Actual $ 1,746,444 $ 1,746,444 $ 1,746,449 1,000 1,000 2,084 20,856 20,856 21,232 15,165 492 1,768,300 1,768,300 1,785,422 247,953 233,597 229,528 85,000 212,599 177,686 550,500 518,070 488,213 19,416 21,772 20,244 365,000 430,000 386,791 18,968 18,968 17,231 70,000 48,000 47,007 26,000 26,500 26,446 125,000 125,000 125,000 40,463 40,463 40,463 1,548,300 1,674,969 1,558,609 Final Budget Variance with Actual $ 5 1,084 376 15,165 492 $ 17,122 Final Budget Variance with Year End Actual and Encumbrances Encumbrances $ $ 4,069 23,072 11,841 29,857 1,528 43,209 1,737 993 54 $ 23,072 $ 93,288 220,000 220,000 220,000 220,000 1,768,300 1,894,969 1,558,609 {126,669) 226,813 126,669 1,399,675 $ $ $ 1,626,488 See Paragraph on Supplementary Information Included in Auditor's Report - 19- I I' I I I I I I I I I I I I I I I I I CULLEN & DANOWSKI, LLP CERTIFIED PUBLIC ACCOUNTANTS VINCENT D. CULLEN CPA JAMES E. DANOWSKI CPA PFIER F. RODIUGUEZ CPA lllI S. SANDEP-S, CPA DONALD I HOFFMANN CPA CHRISIOPIIER~ REINO, CPA AIAN YU CPA REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Fire Commissioners Southold Fire District Southold, New York We have audited the financial statements of the Southold Fire District, as of and for the year ended December 31, 2011, as listed in the table of contents, which collectively comprise the District's basic financial statements and have issued our report thereon dated May 31, 2012. As described more fully in Note 1, the Southold Fire District has prepared these financial statements using accounting practices prescribed and permitted by the New York State Office of the State Comptroller, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. 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 GovernmentAuditingl Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting Management of the Southold Fire District is responsible for establishing and maintaining effective internal controls over financial reporting. In planning and performing our audit, we considered the Southold Fire 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 Southold Fire District's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Southold Fire District's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency or combination of deficiencies in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. 1650 ROUTE 112, PORT JEFFERSON STATION, NEW YORK 11776-3060 - 20- PHONE: 631-473-3400 ' FAX: 631-473-4863 · WWW. CDLLP. NET I I I I I I I I I I I I I I I I I I Compliance and Other Matters As part of obtaining reasonable assurance about whether the Southold Fire 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 no instances of noncompliance or other matters that are required to be reported under Government Audit~n~t Standards. We noted certain matters that we have reported to the Board of Fire Commissioners and management of the Southold Fire District in a separate letter dated May 31, 2012. This report is intended solely for the use and information of the Board of Fire Commissioners and management of the Southold Fire District and the New York State Office of the State Comptroller and is not intended to be and should not be used by anyone other than these specified parties. May 31, 2012 - 21 -