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HomeMy WebLinkAbout2012Fishers Island Fire District ANNUAL FINANCIAL REPORT December 31, 2012 c~ COIvIPANY TABLE OF CONTENTS INDEPENDENT AUDITOR'S 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 UD1TING STA NDA R DS ............................................................ PAGE A 1 18 25 35 /C0MPAN¥ COMPANY A PROFESSIONAL CORPORAIION Ol CERTIFIED PUBLIC ACCOUNTANiS INDEPENDENT AUDITOR'S REPORT To the Board of Fire Commissioners Fishers Island, New York Report on Annual Financial Report Update Document We have audited the accompanying Annual Financial Report Update Document (Financial Section) of Fishers Island Fire District, as of and for the year ended December 31, 2012 and the related notes to the Annual Financial Report Update Document, as listed in the table of contents. Management's Responsibility for the Annual Financial Report Update Document Management is responsible for the preparation and fair presentation of the Annual Financial Report Update Document in accordance with the regulatory basis of accounting as prescribed by the State Comptroller's Office, which is a special purpose framework of accounting other than U.S. generally accepted accounting principles; this includes thc design, implementation and maintenance of internal control relevant to the preparation and fair presentation of the Annnal Financial Report Update Document that is free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on the Almual Financial Report Update Document 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 Annual Financial Report Update Document is free from material misstatements. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Annual Financial Report Update Document. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the Annual Financial Report Update Document, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the District's preparation and fair presentation of the Annual Financial Report Update Document in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant estimates made by management, as well as evaluating the overall presentation of the Annual Financial Report Update Document. An Independent Member of the BDO Seidman Alliance To the Board of Fire Commissioners Fishers Island. New York We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis Ibr our andil 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 special purpose framework 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. Opinions In our opinion, the Annual Financial Report Update Document (Financial Section) referred to above presents fairly, in all material respects, the assets and fund balmlces of Fishers Island Fire District, as of December 31, 2012 and the revenues it received and expenditures made for the year then ended in conformity xvith the basis of accounting described in Note 1. 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. The 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, xve express no opinion on it. in accordance with Government Auditing Standards, we have also issued our report dated February 21, 2013, 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 ~vith Government Auditing Standards in considering Fishers Island Fire District's internal control over financial reporting and compliance. February 21, 2013 -A- ~COMP~ 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 12/31/2012 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 2011 and has been used by the OSC as the basis for preparin9 this update document for the fiscal year ended 2012: (A) GENERAL (R) Reserve (TA) AGENCY All amounts included in this update document for 2011 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 Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2012 (A) GENERAL Balance Sheet Code Description Assets Cash Cash In Time Deposits TOTAL Cash TOTAL Assets 2011 EdpCode 2012 21,744 A200 57,613 A201 21,744 57,613 21,744 57,613 Page 3 OSC Municipality Code 471179004000 Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2012 (A) GENERAL Balance Sheet Code Description Fund Equity Unassigned Fund Balance TOTAL Unassigned Fund Balance TOTAL Fund Equity TOTAL Liabilities And Fund Equity q' 20~1 ;I Edpcode 2012 21,744 A917 2t,744 2t,744 21,744 57,613 57,613 57,613 57,613 Page 4 Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2012 (A) GENERAL Results of Operation Code D~scripti0n Revenues Real Proper{y Taxes TOTAL Real Property Taxes Interest And Earnings TOTAL Use of Money And Property Refunds of Prier Year's Expenditures TOTAL Miscellaneous Local Sources Fed Aid Other Public Safety TOTAL Federal Aid TOTAL Revenues TOTAL Detail Revenues And Other Sources 20!! ! EdpC°de 2012 , 356,403 A1001 394,207 356,403 394,207 71 A2401 6O 7t 60 35 A2701 35 0 73,614 A4389 4,274 73,614 4,274 430,123 398,541 430,t 23 398,541 Page 5 OSC Municipality Code 471179004000 Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2012 (A) GENERAL Results of Operation Code Description 2011 ! EdpCode ii Expenditures Payment of Mta Payroll Tax,contr Expend TOTAL Payment of Mts Payroll Tax TOTAL General Government Support Fire, Pers Serv Fire~ Equip & Cap OuSay 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 2012 TOTAL Employee Benefits TOTAL Expenditures Transfers, Other Funds 77 A19804 23 77 23 77 23 22,556 A34101 20,956 78,896 A34102 39,907 190,983 A34104 171,901 292,438 232,764 292,438 232,764 2,602 A90108 286 86,014 A90258 84,547 1,663 A90308 1,624 5,709 A90408 6,841 17,698 A90458 15,588 TOTAL Operating Transfers TOTAL Other Uses TOTAL Detail Expenditures And Other Uses 113,681 108,886 406,193 341,673 26,000 A99019 21,000 26,000 21,000 26,000 21,000 432,193 362,673 Page 6 OSC Municipality Code 471179004000 Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2012 (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 201i ! EdpC0de : 2012 23,814 A8021 21,745 23,814 A8022 21,745 430,123 398,541 432,193 362,673 21,745 A8029 57,613 Page 7 OSC Municipality Code 471179004000 Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2012 (A) GENERAL Budget Summary code Description Estimated Revenues Est Rev - Real Property Taxes Est Rev - Use of MoneyAnd Properly TOTAL Estimated Revenues Estimated - Inter~und Transfer TOTAL Estimated Other Sources TOTAL Estimated Revenues And Other Sources 2012 !i Ed~ceS~ 394,200 A1049N 1,000 A2499N 395,200 0 A5031N 0 395,200 2013 395,050 150 395,200 0 0 395,200 Page 8 OSC Municipality Code 471179004000 Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2012 (A) GENERAL Budget Summary Code Description Appropriations App - Public Safety App - Employee Benefits TOTAL Appropriations App - Inter[und Transfer TOTAL Other Uses TOTAL Appropriations And Other Uses , 2~2 :; EdpCode 2013 262,200 112,000 374,200 21,000 21,000 395,200 A3999N A9199N A9999N 281,300 113,900 395,200 0 395,200 Page 9 OSC Municipality Code 471179004000 Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2012 (R) Reserve Balance Sheet Code Description Assets Cash, Special Reserves TOTAL Restricted Assets TOTAL Assets 2011 EdpCode 2012 820,521 R230 843,606 820,521 843,606 820,521 843,606 Page 10 OSC Municipality Code 471179004000 Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2012 (R) Reserve Balance Sheet ' I' 2011 !i I:dpcod~ i! 2012 ;Code Description Fund Equity Capital Reserve TOTAL Restricted Fund Balance TOTAL Fund Equity TOTAL Liabilitiee And Fund Equity 820,521 R878 843,606 820,521 843,606 820,521 843,606 820,521 843,606 Page 11 OSC Municipality Code 471179004000 Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2012 (R) Reserve Results of Operation c0de D~scripti0~ Revenues Interest & Earnings TOTAL Use of Money And Property TOTAL Revenues interfund Transfers TOTAL Inte~und Transfers TOTAL Other Sources TOTAL Detail Revenues And Other Sources EdpCode i 2012 2,040 R2401 2,085 2,040 2,085 2,040 2,085 26,000 R5031 21,000 26,000 2%000 26,000 21,000 28,040 23,085 Page 12 OSC Municipality Code 471179004000 Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2012 Results of Operation ': 2011 ' EdpCode 2012 C~de Description i, Page13 Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2012 (R) Reserve Changes in Fund Equity Code Description ANALYSIS OF CHANGES IN FUND EQUITY Fund Equity - Beginning of Year Restated Fund Equity - Beg of Year ADD - REVENUESAND OTHER SOURCES Fund Equity - End of Year t 2011 i Edpcode 2012 792,481 R8021 820,521 792,481 R8022 820,521 28,040 23,085 820,521 R8029 843,606 Page 14 OSC M u nicipality Code 471179004000 (TA) AGENCY Balance Sheet C0d~ Description Assets Service Award Program Assets TOTAL Invesbnents TOTAL Assets Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2012 ~ i~ i! ~0~'1 ! Edpcode 2012 1,008,842 TA461 1,061,655 1,008,842 1,061,655 1,008,842 1,061,655 Page 15 OSC Municipality Code 471179004000 Fishers Island FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2012 f, TA) AGENCY Balance Sheet code Description Liabilities Service Awards TOTAL Agency Liabilities TOTAL Liabilities TOTAL Liabilities And Fund Equity 2011 EdpCod~ il 2012 %008,842 TA13 1,061,655 1,008,842 1,061,655 '~ ,008,842 '1,061,655 1,008,842 1,061,655 Page 16 OSC Municipality Code 471179004000 Fishers Island FIRE DISTRICT Financial Comments For the Fiscal Year Ending 2012 Page 17 Fishers Island FIRE DISTRICT Statement of Indebtedness For the Fiscal Year Ending 2012 02/02/2013 First Debt Cops Comp Date of Date of Int. Amt. Orig. O/S Beg. Paid Redeemed Prior Yr. O/S End Year Code Description Flag Flag Issue Maturity Rate Var? Issued of Year Dur. Year Bond Proc. Adjust. of Year Page 18 Fishers Island FIRE DISTRICT Schedule of Time Deposits and Investments For the Fiscal Year Ending 2012 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 $905,195.00 $905,195.00 9Z2014 $250,000.00 9Z2014A $687,955.00 $937,955.00 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 19 OSC Municipality Code 471179004000 Fishers Island FIRE DISTRICT Bank Reconciliation For the Fiscal Year Ending 2012 Include AIl Checking, Savings and C.D. Accounts Bank Account Number ..... -5498 ..... -5704 ..... -5662 ..... -5654 Add: Less: Bank Deposit Outstanding Balance In Transit Checks $40,908 $0 $3,976 $20,681 $0 $0 $765,207 $0 $0 $78,399 $0 $0 Total Adjusted Bank Balance Betty Cash Adjustments Total Cash Total Cash Balance All Funds * Must be equal 9ZCASH 9ZCASHB Adjusted Bank Balance $36,932 $20,681 $765,207 $78,399 $901,219 $.00 $.oo $901,219 $901,219 Page 20 OSC Municipality Code 471179004000 Fishers Island FIRE DISTRICT Fire District Questionnaire For the Fiscal Year Ending 2012 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 N Y Y $558,325 N Y Y · 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 2012 Total Full Time Employees: Total Part Time Employees: ~ Account Description Total Code Expenditures (Ail Funds) 9010~ State Reti~emeni system $286.00 901~i - Poli~ and Fir~ R~tir~men~ 90251 Local Pension Fund $84,547.0( 9030~ Social Security $1,624.0( 90401 Worker's Compensation $6,841.0( Insurance # of Ful! # of Pa~ Time Time Employees Employees 904-~1 Life IH~tJraHc~ 905-0(' '" Dn~mployment ins~7~nc~ 9055~ Disability Insurance 90608; Hospital and Medical (Dental) Insurance 90~81 oni~n Welfar~-~enefits ~085~SUppl~mental BenOfi~ ~aym~nt to [ Disabled Fire Fighters ~C] Other Employee Benefits Total [C~me8 T~tal From Fin~hcial ' iSection (comparative purposes only) Page 22 OSC Municipality 471179004000 Fishers Island FIRE DISTRICT Energy Costs and Consumption For the Fiscal Year Ending 2012 Energy Type Total Total Volume Units Of Alternative Expenditures Measure Units Of Measure Gasoline $122 IDiesel Fuel $1,728 Fuel Oil $7,698 Natural Gas $! E ectr cry $7,11,~I Coal 2/~ gallons 3371; gallons 1 i~54 gallons ~'~ ~ubiC feet i'L 25,492i kilowatts ii Page 23 OSC Municipality 471179004000 Fishers Island FIRE DISTRICT Schedule of Other Post Employment Benefits (OPEB) For the Fiscal Year Ending 2012 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 toAnnual 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 10 Total Other Post Employment Benefits as reported in Accounts 683 in Financial Section, Current Fiscal Year 11 Percentage ofAnnual OPEB Cost Contributed (Actual Contribution Made/Annual OPEB Cost) Funded Status and Funding Process 12 ActuariatAccrued Liability(AAL) 13 Less: Actuarial Value of Plan Assets 14 Unfunded Actuarial Accrued Liability(UAAL) 15 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, 2012 has been prepared in conformity with the cash regulatory basis of accounting as prescribed by the State Comptroller's Office, which is a special purpose framework 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. Equipment Repair Reserve Fund The Equipment Repair Reserve Fund is used to account for and report financial resources to be used for the acquisition and repair of equipment as 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 ~ ~? COIvlPANY Fishers Island Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT Summary of significant accounting policies (continued): Governmental (continued): Interior and Exterior Repairs and Renovations Reserve Fund The Interior and Exterior Repairs and Renovations Reserve Fund is used to account for and report financial resources to be used fbr interior and exterior repairs and renovations. Pump Repair Reserve Fund The Pump Repair Reserve Fund is used to account lbr and report financial resources to be used for the repair and acquisition of fire pumps. 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 special purpose framework 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. -26- COMP;26' Fishers Island Fire District NOTES 'FO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT Summary of significant accounting policies (continued): Fund balances: In fiscal year 2011, 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 focus on the constraints imposed on resources in governmental funds, instead of the previous focus on availability for appropriation. Fund balance is broken down into five different classifications: non-spendable, restricted, committed, assigned and unassigned. 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 fbr 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 government's highest level of decision-making authority before the end of the fiscal year and that require the same level of formal action to remove the constraint. 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 xvhich amounts had been restricted, committed or assigned. -27- C? COlVlPANY Fishers Island Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT Summary of significant accounting policies (continued): Fund balances (continued): 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 lbr which amounts in any of those unrestricted fund balance classifications could be used. 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, all 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 tums over uncollected items to the Suffolk County Treasurer who continues the collection of these items. Responsibility for the collection of unpaid taxes rests with Suffolk 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 confbrmity 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. -28- ~fCO~AN~ Fishers Island Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 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. 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: Category Amount 1 $250,000 2 655,195 3 4 Total $905,195 Length of Service Awards Program (LOSAP): The information contained in this note is based on information for the LOSAP tbr the plan year ending December 31, 2012, which is the most recent plan year for which complete information is available. The funding detail is for the period January 1, 2011 through December 31,2011. -29- ~C0MPA~Y Fishers Island Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT o Length of Service Awards Program (LOSAP) (continued): 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 II-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. Program description: Participation, vesting and service credit: Active volunteer firefighters who have reached the age of 18 and who have completed one year of service are eligible to participate in the Program. Participants acquire a non-forfeitable right to a service axvard 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 fur 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 furms 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 annual administration services as follows: -30- ~.~CO~A~Y Fishers Island Fire District NOTES TO ANNUAL FINANCIAL REPORT UPI)ATE DOCUMENT o 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: 1. 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. 2. 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. 3. 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. Payment of administrative expenses: 1. Per the executed Service Fee Agreement, the Plan Sponsor agrees to payment as contracted. -31- ~CO~ANY Fishers Island Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT o Length of Service Awards Program (LOSAP) (continued): Payment of administrative expenses (continued): Authority to invest Program assets is vested in Genworth Financial, Inc. and Standard Security Litk 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 armum. 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 vested accrued benefits at December 31,2011: Vested Non-vested $1,269,468 18,137 $1,287,605' Accrued liability at January 1,2012 $1,426,799' Less assets available for benefits: % of Total New York Commercial Trust 1.35% 13,581 Standard Security annuity 29.25% 295,104 Genworth Financial annuity 22.06% 222,531 Cash value of life insurance 47.34% 477,626 Total net assets available lbr benefits 100.00% Total unfunded liability as of January 1, 2012 1,008,842 $ 417,957'* * Present value of vested accrued benefits and accrued liability were determined using different actuarial assumptions. ** The unfunded liability was recomputed as of January 1, 2012 to incorporate any actuarial or experience gains or losses which occurred in 2011. -32- ~C0MPANY 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 $ 962,277 Changes during the year: Plan contributions $ 36,000 Investment income earned 18,857 Plan benefit withdrawals (53,200) Life insurance premiums paid 44,908 46,565 Plan net assets, end of year $1,008,8~4~2 Contributions: Range of Sponsor's contribution recommended by actuary $88,002 to $ 109,873 Amount of Sponsor's actual contribution $ 80,908 Administration fees: Fees paid to designated program administrator from separate District funds $ 3,900 Funding methodoiog3~ 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 Assumed rate of return on investment Mortality table used for: Pre-retirement: None Post-retirement: 1994 Group A~muity - Male 5.25% for determining contribution 6.00% for determining actuarial present value of benefits -33- COMP^ 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 arc covered by commercial insurance purchased from independent third- parties. Settled claims from these risks have not exceeded commercial insurance coverage. Subsequent events: The District approved a resolution to add two additional reserve funds as described in Note 1 during the year ended December 31, 2012. After year end, the District transferred $250,000 from the Capital Reserve Fund into the Interior and Exterior Repairs and Renovations Reserve Fund and $50,000 from the Equipment Repair Reserve Fund to the Pump Repair Reserve Fund. -34- gCOMPANY To the Board of Fire Commissioners Fishers Island, New York We have audited in accordance ~vith auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the Annual Financial Report Update Document (AUD) of Fishers Island Fire District (the District) as of and for the year ended December 31, 2012, and the related notes to the AUD, and have issued our report thereon dated February 21, 2013. Internal Control Over Financial Reporting In planning and performing our audit, we considered the District's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances tbr 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. Accordingly, we do not express an opinion on the effectiveness of the District's internal control. 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 District's AUD will not be prevented or detected and corrected in a timely basis. A sign~icant 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. Our consideration of internal control 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 material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 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, we do not express such an opinion. The results of our tests disclosed no instances of non-compliance or other ~natters that are required to be reported under Government Auditing Standards. -35- An Independent Member of the BDO Seidman Alliancc To the Board of Fire Commissioners Fishers Island, New York We notcd certain matters that we reported to those charged with governance in a separate letter dated February 21,2013. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the result of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. a_,5. . February 21, 2013 -36- &COMNNY