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Home My WebLink About2011Fishers Island Fire District ANNUAL FINANCIAL REPORT December 31, 2011 ~COMPANY TABLE OF CONTENTS INDEPENDENT AUDITORS' REPORT ...................................... ANNUAL FINANCIAL REPORT UPDATE DOCUMENT: FINANCIAL SECTION .............................................. SUPPLEMENTAL SECTION .......................................... NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT ........ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF ANNUAL FINANCIAL REPORT UPDATE DOCUMENT PERFORMED IN ACCORDANCE WITH GOVERNMENTA UDITING STANDARDS ........................................................... PAGE A 1 18 25 35 C~COMPANY d£OMPANY A PROFESSIONAL CORPORATION OF CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITORS' REPORT To the Board of Fire Commissioners Fishers Island, New York We have audited the accompanying Annual Financial Report Update Document (Financial Section) of Fishers Island Fire District, as of and for the years ended December 31,2011 and 2010, as listed in the table of contents. This report is the responsibility of Fishers Island Fire District's management. Our responsibility is to express an opinion on this report based on our audits. We conducted our audits 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 our audits to obtain reasonable assurance about whether the Annual Financial Report Update Document is free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Annual Financial Report Update Document. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation. We believe that our audits provide a reasonable basis for our opinions. As described more fully in Note 1, the Fishers Island Fire District prepares its Annual Financial Report Update Document using accounting practices prescribed or 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 Annual Financial Report Update Document 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 Annual Financial Report Update Document referred to above presents fairly, in all material respects, the assets, liabilities and fund balances of Fishers Island Fire District, as of December 31, 2011 and 2010 and the revenues it received and expenditures made for the years then ended in conformity with the basis of accounting described in Note 1. -A- An Independent Member of the BDO Seidman Alliance To the Board of Fire Commissioners Fishers Island, New York Our audits were conducted for the purpose of forming opinions on the Annual Financial Report Update Document (Financial Section) taken as a whole. The Supplemental Section listed on page two of the Annual Financial Report Update Document is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information, except for the Fire District Questionnaire, has not been subjected to the auditing procedures applied in the audit of the Annual Financial Report Update Document (Financial Section) and, accordingly, we express no opinion on it. In accordance with Government Auditing Standards, we have also issued our report dated February 29, 2012, on our consideration of the Fishers Island Fire District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audits. February 29, 2012 ~CO~/ All Numbers in This Report Have Been Rounded To The Nearest Dollar ANNUAL FINANCIAL REPORT UPDATE DOCUMENT For The FIRE DISTRICT of Fishers Island 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 Fishers Island *** 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 (R) Reserve O-A) AGENCY A~I 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) Statez3-~nt of Indebtedness 2) SFhedule of Tirpe Deposits ~nd Investments 3) Bank Reconciliation 4) Local Government Questionnaire 5) Schedule of EmPloyee al~d 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 Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 (A) GENERAL Balance Sheet ¢:o~-e~D~cripiio~ 7~ -; .... ;-~ -~'~ ~;~ ...... 20~0 i? ~dpCode~ ~0~i~ Assets Cash 23~814 ^200 21,744 Cash In Time Deposits A201 TOTAL Cash 23,814 21,744 TOTAL Assets 23,814 21,744 Page 3 OSC Municipality Code 471179004000 Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 (A) GENERAL Balance Sheet (::ode Description Fund Equity Unreserved Fund Balance Unappropriated Unassigned Fund Balance TOTAL Unassigned Fund Balance TOTAL Fund Equity TOTAL Liabilities And Fund Equity - : ~ -- 20i~ ~i EdpCod~-v 2~'1~ 23,814 A911 A917 21,744 23,814 2'~,744 23,814 21,744 23,8t4 21,744 Page 4 OSC Municipality Code 471179004000 Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 (A) GENERAL Results of Operation Revenues Real Property Taxes TOTAL Reel Property Taxes interest And Earnings TOTAL Use of Money And Property Sales of Equipment TOTAL Sale of Property And Compensation For Loss Refunds of Prior Year's Expenditures TOTAL Miscellaneous Local Sources Fed Aid Other Public Safety TOTAL Federal Aid TOTAL Revenues TOTAL Detail Revenues And Other Sources 356,403 A1001 356,403 952 A2401 952 5,000 A2665 6,000 A2701 0 A4389 0 362,355 362,355 356,403 356,403 71 71 0 35 35 73,6t4 73,614 430,123 430,123 Page 5 OSC Municipality Code 471179004000 Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 (A) GENERAL Results of Operation CodeDe-scripiion ~' - --'~[------: .... ~[ 2~0: !['i~lpc~xie [ 20il Expenditures Payment of Mta Payroll Tax,contr Expend TOTAL Payment of Mts Payroll Tax TOTAL General Government Support Fire, Pers Serv Fire, Equip & Cap Outlay Fire, Contr Expend TOTAL Fire TOTAL Public Safety State Retirement System Local Pension Fund, Empl Bnfts Social Security, Employer Cont Worker's Compensation, Empl Bnfts Life Insurance, Empl Bnfts 89 A19804 77 89 77 89 77 28,464 A34101 22,556 17,292 A34102 78,896 189,379 A34104 190,983 236, t35 292,435 235,t35 292,435 A90108 2,602 84,808 A90258 86,014 2,189 A90308 1,663 6,364 A90408 5,709 18,599 A90458 17,693 TOTAL Employee Benefits TOTAL Expenditures Transfers, Other Funds 111,960 113,681 347,184 406,193 426,000 A99019 26,000 TOTAL Operating Transfem TOTAL Other Uses TOTAL Detail Expenditures And Other Uses 426,000 26,000 426,000 26,000 773,t84 432,193 Page 6 OSC Municipality Code 471179004000 Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 (A) GENERAL Changes in Fund Equity Code Description 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 2010 V EdpCod~ i;: 2011 434,643 A8021 23,814 434,643 A8022 23,814 362,355 430,123 773,184 432,193 23,814 A8029 21,744 Page 7 OSC Municipality Code 471179004000 Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 (A) GENERAL Budget Summary CodeDe~cription - : 2011 il EdpCode-! Estimated Revenues Est Rev - Real Property Taxes Est Rev - Use of Money And Property TOTAL Estimated Revenues Estimated - Intedund Transfer TOTAL Estimated Other Sources TOTAL Estimated Revenues And Other Sources 356,400 A1049N 3,300 A2499N 359,700 0 A5031N 0 359,700 2012 394,2OO 1,000 395,200 0 0 395,200 Page 8 OSC Municipality Code 471179004000 Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 (A) GENERAL Budget SummaE/ Cod~escdption - ' ~:: ~: 20!'1 ' 7""ii: EdpCode [ 2012 Appropriations App - Public Safety App - Employee Benefits TOTAL Appropriations App - Inten~und Transfer TOTAL Other TOTAL Appropriations And Other Uses 221,740 A3999N 262,200 111,960 A9199N 112,000 333,700 374,200 26,000 A9999N 21,000 26,000 21,000 359,700 395,200 Page 9 OSC Municipality Code 471179004000 (R) Reserve Balance Sheet Code Description Assets Cash, Special Reserves TOTAL Restricted Assets TOTAL Assets Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 ..... i 2010 ~ EdpCode il ~ ~01~ , 792,481 R230 820,521 792,481 820,521 792,481 820,521 Page 10 OSC Municipality Code 471179004000 (R) Reserve Balance Sheet Fund Equity Capital Reserve TOTAL Restricted Fund Balance TOTAL Fund Equity TOTAL Liabilities And Fund Equity Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 2010 792,481 R878 820,521 792,481 820,521 792,481 820,521 792,481 820,521 Page 11 OSC Municipality Code 471179004000 Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 (R) Reserve Results of Operation code Descripti~)n' Revenues Interest & Earnings TOTAL Use of Money And Property TOTAL Revenues Interfund Transfers TOTAL Inter~und Transfers TOTAL Other Sources TOTAL Detail Revenues And Other Sources 1,269 R2401 2,040 t ,269 2,040 1,269 2,040 426,000 R5031 26,000 426,000 26,000 426,000 26,000 427,269 28,040 Page 12 OSC Municipality Code 471179004000 Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Endin9 2011 (R) Reserve Results of Operation ~-ode~s-criptior{ ....... ! 20'1~ ~? EdpC~ 1[ ~0'1'1 - Expenditures Fire, Equipment Outlay 134,500 R34102 TOTAL Fire 134,500 0 TOTAL Public Safety 134,500 0 TOTAL Expenditures 134,500 0 TOTAL Detail Expenditures And Other Uses 134,500 0 Page 13 OSC Municipality Code 471179004000 Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 (R) Resewe Changes in Fund Equity [Code Description ANALYS1S 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 i~-- ~0'10 ii EdpCode 499,712 R8021 792,481 499,712 R8022 792,481 427,269 28,040 134,500 792,481 R8029 820,521 Page 14 OSC Municipality Code 471179004000 Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 (TA) AGENCY Balance Sheet ~odeDescdptio. - ~ - ' _ --- ]1 - 2(310 i! EdpCod~ ][ :- :~:11 : Assets Service Award Program Assets 962,277 TA461 1,008,842 TOTAL Investments 962,277 1,098,842 TOTAL Assets 962,277 1,908,842 Page 15 OSC Municipality Cede 471179004000 Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2011 (TA) AGENCY Balance Sheet Liabilities Service Awards 962,277 TA13 t ,008,842 TOTAL Agency Liabilities 962,277 1,008,842 TOTAL Liabilities 962,277 1,008,842 TOTAL Liabilities And Fund Equity 962,277 1,008,842 Page 16 OSC Municipality Code 471179004000 Fishers Island FIRE DISTRICT Financial Comments For the Fiscal Year Ending 2011 Page 17 Fishers Island FIRE DISTRICT Statement of Indebtedness For the Fiscal Year Ending 2011 Page 18 Fishers Island 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 9Z2011 9Z2021 $847,973.00 $847,973.00 9Z2014 $250,000.00 9Z2014A $620,709.00 $870,709.00 INVESTMENTS: - Securities (450) Book Value (cost) Market Value at Balance Sheet Date 9Z4501 9Z4502 Collateralized with securities held in possession of municipality or its agent 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 19 OSC Municipality Code 471179004000 Fishers Island FIRE DISTRICT Bank Reconciliation For the Fiscal Year Ending 2011 Include All Checking, Savings and C.D. Accounts · Bank Account Number ..... -5498 ..... -5704 · ..... -5662 ..... -5654 Add: Less: Bank Deposit Outstanding Balance In Transit Checks $6,822 $0 $5,708 $20,630 $0 $0 $743,317 $0 $0 $77,204 $0 $0 Total Adjusted Bank Balance Betty Cash Adjustments Total Cash 9ZCASH Total Cash Balance All Funds 9ZCASHB * Must be equal Adjusted Bank Balance $1,114 $20,630 $743,317 $77,204 $842,265 $.oo $.oo $842,265 $842,265 Page 20 OSC Municipality Code 471179004000 Fishers Island FIRE DISTRICT Fire District Questionnaire For the Fiscal Year Ending 2011 1) Has your district adopted a written procurement prolicy and is it complied with? 2) Has your district contracted to have an independent audit of its financial statements? if not, has the Board of Fire Commissioners performed an internal audit of the Treasurer's records and reports? · ' 3) Does your district have a written travel policy and is it complied with? 4) Are monthly bank reconciliations performed? 5) What is your district's statutory spending limitation margin (amount) for the next 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) Demand Deposits Response Y Y Y Y $594,322 N Y Y O 7) Has your Fire District adopted an investment policy as required by General Municipal Law, Section 39? Y Page 21 Fishers Island FIRE DISTRICT Employee and Retiree Benefits For the Fiscal Year Ending 2011 Total Full Time Employees: Total Part Time Employees: 3 Account Description Total Code Expenditures {All Funds) 90108 State Retirement S~,stem $2.602 0C~ 9015~ Police and Fire Rebrement 9o~5~ 90408 Local Pension Fund $86,014.06t ! S~cial Se~u~:ity $1.663.00~ Worker's ComDensabon $5.709.00 Insurance # of Full # of Part Time Time Employees Employees 90458 Life Insurance - '$17.693.00 ~ 90508 unemployment Insurance ' · 90553 Disability nsurance ' 90608~ Hospital and Medical ~ (Dental) Insurance ~70-8r Union Welfar~ ~nef~ts 9085~Supplemental Benefit Payment to Disabled Fire Fign[ers 9189C~ Other Emo[oyee Benefits Computed Total From Financial Section (comparative purooses only) Total $113,681.00 $1137681,4¢ # of Retirees Page 22 OSC Municipality 471179004000 Fishers Island FIRE DISTRICT Energy Costs and Consumption For the Fiscal Year Ending 2011 Energy Type Total Expenditures Total Volume Units Of Measure Alternative Units Of Measure v Gasoline i $262 54 gallons ?iesel Fuel ' $2,427, 298 gallons [Fu;I 0it $9,864ii 2,851i gallons Natural Gas I cubic feet · IElectbcity t~ $6,204! 25,02~ k![~watts Coal il $'! : tons Page 23 OSC Municipality 471179004000 Fishers Island FIRE DISTRICT Schedule of Other Post Employment Benefits (OPEB) For the Fiscal Year Ending 2011 Annual OPEB Cost and Net OPEB Obligation · 1 Type of Other Post Employment Benefits Plan 2 Annual Required Contribution(ARC) 3 Interest on Net OPEB Obligation 4 Adjustment to Annual Required Contribution 5. Annual OPEB Expense 6. Less: Actual Contribution Made · 7. Increase in Net OPEB Obligation 8 Net OPEB Obligation - beginning of year 9 Net OPEB Obligation ~ end of year t0 Total Other Post Employment Benefits as reported in Accounts 683 in Financial Section, Current Fiscal Year t 1. Percentage of Annual OPEB Cost Contributed (Actual Contribution Made/Annual OPEB Cost) Funded Status and Funding Process 12 Actuarial Accrued Liability(AAL) t 3. Less: Actuarial Value of Plan Assets t4. Unfunded Actuarial Accrued Liability(UAAL) t 5 Funded Ratio(Actuarial Value of Plan Assets/AAL) · 16. Annual Covered Payroll (of active employees covered by the plan) 17. UAAL as Percentage of Annual Covered Payroll Other OPEB Information 18.Date of most recent actuarial valuation 19.Actuarial method used ~ 20 Assumed rate of return on investments discount rate 21. Amortization period of UAAL(in years) .00% Page 24 OSC Municipality 471179004000 Fishers Island Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT Summary of significant accounting policies: The Annual Financial Report Update Document of the Fishers Island Fire District (the District), as of and for the year ended December 31, 2011 has been prepared in conformity with the cash regulatory basis of accounting as prescribed by the State Comptroller's Office, which is a comprehensive basis of accounting other than United States generally accepted accounting principles. Financial reporting entity: The District is a governmental entity that provides fire protection to the local community. The District receives most of its funding from property taxes. The District is governed by laws of the State of New York. The Board of Fire Commissioners is the legislative body responsible for the overall operation of the District. All activities and functions performed for the District are its direct responsibility. The Treasurer serves as Chief Fiscal Officer of the District. Basis of presentation: The Annual Financial Report Update Document provides information about the District's funds, including fiduciary funds. The accounts of the District are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. The following fund types are used: Governmental: General Fund The General Fund is the principal operating fund of the District and is used to account for all financial resources except those required to be accounted for in another fund. Debt service is also accounted for in the General Fund. Equipment Repair Reserve Fund The Equipment Repair Reserve Fund is used to account for and report financial resources to be used for the acquisition of equipment needed by the District. Capital Reserve Fund The Capital Reserve Fund is used to account for and report financial resources to be used for the acquisition, construction or renovation of major capital facilities. -25- ~COMPANY Fishers Island Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT Summary of significant accounting policies (continued): Fiduciary Fund: Fiduciary funds are used to account for assets held by the District in a trustee or custodial capacity. The District utilizes the following fund: Agency Fund The Agency Fund is used to account for and report assets held by the District in the capacity of trustee, custodian or agent for individuals. Agency funds are custodial in nature and do not involve measurement of results of operations. Basis of accounting: The accompanying Annual Financial Report Update Document has been prepared on the cash regulatory basis of accounting, which is a comprehensive basis of accounting other than generally accepted accounting principles. Under that basis, the only asset recognized is cash and no liabilities are recognized. All transactions are recognized as either cash receipts or disbursements. Non-cash transactions are not recognized in the Annual Financial Report Update Document. Cash and cash equivalents: Cash and cash equivalents include demand deposits and temporary investments with original maturities of three months or less from date of acquisition. Interfund transfers: The operations of the District give rise to certain transactions between funds, including transfers of expenditures and revenues to provide services and construct assets. This is either by budget, Board resolution, permissive referendum or mandatory referendum. Fund balances: In fiscal year 201 l, the District implemented Governmental Accounting Standards Board Statement No. 54, "Fund Balance Reporting and Governmental Fund Type Definitions" (GASB 54). GASB 54 changed the classification of fund balance to fbcus on the constraints imposed on resources in governmental funds, instead of the previous focus on availability tbr appropriation. Fund balance is now broken down into five different classifications: non-spendable, restricted, committed, assigned and unassigned. -26- ?c0 P a' Fishers Island Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT Summary of significant accounting policies (continued): Fund balances (continued): Non-spendable consists of assets that are inherently non-spendable in the current period either because of their form or because they must be maintained intact, including prepaid items, inventories, long-term portions of loan receivable, financial assets held for resale and principal of endowments. 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. Committed consists of amounts that are subject to a purpose constraint imposed by a formal action of the govermnent's highest level of decision-making authority before the end of the fiscal year and that require the same level of formal action to remove the constraint. The Board of Fire Commissioners is the decision-making authority that can, by Board resolution, prior to the end of the fiscal year, commit fund balance. Assigned consists of amounts that are subject to a purpose constraint that represents an intended use established by the government's highest level of decision-making authority or by their designated body or official. The purpose of the assignment must be narrower than the purpose of the General Fund and, in funds other than the General Fund, assigned fund balance represents the residual amount of fund balance. The Board of Fire Commissioners, by Board resolution, can authorize the Treasurer to assign fund balance. Unassigned represents the residual classification for the government's General Fund and could report a surplus or deficit. In funds other than the General Fund, the unassigned classification should be used only to report a deficit balance resulting from overspending for specific purposes for which amounts had been restricted, committed or assigned. When resources are available from multiple classifications, the District spends funds in the following order: Restricted amounts are deemed to have been spent when an expenditure is incurred for purposes for which both restricted and unrestricted (committed, assigned or unassigned) amounts are available. Within unrestricted fund balance, expenditures are deemed to be spent first from committed amounts, followed by assigned amounts and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of those unrestricted fund balance classifications could be used. -27- ~COMPANY Fishers Island Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT o Summary of significant accounting policies (continued): Real property taxes: All real property assessments are made by the Town of Southold. Real property tax payments are due in two equal installments; the first half payable on December 1 (lien and levy date) preceding the year for which the same is levied and the second half payable May 10, with the first half payable without penalty to January 10 and the second half payable without penalty to May 31. After May 31, ali taxes must be paid to the Suffolk County Treasurer with a 5% penalty charge and interest at the rate of 1% per month from February 1. The Town of Southold Receiver of Taxes collects all real estate taxes for the District. The Town of Southold Receiver of Taxes distributes the tax collections to the District. All payments made to the District are made in the year for which the tax has been levied. The Town of Southold Receiver of Taxes turns over uncollected items to the Suflblk County Treasurer who continues the collection of these items. Responsibility for the collection of unpaid taxes rests with Suflblk County. Budgetary, data: The District prepares an operating budget for the General Fund each year. The budget is adopted by the Board of Fire Commissioners as its final budget for the coming year. The budget is not subject to referendum. All budget appropriations lapse at the end of each year. Use of estimates: The preparation of the Annual Financial Report Update Document in conformity with the cash regulatory basis of accounting requires management to make significant estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Deposits with financial institutions and investments: The District's investment activities are governed by state statutes. Resources must be deposited in Federal Deposit Insurance Corporation (FDIC) insured commercial banks or trust companies located within the state. Collateral is required for demand and time deposits and certificates of deposit not covered by FDIC insurance. The District adopted a formal investment policy allowing investments in special time deposit accounts, certificates of deposit, obligations of the United States of America, obligations guaranteed by agencies of the United States of America where the payment of principal and interest are guaranteed by the United States of America, obligations of the State of New York and obligations issued by a municipality, school district or fire district other than the District. -28- ~COMPAI~ Fishers Island Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT Deposits with financial institutions and investments (continued): Custodial credit risk is the risk that in the event of a bank failure, the District's deposits may not be returned to it. The GASB directs that deposits be disclosed according to custodial credit risk. The District's custodial risk is specified by the following categories: 1. Insured by FDIC insurance. 2. Collateralized by securities held by the pledging financial institution's trust department or agent but not in the District's name. 3. Collateralized by securities held by the pledging financial institution but not in the District's name. 4. Uncollateralized. The District's deposits held by the banks are categorized, based on the above criteria, as follows: Categor~ Amount I $250,000 2 597,973 3 4 Total $847,973 Length of Service Awards Program (LOSAP): The information contained in this note is based on information for the LOSAP for the plan year ending December 31, 2011, which is the most recent plan year for ~vhich complete information is available. The funding detail is for the period January 1, 2010 through December 31, 2010. The District established a defined benefit LOSAP for the active volunteer firefighters of the District. The Program took effect on January 1, 1993. The Program was established pursuant to Article 11-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. -29- ~COMPA~ Fishers Island Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT o Length of Service Awards Program (LOSAP) (continued): Program description: Participation~ vesting and service credit: Active volunteer firefighters xvho have reached the age of I8 and who have completed one year of service are eligible to participate in the Program. Participants acquire a nonforfeitable right to a service award after being credited with 5 years of firefighting service or upon attaining the Program's entitlement age and completing one year of Plan participation. The Program's entitlement age is 65. In general, an active volunteer firefighter is credited with a year of firefighting service for each calendar year after the establishment of the Program in which he or she accumulates 50 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. Benefits: A participant's benefit under the Program is the actuarial equivalent of a monthly payment for life, with 10 years certain, 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 30. Benefits are not payable until the first day of the month coincident with or following the attainment of age 65 and completion of one year of plan participation. Except in the case of disability or death, benefits are payable when a participant reaches entitlement age. 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 the information certified to the Governing Board by the fire company. The fire company must maintain all required records on forms prescribed by the Governing Board. The Governing Board of the Sponsor has retained and designated Hometown Insurance Agency (Hometown)/RSA Consultants to assist in the administration of the Program. The designated Program administrator's functions include providing basic annuaI administration services as follows: -30- ~CO~ANY Fishers Island Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT go Length of Service Awards Program (LOSAP) (continued): Program description (continued): Fiduciary investment and control (continued): a) Providing participants enrollment forms; b) Providing an annual reminder letter with a review list for the current anniversary date; c) Preparation of Explanation of Plan Benefits; d) Calculation of Schedule of Benefits and cost annually; e) Participants' benefit calculation at time of severance or retirement; f) Auxiliary Fund valuation and suggested deposit; g) Summary of required annual contribution; h) Annual actuarial review and recommended benefit enhancements. Disbursements of Program assets for the payment of benefits or administrative expenses must be approved. The following is an explanation of the process for approving disbursements: Payment of benefits: Entitlement benefits - When a participant becomes eligible to receive entitlement benefits, the Plan Sponsor prepares and submits an authorization letter to Hometown indicating the participant's name, address, age, social security number, term of service and other pertinent information. Hometown will then facilitate the disbursement of entitlement benefits. Death benefits - Upon notification from the Plan Sponsor of a participant's death, Hometown forwards an individual claim form to the Plan Sponsor for completion. The Plan Sponsor will then complete and return this form, accompanied by a death certificate, to Hometown, authorizing the disbursement of a death benefit. Disability benefits - When a participant becomes disabled, the Plan Sponsor will notify Hometown in writing of a participant's total and permanent disability. Hometown will then verify that the participant has been declared 100% disabled by the Workers Compensation Board. Subsequent to this verification, Hometown will facilitate the disbursement of disability benefits. -31- ~CO~A~Y Fishers Island Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT o Length of Service Awards Progrmn (LOSAP) (continued): Payment of administrative expenses: 1. Per the executed Service Fee Agreement, the Plan Sponsor agrees to payment as contracted. Authority to invest Program assets is vested in Genworth Financial, Inc. and Standard Security Life Insurance Company. Subject to restrictions in the Program document, Program assets are invested in accordance with a statutory "prudent person" rule. The Sponsor has invested plan funds in Group Annuity Contracts with guaranteed floor rates of interest of 3% per annum. 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 2011. Program financial condition: Assets and liabilities: Actuarial present value of vested accrued benefits at December 31, 2010: Vested Non-vested Less assets available for benefits $1,178,073 35,174 $1,213,247 %ofTotal 3.17% 26.96% 24.82% 45.05% 100.00% New York Commercial Trust Standard Security annuity Genworth Financial annuity Cash value of life insurance Total net assets available for benefits Total unfunded benefits 30,507 259,414 238,878 433,478 962,277 250,970 -32- Fishers Island Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT Length of Service Awards Program (LOSAP) (continued): Program financial condition (continued): Receipts and disbursements: Plan net assets, beginning of year $908,918 Changes during the year: Plan contributions Stripped cash value insurance Investment income earned Plan benefit withdrawals Life insurance premiums paid Cash value of life insurance, net $ 36,000 5,827 21,788 (48,240) 44,115 (6,131) 53,359 Plan net assets, end of year $962,27~ Contributions: ange of Sponsor s contribution recommended by actuary Amount of Sponsor's actual contribution $78,399- $98,839 $80,115 Administration fees: Fees paid to designated program administrator from separate District funds $ 3,900 Funding methodology and actuarial assumptions: 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: Assumed rate of return on investment 5.25% for determining contribution 6.00% for determining actuarial present value of benefits Mortality table used for: Pre-retirement: None Post-retirement: 1994 Group Annuity - Male -33- C COMPANY Fishers Island Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT Commitments and contingencies: The District is exposed to various risks of loss related to torts; theft of; damage to and destruction of assets; injuries to employees; errors and omissions; natural disasters, etc. These risks are covered by commercial insurance purchased from independent third- parties. Settled claims from these risks have not exceeded commercial insurance coverage. -34- ~COME,~d~Y dCOMPANY 437 Madison Avenue, 29th F]oot New York, NY 10022 · 212.962.4470 A PROFESSIONAl CORPORATION OF CERTIFIED PUBLIC ACCOUNTAN][S To the Board of Fire Commissioners Fishers Island, New York We have audited the Annual Financial Report Update Document (AUD) of Fishers Island Fire District (the District) as of and for the year ended December 3 i, 2011 and have issued our report thereon dated February 29, 2012. 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 District's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the AUD, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the District's internal control over financial reporting. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses and, therefore, there can be no assurance that ali deficiencies, significant deficiencies or material weaknesses have been identified. However, as described below, we identified a certain deficiency in internal control over financial reporting that we consider to be a significant deficiency, as well as a material weakness. 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 AUD will not prevented or detected and corrected in a timely basis. A significant deficiency, is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the following deficiency to be a material weakness: · Controls over financial reporting process as they pertain to the preparation of the AUD, including related disclosures. -35- An Independent Member of the BDO Seidman Alliance To the Board of Fire Commissioners Fishers Island, New York The District's response is that its size and limited resources do not warrant the cost of having a full-time certified public accountant on its payroll. The District feels that this deficiency has been appropriately mitigated. Compliance and Other Matters As part of obtaining reasonable assurance about whether the District's AUD is free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, non-compliance with which could have a direct and material effect on the determination of AUD amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, ~ve do not express such an opinion. The results of our tests disclosed no instances of non-compliance or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we reported to those charged with governance in a separate letter dated February 29, 2012. The District's response to the findings identified in our audit is described above. We did not audit the District's responses and, accordingly, we express no opinion on it. This report is intended solely for the information and use of the Fishers Island Fire District's Board of Fire Commissioners and management and is not intended to be and should not be used by anyone other than these specified parties. February 29, 2012 -36- COMPAN Fishers Island Fire District COMMUNICATION WITH THOSE CHARGED WITH GOVERNANCE December 31,2011 t3COMPANY COMPANY A PROFESSIONAL CORPORATION OF CERTIFIED PUBLIC ACCOUNTANTS 437 Madison Avenue, 29th Floor New York, NY 10022 * 212962.44?0 February 29, 2012 To the Board of Fire Commissioners Fishers Island Fire District We have audited the Annual Financial Report Update Document (AUD) of Fishers Island Fire District (the District) for the year ended December 31,2011. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and Government Auditing Standards, as xvell as certain information related to the planned scope and timing of our audit. We have communicated such information in our engagement letter to you dated December 27, 2011. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Findings Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the District are described in Notc 1 to the AUD. As described in Note 1 to the AUD, the District changed accounting policies related to Fund Balance Reporting by adopting Governmental Accounting Standards Board (GASB) Statement No. 54, "Fund Balance Reloorting and Governmental Fund Type Definitions", in 2011. We noted no transactions entered into by the governmental unit during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the AUD in the proper period. Accounting estimates are an integral part of the AUD prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the AUD and because of the possibility that future events affecting them may differ significantly from those expected. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to the AUD taken as a whole. An Independent Member of the BDO Seidman Alliance To the Board of Fire Commissioners Fishers Island Fire District February 29, 2012 Page 2 Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting or auditing matter, whether or not resolved to our satisfaction, that could be significant to the AUD or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated February 29, 2012. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the governmental unit's AUD or a determination of the type of auditor's opinion that may be expressed on that AUD, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the governmental unit's auditors. Ho~vever, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. OTHER MATTERS Reporting on Capital Assets Historically, the District has not reported its capital asset balances and related additions and dispositions in the AUD. The AUD does include a schedule for the reporting of capital assets, but New York State has not, in the past, enforced completion of the schedule. In practice, many districts have been reporting this information and many have not. As we have in the prior year, we are again suggesting that this section of the AUD be completed to provide a complete report to the State and avoid any possible criticisms in the future. ffCOMPA~ To the Board of Fire Commissioners Fishers Island Fire District February 29, 2012 Page 3 Capital assets are those assets that have a useful life of more than one year and include such things as land, buildings and building improvements, furnishings, vehicles and equipment. District officials have a responsibility to ensure that capital assets are protected from loss and that their value is maintained. This can be accomplished by adopting a capital asset policy, maintaining perpetual inventory records, conducting periodic inventories and establishing other safeguards to protect these assets. Periodic physical inventories of all capital assets are necessary to help ensure the accuracy of the asset records and to determine the existence and condition of the assets. Maintaining capital assets records is essential for properly controlling District-owned property. Such records create a system to help safeguard assets, determine the adequacy of insurance protection and provide a means of planning for future replacements. To accomplish this task of maintaining capital assets records, many fire districts engage the services of appraisal companies that offer capital (fixed) asset reporting and valuation services. Firms such as Appraisal Affiliates and American Appraisal are currently maintaining capital asset reports for many districts on Long Island. After an initial inventory is taken, it can be updated annually by providing a schedule of new additions and dispositions to the appraisal company and an updated annual report can be generated. Some districts have chosen to update the reports once every three years to minimize costs. It is our recommendation that, going forward, the District complete the schedule in the AUD/hr the reporting of capital assets. In order to do so, the District will need to adopt a capital asset policy, take an initial inventory, maintain perpetual inventory records and conduct periodic inventories. We wish to express our appreciation for the courtesies extended to our staff during the audit and we would be pleased to discuss our comments and recommendations with the Board of Fire Commissioners. This information is intended solely for the use of the Fishers Island Fire District's Board of Fire Commissioners and management and is not intended to be and should not be used by anyone other than these specified parties. Sheehan & Company, C.P.A., P.C. ~COIvlPANY