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i Southold Fire District
Financial Statements (Regulatory Basis)
' with Independent Auditor's Report
December 31, 2012
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' SOUTHOLD FIRE DISTRICT
' Table of Contents
December 31, 2012
Paee
' Independent Auditor's Report 1
Basic Financial Statements (Regulatory Basis)
' Balance Sheet -Governmental Funds and Account Groups 3
Statement of Revenues, Expenditures and Changes in
' Fund Balance -Governmental Funds 4
Statement of Fiduciary Net Position -Fiduciary Funds S
' Notes to Financial Statements 6
' Other Supplementary Information
Schedule of Revenues, Expenditures and Changes in Fund Balance
- Budget and Actual -General Fund 19
' Independent Auditor's Report on Internal Control over Financial Reporting
and on Compliance and Other Matters Based on an Audit of Financial Statements
' Performed in Accordance with GovernmentAuditingStandards 20
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VINCENL D. CULLEN. CPA
JAMES E. DANOWSKI. CPA
CULLEN DANOWSKI, LLP PETER F. RODRIGUEZ. CPA
CERTIFIED PUBLIC ACCOUNTANTS SILL S. SANDERS. CPA
DONALD I~ HOFFMANN. CPA
CH RIS'TOPH ER V. REINO. CPA
ALAN YU. CI'A
INDEPENDENT AUDITOR'S REPORT
To the Board of Fire Commissioners
Southold Fire District
Southold, New York
' Report on Financial Statements
' We have audited the accompanying financial statements (regulatory basis) of the Southold Fire District, as of
and For the year ended December 31, 2012, and the related notes to the financial statements, as listed in the
table of contents.
1 Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
' accordance with accounting practices prescribed and permitted by the New York State Office of the State
Comptroller; this includes the design, implementation, and maintenance of internal control relevant to the
preparation and fair presentation of financial statements that are free from material misstatement, whether
due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our
audit in accordance with auditing standards generally accepted in the United States of America and the
' standards applicable to financial audits contained in Government 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 from material misstatement.
' An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor's judgment, including the assessment of
' the risks of material misstatement of the financial statements, whether due to fraud or error. [n making those
risk assessments, the auditor considers internal control relevant to the entity's preparation and fair
presentation of the financial statements 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 accounting estimates made by management, as
well as evaluating the overall presentation of the financial statements.
t We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinions.
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1650 ROUTE 112, PORT JEFFERSON STATION, NEW YORK1177G-3060
PHONE: 631-473-3400 ~ FAX:631 473-4863 ~ WWW.CDLLP.NET
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the assets,
liabilities and fund balances of each fund and account group of the Southold Fire District, as of December 31,
' 2012, and their respective revenues and expenditures for the year then ended, in conformity with the basis of
accounting described in Note 1.
Other Matters
Basis of
Accounting
` We draw attention to Note 1 of the Financial statements, which describes the basis of accounting. The
financial statements are prepared using accounting practices prescribed and permitted by the New York State
' Office of the State Comptroller, which is a basis of accounting other than accounting principles generally
accepted in the United States of America, to comply with the requirements of the New York State Office of the
State Comptroller. Our opinion is not modified with respect to that matter.
' Other Supplementarylnformation
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 do not express an opinion or provide any
assurance on it.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated May 24, 2013, on
t 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 in considering Southold Fire District's internal control over financial
' reporting and compliance.
Restriction of Use
' 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.
t L ~ ~tm.Bctta~i, LL>°
May 24, 2013
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' SOUTBOLD FIRE DISTRICT
' Balance Sheet -Governmental Funds and Account Groups
December 31, 2012
Governmental Funds Account Groups
' General General
Capital Fixed Long-Term
General Projects Assets Debt Total
' ASSETS
Cash
Unrestricted $ 498,491 $ $ $ $ 498,491
Restricted 1,263,297 200,000 1,463,297
' Accounts receivable 3,564 3,564
Prepaid expenditures 16,236 16,236
Land 258,752 258,752
' Buildings and improvements 3,268,995 3,268,995
Equipment 3,240,678 3,240,678
Amount to be provided for
retirement oflong-term debt 750,000 750,000
Total Assets $ 1,781,588 $ 200,000 $ 6,768,425 $ 750,000 $ 9,500,013
LIABILITIES
Accounts payable $ 59,012 $ $ $ $ 59,012
Accrued liabilities 3,958 3,958
Bonds payable 750,000 750,000
Total Liabilities 62,970 - 750,000 812,970
FUND BALANCE
Investment in general fixed assets 6,768,425 6,768,425
Nonspendable 16,236 16,236
Restricted: Capital 1,263,297 200,000 1,463,297
Assigned 12,000 12,000
Unassigned 427,085 427,085
' Total Fund Balance 1,718,618 200,000 6,768,425 - 8,687,043
Total Liabilities and Fund Balance $ 1,781,588 $ 200,000 $ 6,768,425 $ 750,000 $ 9,500,013
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' See Notes to Financial Statements - 3 -
' SOUTHOLD FIRE DISTRICT
Statement of Revenues, Expenditures and Changes in Fund Balance -Governmental Funds
For the Year Ended December 31, 2012
Total
Capital Governmental
General Projects Funds
REVENUES
' Real property taxes $ 1,780,810 $ $ 1,780,810
Interest and earnings 3,553 3,553
Rentals 21,869 21,869
Sale of equipment 200 200
Grant revenue 1,000 1,000
Miscellaneous 450 450
' Total Revenues 1,807,882 - 1,807,882
EXPENDITURES
Personal services 242,400 242,400
Equipment and capital outlay 136,790 136,790
Fire protection 470,337 470,337
State retirement system 27,154 27,154
' Service award program 359,384 359,384
Social security 18,393 18,393
Workers' compensation 48,012 48,012
Medical and accident insurance 27,507 27,507
Debtservice-principal 150,000 150,000
Debt service -interest 35,775 35,775
' Total Expenditures 1,515,752 1,515,752
Excess of Revenues Over Expenditures 292,130 - 292,130
OTHER SOURCES AND USES
Operating transfers in 200,000 200,000
Operating transfers out (200,000) (200,000)
Total Other Sources and Uses (200,000) 200,000 -
' Net Change in Fund Balances 92,130 200,000 292,130
Fund Balance - Beginning of Year 1,626,488 1,626,488
' Fund Balance - End of Year $ 1,718,618 $ 200,000 $ 1,918,618
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' See Notes to Financial Statements - 4 -
SOUTHOLD FIRE DISTRICT
Statement of Fiduciary Net Position -Fiduciary Funds
' December 31, 2012
Trust and Agency
ASSETS
' Service award program assets $ 3,129,444
Total Assets $ 3,129,444
LIABILITIES
Service awards $ 3,129,444
' Total Liabilities $ 3,129,444
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' See Notes to Financial Statements - 5 -
SOUTHOLD FIRE DISTRICT
Notes to Financial Statements
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 Comptroller, 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
1 been prepared using only the modified accrual basis 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 aself-balancing set of accounts.
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' SOUTHOLD F[RE DISTRICT
' Notes to Financial Statements
(Continued)
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 District
utilizes the following governmental funds:
' Genera! 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. Account groups are not "funds". They are
concerned only with the measurement of financial position, and not with the results of operations.
' The District utilizes the following account groups:
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. 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.
SOUTHOLD FIRE DISTRICT
Notes to Financial Statements
' (Continued)
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 recognized as expenditures to the extent they have matured.
D. Property Taxes
Real property taxes are levied annually by the District no later than November 15~ and become a lien on
' December 1~~. 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. Interfund 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. Receivables
Receivables are shown net of an allowance for uncollectibles, if any. However, no allowance for
uncollectibles has been provided since it is believed that such allowance would not be material.
' SOUTHOLD FIRE DISTRICT
Notes to Financial Statements
(Continued)
1. Prepaid Expenditures
Prepaid expenditures 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 expenditures 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.
J. 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
' Land $ 1,000
' Buildings and improvements 1,000
Equipment 1,000
K. Other Benefits
Eligible District employees participate in the New York State Employees' Retirement System. Eligible
' volunteer firefighters participate in the District sponsored Length of Service Award Program.
L. Long-Term Obligations
The liabilities reported in the general long-term debt account group represent the District's liability for
serial bonds.
M. Fund Balance
The fund statements report fund balance classifications according to the relative strength of spending
constraints placed on the purpose for which resources can be used, as follows:
Nonspendoble -Consists of amounts that are inherently nonspendable in the current period either
because of their form or because they must be maintained intact. Nonspendable fund balance consists
of prepaid expenditures.
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:
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' SOUTHOLD FIRE DISTRICT
Notes to Financial Statements
(Continued)
Capital Reserve
A Capita] 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.
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 Fire 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 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 bylaw or by formal action of the Board of Fire 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 Fire Commissioners.
' The Board of Fire 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. 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 practices prescribed and permitted by the New York State Office of the State
Comptroller to comply with the filing requirements of the District's Annual Financial Update Document.
Appropriations are adopted at the program line item level.
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SOUTHOLD FIRE DISTRICT
' Notes to Financial Statements
(Continued)
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
subsequent year. Appropriations authorized for the current year can be funded by the planned use of
specific reserves, and can be increased by budget amendments approved by the Board as a result of
' selected new revenue sources not included in the original budget (when permitted by law) and
appropriation of fund balance. 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. A summary of the general fund budget is as follows:
Budget approved by the Board of Fire Commissioners $ 1,803,275
Encumbrances from prior year 23,072
Additional appropriations funded by
grant revenues 1,000
Transfers to capital projects fund for
current year permissive referendums 200,000
Final Budget $ 2,027,347
B. Encumbrances
Encumbrance accounting is used for budget control and monitoring purposes and is reported as a part
of the governmental funds. Under this method, purchase orders, contracts and other commitments for
' the expenditure of monies are recorded to reserve applicable appropriations. Outstanding
encumbrances as of year-end are presented as part of assigned fund balance, unless classified as
restricted or committed, and do not represent expenditures or liabilities. These commitments will be
honored in the subsequent period. Related expenditures are recognized at that time, as the liability is
incurred or the commitment is paid.
3. 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 United 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.
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SOUTHOLD FIRE DISTRICT
Notes to Financial Statements
' (Continued)
' 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.
Investment pool:
The District participates in amulti-municipal cooperative investment pool agreement pursuant to New
York State General Municipal Law Article S-G, §119-0, 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, 2012 are $192,340,517, which consisted of
$139,222,629 in repurchase agreements, $33,117,888 in U.S. Treasury Securities and $20,000,000 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 $ 886,615
Capital reserves 200,000
' $ 1,086,615
' 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.
4. GENERAL FIXED ASSETS
The District obtained an independent appraisal dated December 31, 2011. This appraisal has been
updated for current year additions and deletions. Capital assets balances and activity for the year ended
December 31, 2012, were as follows:
Balance Balance
December 31, December 31,
2011 Additions Deletions 2012
Land $ 258,752 $ - $ _ $ 258,752
Buildings and improvements 3,225,565 43,430 3,268,995
Equipment 3,172,130 79,625 (11,077) 3,240,678
' $ 6,656,447 $ 123,055 $ (11,077) $ 6,768,425
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' SOUTHOLD FIRE DISTRICT
Notes to Financial Statements
' (Continued)
' S. INTERFUND TRANSACTIONS
Interfund balances at December 31, 2012, are as follows:
' Interfund
Transfers In Transfers Out
' General fund $ 200,000
Capital projects fund 200,000
$ 200,000 $ 200,000
The District transfers from the general fund to the capital projects fund in accordance with permissive
referendums approved during the current year.
6. CAPITAL RESERVES
' Activity for the general fund capital reserves during the year is as follows:
Building Equipment
' Reserve Reserve Total
Reserve Balance - Beginning of Year $ 31,301 $ 1,269,394 $ 1,300,695
' Additions to Reserve:
Board approved transfers:
Planned budgeted increase 160,000 160,000
' Interest 6 2,596 2,602
Use of Reserve:
Transfer to capital projects fund for
' approved permissive referendums (200,000) (200,000)
Reserve Balance - End of Year $ 31,307 $ 1,231,990 $ 1,263,297
7. 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 acost-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, Office of the State Comptroller, 110 State Street, Albany, NY 12244.
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' SOUTHOLD FIRE DISTRICT
Notes to Financial Statements
' (Continued)
' Funding Polite
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 and before April 1, 2012, who contribute 3% of their salary throughout active
membership. For employees hired on or after April 1, 2012, employee contribution rates are
dependent upon salaries and range from 3% to 6% of salary throughout active membership.
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 1 to March
31 of the following year based on estimated eligible employees' salaries. Contributions are adjusted
' in the following year based on actual salaries.
The following represents the District's regular pension contribution to the system based on annual
covered payroll:
2012 2011 2010
District contributions $ 28,948 $ 20,244 $ 15,659
' 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 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. The information contained in this note is based on information for the Length
of Service Award Program for the plan year ended December 31, 2012.
Program Description
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 S 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.
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' SOUTHOLD FIRE DISTRICT
Notes to Financial Statements
(Continued)
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.
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, authorise 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 March
2013.
' -15-
' SOUTHOLD FIRE DISTRICT
Notes to Financial Statements
' (Continued)
' Program Financial Condition
Assets and Liabilities
' Actuarial Present Value of Benefits at December 31, 2012 $ 4,293,836
' Less:
Assets Available for Benefits
' % of total
Truss 2.98% $ 93,120
Annuities 74.93% 2,344,752
Insurance contracts 22.10% 691,572
Total Net Assets Available for Benefits 3,129,444
Total Unfunded Benefits 1,164,392
' Less: Unfunded Liability for Prior Service (1,164,392)
Unfunded Normal Benefits $ -
' Prior Service Costs
Prior service costs are being amortized over a range of 14 to 10 years at a discount rate of 5.25%.
' Receipts and Disbursements
Plan Net Assets, Beginning of Year $ 2,894,204
Changes during the year
+ plan contributions $ 403,983
+ Investment income earned 77,644
' Changes in fair market value of investments 24,456
- Plan benefit withdrawals (275,243)
+Administrativesnd other fees/charges 4,400
' 235,240
Plan Net Assets, End of Year $ 3,129,444
-16-
' SOUTHOLD FIRE DISTRICT
Notes to Financial Statements
(Continued)
' Contributions
Maximum amount of sponsor's contribution recommended by actuary: $ 357,237
Minimum amount of sponsor's contribution recommended by actuary: 317,391
Amount of sponsor's actual contribution: 403,983
' Administration Fees
Fee paid to actuary $ 4,400
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 5.25o/o
Mortality tables used for
' Withdrawal None
Disability None
Retirement 1994 Group Annuity -Male
Death (actives) None
Death (inactives) None
' Other None
8. LONG-TERM LIABILITIES
Long-term liability balances and activity for the year are summarized below:
' Balance Balance Amounts
December 31, December 31, Due Within
2011 Additions Reductions 2012 One Year
Long-term debt:
Bonds payable $ 900,000 $ - $ 150,000 $ 750,000 $ 150,000
' The general fund has typically been used to liquidate long-term liabilities.
' Bonds payable are comprised of the fallowing:
Outstanding at
Issue Final Interest December 31,
Description Date Maturity Rate 2012
Serial bond 6/24/2002 7/9/2017 3.7-4.2% $ 750,000
-17-
SOUTHOLD FIRE DISTRICT
Notes to Financial Statements
(Continued)
The following is a summary of debt service requirements for bonds payable:
Fiscal Year Ending December 31, Principal Interest Total
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
' Tota] $ 750,000 $ 91,800 $ 841,800
' Interest on Tong-term debt for the year was $35,775.
9. COMMITMENTS ANDCONT[NGENCIES
A. Encumbrances
All encumbrances are classified as either restricted or assigned fund balance. At December 31, 2012,
the District encumbered the following amounts:
Assigned: Fund Balance
General Fund
Fire Protection $ 12,000
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.
10. SPENDING LIMITATION
The District did not exceed the statutory spending limitation imposed by New York State Law for the year
ended December 31, 2012, and the budget for the year ending December 31, 2013.
-18-
SOUTHOLD FIRE DISTRICT
Schedule of Revenues, Expenditures and Changes in Fund Balance -
' Budget and Actual -General Fund
For the Year Ended December 31, 2012
Board- Final Budge[
Approved Final Variance with
Budget Budget Actual Actual
REVENUES
Real property taxes $ 1,78Q78Z $ 1,780,782 $ 1,780,810 $ 28
Interest and earnings 1,000 1,000 3,553 2,553
Rentals 21,493 21,493 21,869 376
Sale of equipment 200 200
Grant revenues 1,000 1,000
Miscellaneous 450 450
Total Revenues 1,803,275 1,804,275 1,807,882 $ 3,607
APPROPRIATED FUND BALANCE
Prior year's encumbrances 23,072
Appropriated capital reserves 200,000
Total Appropriated Fund Balance 223,072
Total Revenues and
Appropriated Fund Balance $ 1,803,275 $ 2,027,347
Final Budget
Variance with
Year End Actual and
Encumbrances Encumbrances
EXPENDITURES
Personal services $ 255,457 $ 255,457 242,400 $ $ 13,057
Equipment and capital outlay 125,000 136,790 136,790 -
Fire protection 544,500 547,834 470,337 12,000 65,497
State retirement system 20,000 28,948 27,154 1,794
' Service award program 365,000 365,000 359,384 5,616
Social security 19,543 19,543 18,393 1,150
Workers' compensation 60,000 60,000 48,012 11,988
Medical and accident insurance 28,000 28,000 27,507 493
Debt service -principal 150,000 150,000 150,000 =
Debt service -interest 35,775 35,775 35,775
' Total Expenditures 1,603,275 1,627,347 1,515,752 $ 12,000 $ 99,595
OTHER USES
Planned increase to capital reserve 200,000 200,000
Operating transfers to capital projects fund
pursuant to permissive referendums 200,000 200,000
' Total Other Uses 200,000 400,000 200,000
Total Expenditures and Other Uses $ 1,803,275 $ 2,027,347 1,715,752
' Ne[Change in Fund Balance 92,130
Fund Balance -Beginning of Year 1,626,488
' Fund Balance -End of Year $ 1,718,618
See Paragraph on Other Supplementary Information Included in Auditor's Report - 19 -
VINCENT D. CULLF N, CPA
7~~ DAMES E. DANOWSKI, CPA
CULLEN & DANOWSKI, LLP~ PETER F RODIiIGUEZ, CPA
CERTIFIED PUBLIC ACCOUNTANTS ILL s. SANDERS, CPA
pONALD J. HOPPMAN N, CPA
CHRISTOPHER V. REINO. CPA
ALAN YU. CPA
' INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS
PERFORMED IN ACCORDANCE W[TH GOVERNMENT AUDITING STANDARDS
' To the Board of Fire Commissioners
Southold Fire District
Southold, New York
' We have audited in accordance with auditing standards generally accepted in the United States of America and
the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States, the financial statements of the Southold Fire District, as of and for the
year ended December 31, 2012, and the related notes to the financial statements as listed in the table of
contents, which collectively comprise the Southold Fire District's basic financial statements and have issued
our report thereon dated May 24, 2013. 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.
Internal Control Over Financial Reporting
[n planning and performing our audit of the financial statements, we considered the Southold Fire District's
internal control over financial reporting (internal control) to determine the audit procedures that are
' appropriate in the circumstances 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.
Accordingly, we do not express an opinion on the effectiveness of the Southold Fire 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 entity's financial
statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a
deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet
' important enough to merit attention by those charged with governance.
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
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.
1650 ROUTE 112, PORT JEFFERSON STATION. NEW YORK 1t77G-3060 - 20 -
PHONE:631-473-3400 • FAX:631-473-48G3 • WWW.CDLLI'.NF.T
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 Auditing 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 24, 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 results of [hat 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 entity's internal control and compliance. Accordingly, this communication is not
suitable for any other purpose.
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C/L(.(iliCiYtl ~ ,~zn,auto.,~i, L.~~
' May 24, 2013
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' -21-