HomeMy WebLinkAbout2012 FIFD
O'CONNOR pKF
DAVIES
RECEIVED
Communication with the Board of Commissioners - „
S t_
Southold Town Clerk
To the Board of Commissioners
Fishers Island Ferry District
Fishers Island, NY
We have audited the financial statements of the Fishers Island Ferry District (the entity) for the
year ended December 31, 2012, and have issued our report thereon dated August 12, 2013.
Professional standards require that we provide you with the following information related to our
audit:
1. Our Responsibility under Generally Accepted Auditing Standards and Government
Auditing Standards - As communicated in our engagement letter dated March 14, 2013,
our responsibility, as described by professional standards, is to plan and perform our audit
to obtain reasonable, but not absolute, assurance that the financial statements that are the
responsibility of management with your oversight, are presented fairly, in all material
respects, in conformity with U.S. Generally Accepted Accounting Principles. Our audit of the
financial statements does not relieve you or management of your respective responsibilities.
Our responsibility, as prescribed by professional standards, is to plan and perform our audit
to obtain reasonable, rather than absolute, assurance about whether the financial
statements are free of material misstatement. An audit of financial statements includes
consideration of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the entity's internal control over financial reporting.
Accordingly, as part of our audit, we considered the internal control of the Fishers Island
Ferry District solely for the purpose of determining our audit procedures and not to provide
any assurance concerning such internal control.
We are also responsible for communicating significant matters related to the audit that are,
in our professional judgment, relevant to your responsibilities in overseeing the financial
reporting process. However, we are not required to design procedures for the purpose of
identifying other matters to communicate to you.
We have provided our findings regarding significant control deficiencies over financial
reporting and material weaknesses and material noncompliance, and other matters noted
during our audit in a report at the end of your financial statements dated August 12, 2013.
O'CONNOR DAVIES, LLP
100 Great Meadow Road, Wethersfield, CT 06109 I Tel: 860.257.1870 I fax: 860.257.1875 I www.odpkf.com
O'Connor Davies, LLP Iz a member firm of the PKF International Limped network of legally Intlependent /Irms and tloes not accept any responsibillry or I'rablllty far the actions or inactions on
the part of any other individual member firm or firms.
Communication with the Board of Commissioners Page 2 of 3
2. Compliance with All Ethics Requirements Regarding Independence - The
engagement team, others in our firm, as appropriate, our firm, and our network firms have
complied with all relevant ethical requirements regarding independence.
3. Qualitative Aspects of the Entity's Significant Accounting Practices
Significant Accounting Policies -Management has the responsibility to select and use
appropriate accounting policies. A summary of the significant accounting policies adopted
by the Fishers Island Ferry District is included in Note 1 to the financial statements. There
have been no initial selections of accounting policies and no changes in significant
accounting policies or their application during the year ended December 31, 2012. No
matters have come to our attention that would require us, under professional standards, to
inform you about (1) the methods used to account for significant or unusual transactions and
(2) the effect of significant accounting policies in controversial or emerging areas for which
there is a lack of authoritative guidance or consensus.
Accounting Estimates -Accounting estimates are an integral part of the financial
statements prepared by management and are based on management's current judgments.
Those judgments are normally based on knowledge and experience about past and current
events and assumptions about future events. Certain accounting estimates are particularly
sensitive because of their significance to the financial statements and because of the
possibility that future events affecting them may differ markedly from management's current
judgments.
The most sensitive accounting estimates affecting the financial statements are:
Management's estimate of the depreciation expense is based on the capitalization
threshold and estimated useful life. We evaluated the key factors and assumptions
used to develop the depreciation expense in determining that it is reasonable in
relation to the financial statements taken as a whole.
4. Significant DifFculties Encountered during the Audit- We encountered no significant
difficulties in dealing with management relating to the performance of the audit.
5. Other Information in Documents Containing Audited Financial Statements -
Pursuant to professional standards, our responsibility as auditors for other information in
documents containing Fishers Island Ferry District's audited financial statements does not
extend beyond the financial information identified in the audit report, and we are not
required to perform any procedures to corroborate such other information. However, in
accordance with such standards, we have:
Read the information and considering whether such information, or the manner of
its presentation, was materially inconsistent with its presentation in the financial
statements.
Our responsibility also includes communicating to you any information which we believe is
a material misstatement of fact. Nothing came to our attention that caused us to believe
that such information, or its manner of presentation, is materially inconsistent with the
information, or manner of its presentation, appearing in the financial statements.
Communication with the Board of Commissioners Page 3 of 3
6. Uncorrected and Corrected Misstatements - For purposes of this communication,
professional standards require us to accumulate all known and likely misstatements
identified during the audit, other than those that we believe are trivial, and communicate
them to the appropriate level of management. Uncorrected misstatements consisted of only
trivial amounts.
None of the misstatements identified by us as a result of our audit procedures and corrected
by management were material, either individually or in the aggregate, to the financial
statements taken as a whole or applicable opinion units.
7. Disagreements with Management -For purposes of this letter, professional standards
define a disagreement with management as a matter, whether or not resolved to our
satisfaction, concerning a financial accounting, reporting, or auditing matter that could be
significant to the Fishers Island Ferry District's financial statements or the auditor's report.
No such disagreements arose during the course of our audit.
8. Representations Requested from Management - We have requested certain written
representations from management, which are included in the letter dated August 12, 2013.
9. Management's Consultations with Other Accountants - In some cases, management
may decide to consult with other accountants about auditing and accounting matters.
Management informed us that, and to our knowledge, there were no consultations with other
accountants regarding auditing and accounting matters.
10. Other Significant Findings or Issues - In the normal course of our professional
association with the Fishers Island Ferry District, we generally discuss a variety of matters,
including the application of accounting principles and auditing standards, operating and
regulatory conditions affecting the Fishers Island Ferry District, and operational plans and
strategies that may affect the risks of material misstatement. None of the matters discussed
resulted in a condition to our retention as the entity's auditors.
This report is intended solely for the use of the Board of Commissioners and management of
the Fishers Island Ferry District and is not intended to be and should not be used by anyone
other than these specified parties.
~ `Crn~ , ul°
August 12, 2013
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P.O. Box so7
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FISHERS ISLAND. NEW YORK 06390
T~hu6a~,~: 631.788.7463 www.f iFerry.com ROARDOf CO~INIISSIONFRS
Fn.: 631.788.5523 CI,d.FoP6e, I. Gdw~.d,
Mona ement Re resentation Letter CI,,..bP6e,L.Re11=,h,
9 P Poi Raq,
Ik6~dV IL
August 12, 2013
O'Connor Davies, LLP
100 Great Meadow Road, Suite 401
Wethersfield, CT 06109
This representation letter is provided in connection with your audit of the financial statements of
Fishers Island Ferry District as of December 31, 2012 and for the year then ended, and the
related notes to the financial statements, for the purpose of expressing opinions on whether the
basic financial statements present fairly, in all material respects, the financial position, results of
operations, and cash flows, where applicable, of the various opinion units of Fishers Island
Ferry District in conformity with accounting principles generally accepted for governments in the
United States of America (U.S. GAAP).
Certain representations in this letter are described as being !invited to matters that are materia!.
Items are considered material, regardless of size, if they involve an omission or misstatement of
accounting information that, in the light of surrounding circumstances, makes it probable that the
judgment of a reasonable person retying on the information would be changed or influenced by
the omission or misstatement.
We confirm that, to the best of our knowledge and belief, having made such inquiries as
we considered necessary for the purpose of appropriately informing ourselves as of
August 12, 2013:
Financial Statements
• We have fulfilled our responsibilities, as set out in the terms of the audit engagement
letter dated March 14, 2013, for the preparation and fair presentation of the financial
statements of the various opinion units referred to above in accordance with U.S. GAAP.
• We acknowledge our responsibility for 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.
• We acknowledge our responsibility for the design, implementation, and maintenance of
internal control to prevent and detect fraud.
• We acknowledge our responsibility for compliance with the laws, regulations, and
provisions of contracts and grant agreements.
• We have reviewed, approved, and taken responsibility far the financial statements and
related notes.
• We have a process to track the status of audit findings and recommendations.
O'Connor Davies, LLP Management Representation Letter Page 2
• We have identified and communicated to you all previous audits, attestation
engagements, and other studies related to the audit objectives and whether related
recommendations have been implemented.
• Significant assumptions used by us in making accounting estimates, including those
measured at fair value, are reasonable.
• Related party relationships and transactions have been appropriately accounted for and
disclosed in accordance with the requirements of U.S. GAAP.
• All events subsequent to the date of the financial statements and for which U.S. GAAP
requires adjustment or disclosure have been adjusted or disclosed.
• The effects of uncorrected misstatements summarized in the attached schedule and
aggregated by you during the current engagement are immaterial, both individually and
in the aggregate, to the applicable opinion units and to the financial statements as a
whole.
• The effects of all known actual or possible litigation and claims have been accounted for
and disclosed in accordance with U.S. GAAP.
• All funds and activities are properly classified.
• All funds that meet the quantitative criteria in GASB Statement No. 34, Basic Financial
Statements-and Management's Discussion and Analysis-for State and Local
Governments, and GASB Statement No. 37, Basic Financial Statements-and
Managements Discussion and Analysis-for State and Local Govemments: Omnibus as
amended, for presentation as major are identified and presented as such and all other
funds that are presented as major are considered important to financial statement users.
• All components of net position, nonspendable fund balance, and restricted, committed,
assigned, and unassigned fund balance are properly classified and, if applicable,
approved.
• Our policy regarding whether to first apply restricted or unrestricted resources when an
expense is incurred for purposes for which both restricted and unrestricted net
positionlfund balance are available is appropriately disclosed and net position/fund
balance is properly recognized under the policy.
• All revenues within the statement of activities have been properly classified as program
revenues, general revenues, contributions to term or permanent endowments, or
contributions to permanent fund principal.
• All expenses have been properly classified in or allocated to functions and programs in
the statement of activities, and allocations, if any, have been made on a reasonable
basis.
• All intertund and infra-entity transactions and balances have been properly classified and
reported.
• Capital assets, including infrastructure assets, are properly capitalized, reported, and if
applicable, depreciated.
• All required supplementary information is measured and presented within the prescribed
guidelines.
• We have reviewed and approved the various adjusting journal entries that were
proposed by you for recording in our books and records and reflected in the financial
statements.
• With respect to the required supplementary information and other supplementary
information accompanying the financial statements:
- We acknowledge our responsibility for the presentation of the supplementary
information in accordance with accounting principles generally accepted in the
United States of America.
O'Connor Davies, LLP Management Representation Letter Page 3
- We believe the supplementary information, including its form and content, is fairly
presented in accordance with GAAP.
- The methods of measurement or presentation have not changed from those used in
the prior period.
- When the supplementary information is not presented with the audited financial
statements, management will make the audited financial statements readily available
to the intended users of the supplementary information no later than the date of
issuance by the entity of the supplementary information and the auditor's report
thereon.
Information Provided
• We have provided you with:
- Access to all information, of which we are aware that is relevant to the preparation
and fair presentation of the financial statements of the various opinion units referred
to above, such as records, documentation, meeting minutes, and other matters;
- Additional information that you have requested from us for the purpose of the audit;
and
- Unrestricted access to persons within the entity from whom you determined it
necessary to obtain audit evidence.
• All transactions have been recorded in the accounting records and are reflected in the
financial statements.
• We have disclosed to you the results of our assessment of the risk that the financial
statements may be materially misstated as a result of fraud.
• We have no knowledge of any fraud or suspected fraud that affects the entity and
involves:
- Management;
- Employees who have signifcant roles in internal control; or
- Others where the fraud could have a material effect on the financial statements.
• We have no knowledge of any allegations of fraud, or suspected fraud, affecting the
entity's financial statements communicated by employees, former employees, vendors,
regulators, or others.
• We have disclosed to you all known actual or possible litigation and claims whose
effects should be considered when preparing the financial statements.
• We have disclosed to you the identity of the entity's related parties and all the related
party relationships and transactions of which we are aware.
There have been no communications from regulatory agencies concerning
noncompliance with or deficiencies in accounting, intemal control, or financial reporting
practices.
• Fishers Island Ferry District has no plans or intentions that may materially affect the
carrying value or classification of assets and liabilities.
• We have disclosed to you all guarantees, whether written or oral, under which Fishers
Island Ferry District is contingently liable.
• We have identified and disclosed to you the laws, regulations, and provisions of
contracts and grant agreements that could have a direct and material effect on financial
statement amounts, including legal and contractual provisions for reporting specific
activities in separate funds.
• There are no:
O'Connor Davies, LLP Management Representation Letter Page 4
- Violations or possible violations of laws or regulations, or provisions of contracts or
grent agreements whose effects should be considered for disclosure in the financial
statements or as a basis for recording a loss contingency, including applicable
budget laws and regulations.
- Unasserted claims or assessments that our lawyer has advised are probable of
assertion and must be disclosed in accordance with GASB-62.
- Other liabilities or gain or loss contingencies that are required to be accrued or
disclosed by GASB-62
Fishers Island Ferry District has satisfactory title to all owned assets, and there are no
liens or encumbrances on such assets nor has any asset or future revenue been
pledged as collateral, except as disclosed to you.
• We have complied with all aspects of grant agreements and other contractual
agreements that would have a material effect on the financial statements in the event of
noncompliance.
We believe that the actuarial assumptions and methods used to measure pension and
other postemployment benefit liabilities and costs for financial accounting purposes are
appropriate in the circumstances.
We have not completed the process of evaluating the impact of adopting Statement of
the Governmental Accounting Standards Board No. 61, 66, 68, 69 and 70, as discussed
in the Notes. We are therefore unable to disclose the impact that adopting these
Statements of the Governmental Accounting Standards Board will have on its financial
position and the results of operations when such Statements are adopted.
To the best of our knowledge and belief, no events, including instances of noncompliance, have
occurred subsequent to the balance sheet date and through the date of this letter that would
require adjustment to or disclosure in the aforementioned financial statements or in the
schedule of findings and questioned costs.
Signed:
Title: Manager
Signed: _
Title: Assis Manager
ACCOUNTING & FINANCE DEPT. til~~QF SO(/TyO t--~.,- TOWN HALL ANNEX
John A_ Cushman, Town Comptroller r'`~ l0 ~1. 54375 Main Road
yy yy y
Telephone (631) 765-4333 T fa P.O. Box 1179
Fax (631)765-1366 ?j G Q Southold, NY 11971-0959
E-mail: accounting@townsuuthold.ny.us ~ i~ http://southoldtown.northfork.net/
~~~~~COU~ ~~tt11!.
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TOWN OF SOU'I'I~OLD
OFFICE OF THE SUPERVISOR
Management Representation Letter
August 12, 2013
O'Connor Davies, LLP
100 Great Meadow Road, Suite 401
Wethersfield, CT 06109
This representation letter is provided in connection with your audit of the financial statements of
Fishers Island Ferry District as of December 31, 2012 and for the year then ended, and the
related notes to the financial statements, for the purpose of expressing opinions on whether the
basic financial statements present fairly, in all material respects, the financial position, results of
operations, and cash flows, where applicable, of the various opinion units of Fishers Island
Ferry District in conformity with accounting principles generally accepted for governments in the
United States of America (U.S. GAAP).
Certain representations in this letter are described as being limited to matters that are material.
Items are considered material, regardless of size, if they involve an omission or misstatement of
accounting information that, in the light of surrounding circumstances, makes it probable that the
judgment of a reasonable person relying on the information would be changed or influenced by
the omission or misstatement.
We confirm that, to the best of our knowledge and belief, having made such inquiries as
we considered necessary for the purpose of appropriately informing ourselves as of
August 12, 2013:
Financial Statements
• We have fulfilled our responsibilities, as set out in the terms of the audit engagement
letter dated March 14, 2013, for the preparation and fair presentation of the financial
statements of the various opinion units referred to above in accordance with U.S. GAAP.
• We acknowledge our responsibility for 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.
• We acknowledge our responsibility for the design, implementation, and maintenance of
internal control to prevent and detect fraud.
• We acknowledge our responsibility for compliance with the laws, regulations, and
provisions of contracts and grant agreements.
O'Connor Davies, LLP Management Representation Letter Page 2
• We have reviewed, approved, and taken responsibility for the financial statements and
related notes.
• We have a process to track the status of audit findings and recommendations.
• We have identified and communicated to you all previous audits, attestation
engagements, and other studies related to the audit objectives and whether related
recommendations have been implemented.
• Significant assumptions used by us in making accounting estimates, including those
measured at fair value, are reasonable.
• Related party relationships and transactions have been appropriately accounted for and
disclosed in accordance with the requirements of U. S. GAAP.
• All events subsequent to the date of the financial statements and for which U.S. GAAP
requires adjustment or disclosure have been adjusted or disclosed.
• The effects of uncorrected misstatements summarized in the attached schedule and
aggregated by you during the current engagement are immaterial, both individually and
in the aggregate, to the applicable opinion units and to the financial statements as a
whole.
• The effects of all known actual or possible litigation and claims have been accounted for
and disclosed in accordance with U. S. GAAP.
• All funds and activities are properly classified.
• All funds that meet the quantitative criteria in GASB Statement No. 34, Basic Financial
Statements-and Management's Discussion and Analysis-for State and Local
Govemments, and GASB Statement No. 37, Basic Financial Statements-and
Management's Discussion and Analysis-for State and Local Governments: Omnibus as
amended, for presentation as major are identified and presented as such and all other
funds that are presented as major are considered important to financial statement users.
• All components of net position, nonspendable fund balance, and restricted, committed,
assigned, and unassigned fund balance are properly classified and, if applicable,
approved.
• Our policy regarding whether to first apply restricted or unrestricted resources when an
expense is incurred for purposes for which both restricted and unrestricted net
position/fund balance are available is appropriately disclosed and net position/fund
balance is properly recognized under the policy.
• All revenues within the statement of activities have been properly classified as program
revenues, general revenues, contributions to term or permanent endowments, or
contributions to permanent fund principal.
• All expenses have been properly classified in or allocated to functions and programs in
the statement of activities, and allocations, if any, have been made on a reasonable
basis.
All interfund and infra-entity transactions and balances have been properly classified and
reported.
• Capital assets, including infrastructure assets, are properly capitalized, reported, and if
applicable, depreciated.
• All required supplementary information is measured and presented within the prescribed
guidelines.
• We have reviewed and approved the various adjusting journal entries that were
proposed by you for recording in our books and records and reflected in the financial
statements.
• With respect to the required supplementary information and other supplementary
information accompanying the financial statements:
O'Connor Davies, t_LP Management Representation Letter Page 3
- We acknowledge our responsibility for the presentation of the supplementary
information in accordance with accounting principles generally accepted in the
United States of America.
- We believe the supplementary information, including its form and content, is fairly
presented in accordance with GAAP.
- The methods of measurement or presentation have not changed from those used in
the prior period.
- When the supplementary information is not presented with the audited financial
statements, management will make the audited financial statements readily available
to the intended users of the supplementary information no later than the date of
issuance by the entity of the supplementary information and the auditor's report
thereon.
Information Provided
• We have provided you with:
- Access to all information, of which we are aware that is relevant to the preparation
and fair presentation of the financial statements of the various opinion units referred
to above, such as records, documentation, meeting minutes, and other matters;
- Additional information that you have requested from us for the purpose of the audit;
and
- Unrestricted access to persons within the entity from wham you determined it
necessary to obtain audit evidence.
• All transactions have been recorded in the accounting records and are reflected in the
financial statements.
• We have disclosed to you the results of our assessment of the risk that the financial
statements may be materially misstated as a result of fraud.
• We have no knowledge of any fraud or suspected fraud that affects the entity and
involves:
Management;
- Employees who have significant roles in internal control; or
- Others where the fraud could have a material effect on the financial statements.
• We have no knowledge of any allegations of fraud, or suspected fraud, affecting the
entity's financial statements communicated by employees, former employees, vendors,
regulators, or others.
• We have disclosed to you all known actual or possible litigation and claims whose
effects should be considered when preparing the financial statements.
• We have disclosed to you the identity of the entity's related parties and all the related
party relationships and transactions of which we are aware.
• There have been no communications from regulatory agencies concerning
noncompliance with or deficiencies in accounting, internal control, or financial reporting
practices.
• Fishers Island Ferry District has no plans or intentions that may materially affect the
carrying value or classification of assets and liabilities.
• We have disclosed to you all guarantees, whether written or oral, under which Fishers
Island Ferry District is contingently liable.
• We have identified and disclosed to you the laws, regulations, and provisions of
contracts and grant agreements that could have a direct and material effect on financial
O'Connor Davies, LLP Management Representation Letter Page 4
statement amounts, including legal and contractual provisions for reporting specific
activities in separate funds.
• There are no:
- Violations or possible violations of laws or regulations, or provisions of contracts or
grant agreements whose effects should be considered for disclosure in the financial
statements or as a basis for recording a loss contingency, including applicable
budget laws and regulations.
- Unasserted claims or assessments that our lawyer has advised are probable of
assertion and must be disclosed in accordance with GASB-62.
- Other liabilities or gain or loss contingencies that are required to be accrued or
disclosed by GASB-62
• Fishers Island Ferry District has satisfactory title to all owned assets, and there are no
liens or encumbrances on such assets nor has any asset or future revenue been
pledged as collateral, except as disclosed to you.
• We have complied with all aspects of grant agreements and other contractual
agreements that would have a material effect on the financial statements in the event of
noncompliance.
• We believe that the actuarial assumptions and methods used to measure pension and
other postemployment benefit liabilities and costs for financial accounting purposes are
appropriate in the circumstances.
• We have not completed the process of evaluating the impact of adopting Statement of
the Governmental Accounting Standards Board No. 60, 61, 62, 63, 65 and 66, as
discussed in the Notes. We are therefore unable to disclose the impact that adopting
these Statements of the Governmental Accounting Standards Board will have on its
financial position and the results of operations when such Statements are adopted.
To the best of our knowledge and belief, no events, including instances of noncompliance, have
occurred subsequent to the balance sheet date and through the date of this letter that would
require adjustment to or disclosure in the aforementioned financial statements or in the
schedule of findings and questione costs.
Signed:
Title: Su ervisor
Signed: ~ /
Title:'' Town Comptroller
1
' Fishers Island Ferry District
A Component Unit of
' the Town of Southold, New York
' Financial Statements and
Supplementary Information
Year Ended December 31, 2012
t
' Fishers Island Ferry District
t Table of Contents
Year Ended December 31, 2012
1 Pape No.
Independent Auditors' Report 1
Management's Discussion and Analysis 3
' Basic Financial Statements
Exhibit
' Government-Wide Financial Statements
1 Statement of Net Position g
2 Statement of Activities 10
Fund Financial Statements
' 3 Balance Sheet -Governmental Funds 11
3a Reconciliation of Governmental Funds Balance Sheet to the Government-Wide
Statement of Net Position -Governmental Activities 12
4 Statement of Revenues, Expenditures and Changes in Fund Balances -
Governmental Funds 13
4a Reconciliation of the Statement of Revenues, Expenditures and Changes in
Fund Balances of Governmental Funds to the Statement of Activities 14
' Notes to the Financial Statements 15
Required Supplementary Information
' Schedule of Revenues, Expenditures and Changes in Fund
Balance -Budget and Actual -Budgetary Basis -General Fund 34
Internal Control and Compliance Reports
Government Auditing Standards Report 36
Schedule of Findings 38
1
1
'
O'CONNOR PKF
DAVIES
Independent Auditors' Report
The Board of Commissioners
Fishers Island Ferry District
We have audited the accompanying financial statements of the governmental activities and each major fund
of the Fishers Island Ferry District ("District"), a component unit of the Town of Southold, New York, as of and
for the year ended December 31, 2012, and the related notes to the financial statements, which collectively
comprise the District's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
' Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; 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.
Auditors' 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 of 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 auditors' judgment, including the assessment
of the risks of material misstatement of the financial statements, whether due to fraud or error. In 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.
' We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.
1
O'CONNOR DAVIES, LLP
100 Great Meadow Road, Wethersfield, Ci 061091 Tel: 860.257.18701 Fax: 860.257.1875 I www.DdpkEcom
O'Connor Davies, LLD Is a member firm of the GKF International Limited network of legally independent flrmz and does no[ accept any responsibility or Ilab"Jlty for [he actions or Inactions on the part
of any other Individual member firm or fvmz.
1
' Opinions
' In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities and each major fund of the District as of December 31, 2012,
and the respective changes in financial position for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
Other Matters
' Required Supplementary Information
Accounting principles generally accepted in the United States of America require that Management's
' Discussion and Analysis and budgetary comparison information be presented to supplement the basic
financial statements. Such information, although not a part of the basic financial statements, is required by
the Govemmental Accounting Standards Board, who considers it to be an essential part of financial reporting
for placing the basic financial statements in an appropriate operational, economic or historical context. We
applied certain limited procedures to the required supplementary information in accordance with auditing
standards generally accepted in the United States of America, which consisted of inquiries of management
about the methods of preparing the information and comparing the information for consistency with
management's responses to our inquiries, the basic financial statements and other knowledge we obtained
during our audit of the basic financial statements. We do not express an opinion or provide any assurance on
the information because the limited procedures do not provide us with sufficient evidence to express an
opinion or provide any assurance.
Other Reporting Required by Government Auditing Standards
' In accordance with Government Auditing Standards, we have also issued our report dated August 12, 2013
on our consideration of the 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 f nancial 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 the District's internal control over financial reporting and compliance.
~'~O~cev ~LQ,uZtd, 1~
' Wethersfield, Connecticut
August 12, 2013
t
t
' Fishers Island Ferry District
' Management's Discussion and Analysis
December 31, 2012
Fishers Island Ferry District
Management's Discussion and Analysis
December 31, 2012
' Our discussion and analysis of Fishers Island Ferry District's (the "Ferry District's financial
performance provides an overview of the Ferry District's financial activities for the fiscal year
ended December 31, 2012. Please read it in conjunction with the Ferry District's fnancial
statements, which begin with Exhibit 1.
' FINANCIAL HIGHLIGHTS
' The Ferry District's net assets decreased $206,393 in 2012.
• The Ferry District's unrestricted net assets increased $64,189 in 2012.
• Fund balance, a measure of the Ferry District's short term health, decreased by $2,004
in 2011.
USING THIS ANNUAL REPORT
' This annual report consists of a series of financial statements. The Statement of Net Assets and
the Statement of Activities (Exhibits 1 and 2) provide information about the activities of the
Ferry District as a whole and present alonger-term view of the Ferry District's finances. Fund
' financial statements start with Exhibit 3. For governmental activities, these statements tell how
these services were financed in the short term as well as what remains for future spending.
Fund financial statements also report the Ferry District's operations in more detail than the
government-wide statements by providing information about the Ferry District's most significant
funds.
Reporting the Government as a Whole
Our analysis of the Ferry District as a whole begins with Exhibit 1. One of the most important
' questions asked about the Ferry District's finances is, "Is the Ferry District as a whole better off
or worse off as a result of the year's activities?" The Statement of Net Assets and the
Statement of Activities report information about the Ferry District as a whole and about its
activities in a way that helps answer this question. These statements include all assets and
liabilities using the aarua/basis of accounting, which is similar to the accounting used by most
private-sector companies. All of the current year's revenues and expenses are taken into
account regardless of when cash is received or paid.
' These two statements report the Ferry District's netassetsand changes in them. You can think
of the Ferry District's net assets-the difference between assets and liabilities-as one way to
' measure the Ferry District's financial health, or financia/ position. Over time, increases or
decreases in the Ferry Districts net assets are one indicator of whether its financial health is
improving or deteriorating. You will need to consider other nonfinancial factors, however, such
' as changes in the Ferry District's property tax base and the condition of the Ferry District's
assets, to assess the overall hea/th of the Ferry District.
3
' Fishers Island Ferry District
Management's Discussion and Analysis
' December 31, 2012
In the Statement of Net Assets and the Statement of Activities, the Ferry District shows the
following activity:
• Governmental activities-The Ferry District's basic services are reported here. Ferry fees,
property taxes, state and federal grants, and rental fees finance most of these activities.
' Reporting the Ferry District's Most Significant Funds
' Our analysis of the Ferry District's major funds begins in the section titled "The Ferry District's
Funds". The fund financial statements begin with Exhibit 3 and provide detailed information
about the most significant funds-not the Ferry District as a whole. Some funds are required to
' be established by State law and by bond covenants. However, the Board of Commissioners
establishes other funds to help it control and manage money for particular purposes or to show
that it is meeting legal responsibilities for using certain taxes, grants, and other money.
• Governmenta/fund.~The Ferry District's basic services are reported in governmental funds,
which focus on how money flows into and out of those funds and the balances left at year-
' end that are available for spending. These funds are reported using an accounting method
called modified accrual accounting, which measures cash and all other financial assets that
can readily be converted to cash. The governmental fund statements provide a detailed
short-term viewof the Ferry District's general government operations and the basic services
it provides. Governmental fund information helps you determine whether there are more or
fewer financial resources that can be spent in the near future to finance the Ferry District's
programs. We describe the relationship (or differences) between governmental activities
' (reported in the Statement of Net Assets and the Statement of Activities) and governmental
funds in a reconciliation at the bottom of the fund financial statements.
THE FERRY DISTRICT AS A WHOLE
' The Ferry District's combined net assets decreased by $206,393 from a year ago -decreasing
from $8,693,921 to 8,487,528. Last year (2011) the net assets decreased by $150,827. Our
analysis below focuses on the net assets (Table 1) and changes in net assets (Table 2) of the
Ferry District.
' Capital assets decreased during the year by $545,582. This was the result of $577,997 of
depreciation applied to the assets to show that they have aged during the year and only
$32,415 of replacement assets were purchased. The District paid a net amount of $275,000 on
debt used to finance the capital assets. The result was that Net Assets invested in capital
assets decreased by $270,582 because the assets are depreciating faster than the debt is
' retiring.
A new accounting standard went into effect this year. This removed unearned revenue from
the liability classification and included it in a new classification, deferred inFlows of resources.
The taxes paid in advance are included in this classification. These amounted to $144,275 and
$129,617 at December 31, 2012 and December 31, 2011.
a
1
Fishers Island Ferry District
Management's Discussion and Analysis
' December 31, 2012
Table 1
' Change in Net Assets (on Exhibit 1)
Change During Year
2012 Dollars Percent 2011
' Current and other assets $ 1,082,979 $ 23,503 2.22% $ 1,059,476
Capital assets 10,554,319 (545,582) -4.92% 11,099,901
Total assets 11,637,298 (522,079) -4.29% 12,159,377
Long-term debt outstanding 2,753,788 (360,485) -11.58% 3,114,273
' Other liabilities 251,707 30,141 13.60% 221,566
Deferred inflows of resources 144,275 14,658 11.31% 129,617
Total liabilities and deferred inflows 3,149,770 (315,686) -9.11% 3,465,456
' Net assets:
Invested in capital assets,
net of related debt 8,279,319 (270,582) -3.16% 8,549,901
Unrestricted 208,209 64,189 44.57% 144,020
Total net assets $ 8,487,528 $ (206,393) -2.37% $ 8,693,921
As discussed earlier, the Ferry District decreased its net assets by $206,393 in 2012 and
' $150,827 in 2011. Below is a comparison of the income statements between the two years:
Table 2
' Change in Net Assets (on Exhibit 2)
Change During Year
2012 Dollars Percent 2011
Revenues
Program revenues:
Charges for services $ 2,658,573 $ 71,392 2.76% $ 2,587,181
' Operating grants and contributions 1,350 (256,315) -99.48% 257,665
General revenues:
Property taxes 750,015 99,979 15.38% 650,036
Interest and investment earnings 845 (912) -51.91% 1,757
Miscellaneous revenues 9,273 2,163 30.42% 7,110
Total revenues 3,420,056 (83,693) -2.39% 3,503,749
' Program expenses
General government 205,378 (27,769) -11.91% 233,147
Ferry operations 3,319,428 216,037 6.96% 3,103,391
' Airport 16,370 (203,592) -92.56% 219,962
Theater 10,465 3,200 44.05% 7,265
Rental activities 3,068 (4,659) -60.30% 7,727
Interest on long-term debt 71,740 (11,344) -13.65% 83,084
Total expenses 3,626,449 (28,127) -0.77% 3,654,576
Increase (decrease)in net assets $ (206,393) $ (55,566) -36.84% $ (150,827)
t
5
1
' Fishers Island Ferry District
Management's Discussion and Analysis
' December 31, 2012
The significant changes between 2012 and 2011 were as follows:
• Charges for services increased due to increases in ferry revenue. There was a nearly
$100,000 decrease in special charters because a road project had been completed in 2011,
traffic was up by $137,000, freight was up by $5,000 and other charters were up by
' $22,000.
• Operating Grants and Contributions decreased by $256,315. For the last few years, the
airport had been receiving a grant for maintenance work. Most of the work was completed
in 2011. The reimbursable expenses and the grant revenue dropped by approximately
$190,000 from 2012 and 2011 as a result. In addition, in 2011 the Ferry District received a
one-time grant for port security of approximately $65,000.
• In 2011, the Ferry District budgeted for aone-time cut in property taxes of $100,000. In
2012, the taxes were set back to the previous levels.
• Expenses for ferry operations were up by $216,037 or 6.96%. Increased repair and
maintenance costs and increased insurance costs were the primary contributors to this
' increase.
• As discussed above, the maintenance work at the airport was mostly completed in 2011
' causing the expenses to drop in 2012.
Governmental Activities
' Table 3 presents the cost of each of the Ferry District's governmental programs as well as each
governmental program's net cost (total cost less revenues generated by the activities). The net
cost shows the financial burden that was placed on the Ferry District's taxpayers by each of
these functions.
Table 3
Governmental Type Activities
Total Cost Net Cost (Income ftom)
' of Services Incr. of Services Incr.
2012 2011 Decr. 2012 2011 Decr.
Governmental Activities
General Government $ 205,378 $ 233,147 -11.91M° $ 205,378 $ 233,147 -11.91M°
Ferry Ope2tions 3,319,428 3,103,391 6.96% 745,413 s27,681 41.26%
Airport 16,370 219,962 -92.s6% 16,370 26,819 -38.96%
Theater 10,465 7,265 44.05% 9 (2,342) -100.38%
Rental Activities 3,068 7,727 -60.30% (72,384) (58,659) 23.40%
' Interest on Long-Term Debt 71,740 63,064 -13.65% 71,740 83,084 -13.6s%
Totals 3,626,449 $ 3,6s4,s76 -0.77°k $ 966,526 $ 809,730 19.36°k
' The significant changes in the total cost of services were discussed above. The net cost of, or
income from, services shared similar variances as the total costs.
6
1
Fishers Island Ferry District
Management's Discussion and Analysis
' December 31, 2012
THE GOVERNMENT'S FUNDS
While the year showed a $206,393 decrease in net assets on Exhibit 2, it showed a much
different picture in Fund Balance. During the year Fund Balance only decreased by $2,004 in
the governmental funds as presented in Exhibits 3 and 4. The difference for this is primarily the
treatment of long-term debt and capital assets. In the fund balance principal payments on
long-term debt are a reduction in fund balance when the payments on the debt are made.
' Debt payments are never a direct reduction in net assets on the government-wide statements.
Likewise, purchases of capital assets are a reduction in fund balance when the purchase is
made. Capital asset purchases are never a direct reduction in net assets on the government-
' wide statements, except that depreciation is deducted.
General Fund Budgetary Highlights
' Over the course of the year, the Board of Commissioners can revise the Ferry District budget
with additional appropriations and budget transfers. Additional appropriates increase the total
budget. Transfers do not increase the total budget, but instead pull appropriations from one
department that needs additional funding from other departments that might have excess
funding. Below is a summarized view of the final budget and actual results for the General
Fund:
' Table 4
General Fund -Budget Summary
Final
' Revenues Budget AMual Variance
Ferry $ 2,410,000 $ 2,572,665 $ 162,665
Property Tax 750,000 750,015 15
' Property Management 98,000 85,908 (12,092)
Grant Revenues 1,350 1,350
Other 7,000 3,105 (3,895)
Total Revenues 3,265,000 3,413,043 148,043
' Expenditures
General Government 305,573 304,711 862
Transportation 2,290,250 2,286,847 3,403
' Miscellaneous 10,500 10,465 35
Employee Benefits 448,200 447,835 365
Debt Service 351,700 351,692 8
Total Expenditures 3,406,223 3,401,550 4,673
' Increase (Decrease)
in Fund Balance $ (141,223) $ 11,493 $ 152,716
' The original budget called for expenditures of $3,315,000. During the year $91,223 of
additional appropriations were made. The budgeted revenues were $3,265,000. If everything
' happened right on budget, the Ferry District would have used $141,223 of its accumulated
Fund Balance to balance the budget.
- - - -
Fishers Island Ferry District
Management's Discussion and Analysis
' December 31, 2012
Actual revenues were $148,043 higher than anticipated and actual expenditures were $4,673
' lower than budgeted. Because of this, instead of using $141,223 of its accumulated Fund
Balance, the Ferry District added 11,493 to Fund Balance. This is $152,716 better than
budgeted.
' CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
At the end of this year, the Ferry District had $17,877,372 invested government activity capital
assets before accumulated depreciation. This amount represents a net increase (including
' additions and deductions) of $32,415 from last year. More detailed information about the Ferry
District's capital assets is presented in Note 4 to the financial statements.
1 Debt
At year end, the Ferry District had $2,275,000 in bonds outstanding. This is a decrease of
' $275,000 from last year. The Ferry District issues bonds through the Town of Southold.
Southold's general obligation bond rating continues to carry an Aa2 rating. More detailed
information about the Ferry District's long-term liabilities is presented in Note 6 to the financial
statements.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET
' The Ferry District's elected and appointed officials considered many factors when setting the
fiscal-year 2013 budget and rates including trying to anticipate an accurate level of ridership,
budgeting for continued improvements to the systems while keeping expenditures in line, and
' planning for future capital needs.
CONTACTING THE FERRY DISTRICT'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, investors and
creditors with a general overview of the Ferry District's finances and to show the Ferry District's
accountability for the money it receives. If you have questions about this report or need
' additional financial information, contact:
Board of Commissioners
t Fishers Island Ferry District
P.O. Drawer H
Fishers Island, NY 06390
t
e
1
' Fishers Island Ferry District
' Basic Financial Statements
December 31, 2012
Exhibit 1
Fishers Island Ferry District
' Statement of Net Position
December 31, 2012
' Governmental
Activities
' ASSETS
Cash and cash equivalents $ 831,884
Receivables 181,308
t Prepaid expenses 69,787
Capital assets
Nondepreciable 82,507
' Depreciable, net of accumulated depreciation 10,471,812
Total assets 11,637,298
' LIABILITIES
Accounts payable 166,800
' Accrued wages and benefits 53,237
Security deposit 9,416
Accrued interest payable 22,254
' Noncurrent liabilities
Due within one year 785,168
Due in more than one year 1,968,620
' Total liabilities 3,005,495
DEFERRED INFLOWS OF RESOURCES
' Unearned revenue -taxes paid in advance 144,275
NET POSITION
Net investment in capital assets 8,279,319
Unrestricted 208,209
Total net position $ 8,487,528
s
' The notes to the financial statements are an integral part of this statement.
Exhibit 2
Fishers Island Ferry District
Statement of Activities
For the Year Ended December 31, 2012
Net (Expense)
Revenue and
Changes in Net
Program Revenues Assets
Charges Operating Capital
for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions Total
Governmental activities
General government $ 205,378 $ - $ - $ - $ (205,378)
Ferry operations 3,319,428 2,572,665 1,350 - (745,413)
Airport 16,370 - - - (16,370)
Theater 10,465 10,456 - - (g)
Rental activities 3,068 75,452 - - 72,384
Interest on long-term debt 71,740 - - - (71,740)
Total government $ 3,626,449 $ 2,658,573 $ 1,350 $ - (966,526)
General revenues:
Property taxes, payments in lieu of taxes, interest and liens 750,015
Interest and investment earnings 845
Miscellaneous 9,273
Total general revenues 760,133
Change in net position (206,393)
Net position -beginning of the year 8,693,921
Net position -end of the year $ 8,487,528
The notes to the financial statements are an integral part of this statemerit
Exhibit 3
' Fishers Island Ferry District
Balance Sheet
Governmental Funds
December 31, 2012
' Special Capital Total
General Aid Project Governmental
' Fund Fund Fund Funds
ASSETS
Cash and cash equivalents $ 831,884 $ - $ - $ 831,884
Receivables 178,442 2,866 - 181,308
Due from other governmental funds 13,626 = - 13,626
Prepaid expenditures 37,917 37,917
Total assets $ 1,061,869 $ 2,866 $ - $ 1,064,735
LIABILITIES, DEFERRED INFLOWS
OF RESOURCES, AND FUND BALANCES
' Liabilities
Accounts payable $ 156,300 $ - $ 10,500 $ 166,800
Accrued payroll 53,237 - - 53,237
Security deposit 9,416 - - 9,416
' Due to atherfunds - 13,626 - 13,626
Total liabilities 218,953 13,626 10,500 243,079
' Deferred inflows of resources
Taxes paid in advance 144,275 144,275
' Fund balances (deficits)
Nonspendable 37,917 37,917
Assigned 281,669 - - 281,669
' Unassigned 379,055 (10,760) (10,500) 357,795
Total fund balances (deficits) 698,641 10,760) (10,500) 677,381
Total liabilities, deferred inflows
of resources, and fund balances
(deficits) $ 1,061,869 $ 2,866 $ - $ 1,064,735
11
The notes to the financial statements are an integral part of this statement.
Exhibit 3a
Fishers Island Ferry District
' Reconciliation of Governmental Funds Balance Sheet
to the Government Wide Statement of Net Position -Governmental Activities
December 31, 2012
' Fund Balances -Total Governmental Funds (Exhibit 3) $ 677,381
Less long-term liabilities not due and payable in current period
Bonds, notes, capital leases payable and unamortized premiums on bond costs (2,275,000)
' Compensated absences and special termination benefits (149,503)
Other post-employment benefits (329,285)
Accrued interest payable (22,254)
' Plus
Difference in treatment of prepaid insurance 31,870
' Net capital assets used in governmental activities are not financial resources and,
therefore, are not reported in the funds 10,554,319
Net position of Governmental Activities (Exhibit 1) $ 8,487,528
1
' 12
The notes to the financial statements are an integral part of this statement.
Exhibit 4
' Fishers Island Ferry District
' Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds
For the Year Ended December 31, 2012
' Special Capital Total
General Aid Projects Recreation Governmental
Fund Fund Fund Fund Funds
' REVENUES
Ferry revenues $ 2,545,149 $ $ $ $ 2,545,149
Property taxes 750,015 - - - 750,015
Property management 85,908 - - - 85,908
' Grants 1,350 - _ _ 1,350
Other 30,621 7,013 37,634
Total revenues 3,413,043 7,013 - - 3,420,056
' EXPENDITURES
Current
General government 304,711 - 304,711
' Transportation 1,973,071 = - - 1,973,071
Miscellaneous 10,465 10,010 20,475
Employee benefits 447,835 - - - 447,835
Debt service 901,692 - - - 901,692
' Capital outlay 313,776 - 10,500 - 324,276
Total expenditures 3,951,550 10,500 10,010 3,972,060
' Excess (deficiency) of revenues
over expenditrues (538,507) 7,013 1( 0,500) 10,010 (552,004)
OTHER FINANCING SOURCES (USES)
Long-term debt issued 550,000 - - - 550,000
Net Change in Fund Balance 11,493 7,013 (10,500) (10,010) (2,004)
Fund balance- beginning of the year 687,148 17,773 - 10,010 679,385
Fund balance- end of the year $ 698,641 $ 1( 0,760) $ 10,500 $ - $ 677,381
1
13
' The notes to the financial statements are an integral part of this statement.
Exhibit 4a
Fishers Island Ferry District
' Reconciliation of the statement of Revenues, Expenditures and Changes
in the Fund Balances of Govenrmental Funds to the Statement of Activities (Exhibit 2)
For the Year Ended December 31, 2012
Amounts Reported for Governmental Activities in the Statement of Activities are Different Because
' Net Change in Fund Balances -Total Governmental Funds (Exhibit 4) $ (2,004)
' Transactions involving the treatment of capital outlays
Plus capital outlays treated as expenditures on Exhibit 4, but capitalized on Exhibit 2 32,415
Less depreciation/amortization expense in Exhibit 2, but not in Exhibit 4 (577,997)
Transactions involving the treatment of long-term debt
Less long-term debt issued or incurred
Issuance of general obligation bonds (550,000)
' Plus principal repayments
Bonds and bond anticipation notes 825,000
' Changes in other items not requiring the use of current financial resources
Compensated absences benefits 64,409
Accrued interest q,952
' Post-employment benefts (6,130)
Difference in the treatment of insurance expense 2,862
Change in Net Assets of Governmental Activities (Exhibit 2) $ 206,393
1
' 14
The notes to the financial statements are an integral part of this statement.
1
Fishers Island Ferry District
Notes to Financial Statements
December 31, 2012
1. Summary of Significant Accounting Policies
' The Fishers Island Ferry District (The District") was created in 1947 by a special act of legislation within
the State of New York, known as the Ferry District Enabling Act. As a district, much like a school district
' or fire district, the District is allowed to levy and collect taxes in addition to collecting fares, in order to
offset its expenses. The tax levy is assigned to the property owners of Fishers Island and the collections
are kept separate from Southold Town funds. Although the District's income and expenses are handled
separately from the town's general fund, the Southold Town Supervisor is the fiscal officer of the District
' and along with the Town Board, reviews, approves and executes all of the District's financial obligations,
including payroll.
' The District is controlled by a five member Board of Commissioners, Each Commissioner is elected
independently from the populace of Fishers Island and serves a five year term. A chairman is elected on
an annual basis. It is the duty of the Commission to oversee the operational, fiscal and administrative
matters of the District. As the governing body of the District, all final decisions are resolved by the
Board.
The accounting policies conform to generally accepted accounting principles as applicable to governmental
' units. The Governmental Accounting Standards Board ("GASB") is the accepted standard setting body for
establishing governmental accounting and financial reporting principles. The following is a summary of the
District's more significant accounting policies:
' A. Financial Reporting Entity
The financial reporting entity consists of: a) the primary government; b) organizations for which the
primary government is financially accountable and c) other organizations for which the nature and
significance of their relationship with the primary government are such that exclusion would cause
the reporting entity's financial statements to be misleading or incomplete as set forth by GASB.
In evaluating how to define the financial reporting entity, for financial reporting purposes,
management has considered all potential component units. The decision to include a potential
' component unit in this reporting entity was made by applying the criteria set forth by GASB,
including legal standing, fiscal dependency and financial accountability. The criterion has been
considered and there are no agencies or entities which should be presented with this
government, although, the Fishers Island Ferry District is a component unit of the Town of
Southold, New York.
B. Government-Wide Financial Statements
The government-wide financial statements (i.e., the Statement of Net Position and the Statement of
Activities) report information on all non-fiduciary activities of the primary government as a whole.
For the most part, the effect of interfund activity has been removed from these statements, except
for interfund services provided and used. Govemmental activities, which normally are supported by
taxes and intergovernmental revenues, are reported separately from business-type activities (if
any), which rely to a significant extent on fees and charges for support.
r
15
1
Fishers Island Ferry District
Notes to Financial Statements (Continued)
' December 31.2012
1. Summary of Significant Accounting Policies (Continued)
' The Statement of Net Position presents the financial position of the District at the end of its fiscal
year. The Statement of Activities demonstrates the degree to which direct expenses of a given
function or segment are offset by program revenues. Direct expenses are those that are clearly
' identifiable with a specific function or segment. When an expense is incurred for purposes for which
both restricted and unrestricted resources are available, the District's policy is to use its restricted
resources first. Program revenues include (1) charges to customers or applicants who purchase,
use or directly benefit from goods or services, or privileges provided by a given function or segment,
' (2) grants and contributions that are restricted to meeting the operational or capital requirements of
a particular function or segment and (3) interest earned on grants that is required to be used to
support a particular program. Taxes and other items not identified as program revenues are
' reported as general revenues.
C. Fund Financial Statements
The accounts of the District is organized and operated on the basis of funds. A fund is an
independent fiscal and accounting entity with aself-balancing set of accounts which comprise its
assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund balances,
revenues and expenditures. Fund accounting segregates funds according to their intended purpose
and is used to aid management in demonstrating compliance with finance related legal and
contractual provisions. The District maintains the minimum number of funds consistent with legal
' and managerial requirements. The focus of governmental fund financial statements is on major
funds as that term is defined in professional pronouncements. Each major fund is to be presented
in a separate column, with non-major funds, if any, aggregated and presented in a single column.
Since the govemmental fund statements are presented on a different measurement focus and basis
' of accounting than the government-wide statements' governmental activities column, a
reconciliation is presented on the pages following, which briefly explains the adjustments necessary
to transform the fund based financial statements into the governmental activities column of the
' government-wide presentation.
Separate financial statements are provided for governmental funds. Major individual governmental
funds are reported as separate columns in the fund financial statements.
The District's resources are reflected in the fund financial statements in broad fund categories, in
accordance with generally accepted accounting principles as follows:
' Fund Categories
' a. Governmental Funds - Govemmental funds are those through which mast general government
functions are financed. The acquisition, use and balances of expendable financial resources
and the related liabilities are accounted for through govemmental funds. The following are the
District's major governmental funds:
' General Fund -The General Fund constitutes the primary operating fund of the District and is
used to account for and report all financial resources not accounted for and reported in another
fund.
16
1
' Fishers Island Ferry District
Notes to Financial Statements (Continued)
' December 31, 2012
1. Summary of Significant Accounting Policies (Continued)
' Special Aid Fund -The Special Aid Fund is used to account for large, one time projects,
financed by state and federal grants. Currently, transactions for improvements to the runways
funded primarily by grants are recorded in this fund.
Capital Project Fund -The Capital Project Fund is used to account for large, one time projects
financed by the District. Currently, transactions for improvements to the ramps are recorded in
' this fund.
Recreation Fund -This fund handled monies earned by the employees in the vending machine
and used for employee recreation. The monies in this fund were transferred out of the District's
' control during the year and the fund was closed.
D. Measurement Focus, Basis of Accounting and Financial Statement Presentation
The accounting and financial reporting treatment is determined by the applicable measurement
focus and basis of accounting. Measurement focus indicates the type of resources being measured
such as current financial resources (current assets less current liabilities) or economic resources (all
assets and liabilities). The basis of accounting indicates the timing of transactions or events for
recognition in the financial statements.
' The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting. Revenues are recorded when earned and
expenses are recorded when a liability is incurred, regardless of the timing of related cash flows.
' Property taxes are recognized as revenues in the year for which they are levied. Grants and similar
items are recognized as revenue as soon as all eligibility requirements imposed by the provider
have been met.
Governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized as
soon as they are both measurable and available. Revenues are considered to be available when
they are collectible within the current period or soon enough thereafter to pay liabilities of the current
period.
Property taxes and certain other revenues are considered to be available if collected within sixty
' days of the fiscal year end. Property taxes associated with the current fiscal period, as well as
charges for services and intergovernmental revenues are considered to be susceptible to accrual
and have been recognized as revenues of the current fiscal period. Fees and other similar
t revenues are not susceptible to accrual because generally they are not measurable until received in
cash. If expenditures are the prime factor far determining eligibility, revenues from Federal and
State grants are accrued when the expenditure is made.
' Expenditures generally are recorded when a liability is incurred, as under accrual accounting.
However, debt service expenditures, as well as expenditures, when applicable, related to early
retirement incentives, compensated absences, capital leases, post-closure landfill costs, pollution
' remediation obligations, other post employment benefit obligations, certain pension obligations and
certain claims payable are recorded only when payment is due. General capital asset acquisitions
are reported as expenditures in governmental funds. Issuance of long-term debt and acquisitions
' under capital leases are reported as other financing sources.
n
' Fishers Island Ferry District
Notes to Financial Statements (Continued)
' December 31, 2012
1. Summary of Significant Accounting Policies (Continued)
' E. Assets, Liabilities, Deferred Outflowsllnflows of Resources and Net Position or Fund
Balances
' Deposits, Investments and Risk Disclosure
Cash and Equivalents -The Ferry District's cash and cash equivalents are considered to
' be cash on hand, demand deposits, and short-term investments with original maturities of
three months or less from the date of acquisition. Investments for the Ferry District, if any,
are generally reported at fair value.
' Custodial Credit Risk -Custodial credit risk is the risk that, in the event of a bank failure,
the Ferry District's deposits may not be returned to it. The Ferry District's policy for
custodial credit risk is to invest in obligations allowable under the New York General
' Municipal Law Article 10. In general this includes deposits in Federal Deposit Insurance
Corporation "FDIC" insured commercial banks or trust companies located within the State.
The Fishers Island Ferry District is authorized to use demand deposit accounts, time
' deposit accounts and certificates of deposit. Permissible investments include obligations
of the U.S. Treasury, U.S. Agencies, repurchase agreements and obligations of New York
State or its political subdivisions.
Collateral is required for demand deposit accounts, time deposit accounts and certificates
of deposit at a minimum of 100% of all deposits not covered by Federal deposit insurance.
The Ferry District has entered into custodial agreements with the various banks which hold
their deposits. These agreements authorize the obligations that may be pledged as
collateral. Such obligations include, among other instruments, obligations of the United
States and its agencies and obligations of the State and its municipal and school district
subdivisions. The Ferry District's aggregate bank balances that were not covered by
depository insurance were not exposed to custodial credit risk at December 31, 2012
because of these custodial agreements
' Interest Rate Risk -Interest rate risk is the risk that the government will incur losses in
fair value caused by changing interest rates. The District does not have a formal
investment policy that limits investment maturities as a means of managing its exposure to
fair value losses arising from changing interest rates.
Custodial Credit Risk -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 District does not have a formal
' custodial credit risk policy.
Credit Risk -Credit risk is the risk that an issuer or other counterparty will not fulfill its
specific obligation even without the entity's complete failure. The District does not have a
formal credit risk policy.
Concentration of Credit Risk -Concentration of credit risk is the risk attributed to the
magnitude of a government's investments in a single issuer. The District does not have a
formal credit risk policy.
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1
Fishers Island Ferry District
Notes to Financial Statements (Continued)
' December 31, 2012
1. Summary of Significant Accounting Policies (Continued)
' Taxes Receivable -Property taxes are assessed on property values as of July 15`. The tax levy
is divided into two billings; the following December 15' and May 315`. This is used to finance the
calendar year. The billings are considered due on those dates; however, the actual due date for
' each respective billing is January 10"' and May 315'. After this, the bill becomes delinquent and
the applicable property is subject to lien, penalties and interest.
' The Town of Southold, New York is responsible for the billing and collection of the taxes through
May, at which time collection responsibility is transferred to the County. At May 31s', the county
pays any unpaid taxes to the Town tax receiver and continues the collections process in the
individual accounts.
Taxes collected in advance of the calendar year that they are levied to finance are considered
unearned until that year starts and are reported on the balance sheet as such.
' All receivables are shown net of an allowance for uncollectibles. The allowance is calculated
using a formula based on prior experience.
' Other Receivables -Other receivables include amounts due from other governments and
individuals for services provided by the District. Receivables are recorded and revenues recognized
as earned or as specific program expenditures/expenses are incurred. Allowances are recorded
' when appropriate.
Prepaid Expenses/Expenditures -Certain payments to vendors reflect costs applicable to future
' accounting periods, and are recorded as prepaid items using the consumption method in both the
government-wide and fund financial statements. Reported amounts are equally offset by
nonspendable fund balance, in the fund financial statements, which indicates that these amounts do
not constitute "available spendable resources' even though they are a component of current assets.
' Inventories -Inventories in the governmental funds are valued at cost on a first-in, first-out basis.
The cost is recorded as inventory at the time individual items are purchased. The District uses the
' consumption method to relieve inventory. In the fund financial statements, reported amounts are
equally offset by nonspendable fund balance in govemmental funds, which indicates that they do
not constitute "available spendable resources' even though they are a component of current assets.
Purchases of other inventoriable items are recorded as expenditures/expenses at the time of
' purchase and year-end balances are not material.
Due FromlTo Other Funds -During the course of its operations, the District has numerous
' transactions between funds to finance operations, provide services and construct assets. To the
extent that certain transactions between funds had not been paid or received as of December 31,
2012, balances of intertund amounts receivable or payable have been recorded in the fund financial
' statements. Any residual balances outstanding between the governmental activities and the
business-type activities are reported in the government-wide financial statements as internal
balances.
is
1
Fishers Island Ferry District
Notes to Financial Statements (Continued)
' December 31, 2012
1. Summary of Significant Accounting Policies (Continued)
Capital Assets -Capital assets, which include property, plant, equipment, and infrastructure
assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable
governmental columns in the government-wide financial statements. Capital assets are defined
' by the District as assets with an initial, individual cost of more than the capitalization threshold for
that asset type and an estimated useful life in excess of two years. Such assets are recorded at
historical cost or estimated historical cost if purchased or constructed. Donated capital assets
are recorded at estimated fair market value at the date of donation.
Intangible assets lack physical substance, is nonfinancial in nature and it's useful life extends
beyond a single reporting period. These are reported at historical cost if identifiable. Intangible
' assets with no legal, contractual, regulatory, technological or other factors limiting their useful life
are considered to have an indefinite useful life and are not amortized.
' The costs of normal maintenance and repairs that do not add to the value of the asset or
materially extend assets lives are not capitalized. Major outlays for capital assets and
improvements are capitalized as projects are constructed.
' Land is considered inexhaustible and, therefore, is not depreciated. Construction in progress has
not been placed in service and, therefore, is not deprecated. Property, plant, and equipment of
the District is depreciated or amortized using the straight line method over the following estimated
' useful lives:
Capitalization
Assets Years Threshold
Land N/A $ 5,000
1 Construction in progress N/A $ 5,000
Buildings and systems 20 to 40 $ 5,000
Machinery and equipment 5 to 40 $ 5,000
Infrastructure 20 $ 5,000
Intangible assets Varies $ 5,000
' Unearned Revenues -Unearned revenues arise when assets are recognized before revenue
recognition criteria have been satisfied. In the govemment-wide financial statements, unearned
revenues consist of revenue received in advance and/or amounts from grants received before the
eligibility requirements have been met.
' Deferred Outflows/Inflows of Resources - In addition to assets, the statement of financial
position will sometimes report a separate section for deferred outflows of resources. This
' separate financial statement element represents a consumption of net position that applies to a
future period and so will not be recognized as an outflow of resources (expense/expenditure) until
then.
' In addition to liabilities, the statement of financial position will sometimes report a separate
section for deferred inflows of resources. This separate financial statement element represents
an acquisition of net position that applies to a future period and so will not be recognized as an
inflow of resources (revenue) until that time.
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1
' Fishers Island Ferry District
Notes to Financial Statements (Continued)
' December 31.2012
1. Summary of Significant Accounting Policies (Continued)
' Also, deferred revenues in the fund financial statements are those where asset recognition criteria
have been met, but for which revenue recognition criteria have not been met. Such amounts in the
fund financial statements have been deemed to be measurable but not "available" pursuant to
' generally accepted accounting principles.
Long-Term Liabilities - In the government-wide financial statements long-term debt and other
long-term obligations are reported as liabilities in the Statement of Net Position. Bond premiums
and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds.
Bonds payable are reported net of the applicable bond premium or discount. Bond issuance
costs are reported as deferred charges and amortized over the term of the related debt.
' In the fund financial statements, governmental fund types recognize bond premiums and
discounts, as well as bond issuance costs, during the current period. The face amount of debt
' issued is reported as other financing sources. Premiums received on debt issuances are
reported as other financing sources while discounts on debt issuances are reported as other
financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received,
and debt payments, are reported as debt service expenditures.
' Compensated Absences -District employees accumulate vacation and sick leave hours for
subsequent use or for payment upon termination or retirement. Vacation and sick leave expenses
to be paid in future periods are accrued when incurred in the government-wide financial
statements. A liability for these amounts is reported in the governmental funds only if the liability
has matured through employee resignation or retirement.
' Net Position -Net position represents the difference between assets, liabilities and deferred
outflows/inflows of resources. Net position is reported as restricted when there are limitations
imposed on their use either through the enabling legislation adopted by the District or through
' external restrictions imposed by creditors, grantors, or laws or regulations of other governments.
Net position on the Statement of Net Position includes net investment in capital assets, and
restricted, if any. The balance is classified as unrestricted.
Fund Balance -Generally, fund balance represents the difference between current assets and
current liabilities. In the fund financial statements, governmental funds report fund classifications
that comprise a hierarchy based primarily on the extent to which the District is bound to honor
' constraints on the specific purposes for which amounts in those funds can be spent. Under this
standard, the fund balance classifications are as follows:
' Nonspendable fund balance includes amounts that cannot be spent because they are either
not in spendable farm (inventories, prepaid amounts, long-term receivables) or they are
legally or contractually required to be maintained intact (the corpus of a permanent fund).
z~
' Fishers Island Ferry District
Notes to Financial Statements (Continued)
' December 31 2012
1. Summary of Significant Accounting Policies (Continued)
' • Restricted fund balance is to be reported when constraints placed on the use of the resources
are imposed by grantors, contributors, laws or regulations of other governments or imposed
by law through enabling legislation. Enabling legislation includes a legally enforceable
' requirement that these resources be used only for the specific purposes as provided in the
legislation. This fund balance classification will be used to report funds that are restricted for
debt service obligations and for other items contained in the General Municipal Law of the
State of New York.
Committed fund balance will be reported for amounts that can only be used for specific
purposes pursuant to formal action of the District's highest level of decision making authority.
' These funds may only be used for the purpose specified unless the entity removes or
changes the purpose by taking the same action that was used to establish the commitment.
This classification includes certain designations established and approved by the entity's
' governing boards.
Assigned fund balance, in the General Fund, will represent amounts constrained either by the
' entity's highest level of decision making authority or a person with delegated authority from
the governing board to assign amounts for a specific intended purpose. An assignment
cannot result in a deficit in the unassigned fund balance in the General Fund. This
classification will include amounts designated for balancing the subsequent year's budget and
' encumbrances. Assigned fund balance in all other governmental funds represents any
positive remaining amount after classifying nonspendable, restricted or committed fund
balance amounts.
' Unassigned fund balance, in the General Fund, represents amounts not classified as
nonspendable, restricted, committed or assigned. The General Fund is the only fund that
would report a positive amount in unassigned fund balance. For all governmental funds other
' than the General Fund, unassigned fund balance would necessarily be negative, since the
fund's liabilities, together with amounts already classified as nonspendable, restricted and
committed would exceed the fund's assets.
' When both restricted and unrestricted amounts of fund balance are available for use for
expenditures incurred, it is the District's policy to use restricted amounts first and then
unrestricted amounts as they are needed. For unrestricted amounts of fund balance, the District
' considers that committed amounts would be reduced first, followed by assigned amounts, and
then unassigned amounts when expenditures are incurred for purposes for which amounts in any
of these unrestricted fund balance classifications could be used.
' F. Use of Estimates
' The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and the reported amounts
' of revenues and expenditures/expenses during the reporting period. Actual results could differ
from those estimates.
t
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1 Fishers Island Ferry District
Notes to Financial Statements (Continued)
' December 31, 2012
1. Summary of Significant Accounting Policies (Continued)
' G. Subsequent Events Evaluation by Management
Management has evaluated subsequent events for disclosure and/or recognition in the financial
' statements through the date that the financial statements were available to be issued, which date is
August 12, 2013.
' 2. Stewardship, Compliance and Accountability
A. Budget Basis
' A formal, legally approved, annual budget is adopted for the General Fund only. This budget is
adopted on a basis consistent with Generally Accepted Accounting Principles (modified accrual
' basis) except revenues and expenditures from refunding or renewing long-term debt or issuing
lease financing are included in the budget as the net revenues or expenditures expected.
' B. Budget Calendar
The Board of Commissioners prepares detailed estimates of the revenues and expenditures for the
next calendar. These estimates are reviewed at a public hearing held on or about August 20'n each
year. After the public hearing, the Board of Commissioners meets to increase or decrease the
annual estimates and prepares final budget estimates.
' The Fishers Island Ferry District's Board of Commissioners submits its budget estimates for the
subsequent calendar year to the Town of Southold, New York's Supervisor on or before September
20'n. The Town Supervisor adds estimates of debt service and incorporates the Fishers Island
Ferry District budget into his Tentative Budget and files this with the Town of Southold, New York's
' Town Clerk no later than September 30'n. The Town Clerk presents the Tentative Budget to the
Town of Southold, New York's Town Board on or before October 5`n. The Town Board makes
revisions and prepares a Preliminary Budget.
The Town Board holds a public hearing by the Thursday following the November election. The
Town Board then considers the estimates and any other matters brought to their attention at a
public meeting held subsequent to the public hearing and prior to the budget adoption. The Town
' Board adopts the budget no later than November 20`n
C. Budget Control
As a rule, no expenditure may be made, or any liability incurred, unless an amount has been
appropriated for the particular purpose. If, during the year, the Board of Commissioners or Town
' Board determines that sufficient revenues will not be generated to finance the total appropriations
provided for in the original budget, the Board of Commissioners (subject to the approval of the
Town Board) generally may reduce appropriations to prevent making expenditures of money
available. An appropriation may not be reduced below the minimum amount required by law, nor
generally be reduced by more than the unexpended balance less the outstanding and unpaid
claims chargeable to it.
23
' Fishers Island Ferry District
Notes to Financial Statements (Continued)
December 31.2012
2. Stewardship, Compliance and Accountability (Continued)
' The Fishers Island Ferry District (subject to the approval of the Town Board) may make
supplemental appropriations These may be provided by transfer from the unexpended balance of
an appropriation, from the appropriation for contingencies within a fund (if any), or by borrowing
' pursuant to the Local Finance Law. The expected unreserved fund balance at the end of the
current year may be utilized for this purpose. During the year $91,223 of additional appropriations
were made.
' D. Property Tax Limitation
The District is not limited as to the maximum amount of real property taxes which may be raised.
' However, on June 24, 2011, the Governor signed Chapter 97 of the Laws of 2011 ("Tax Levy
Limitation Law"). This applies to all local governments.
The Tax Levy Limitation Law restricts the amount of real property taxes that may be levied by a
government in a particular year, beginning with the 2012 year. It expires on June 16, 2016.
The following is a brief summary of certain relevant provisions of the Tax Levy Limitation Law. The
' summary is not complete and the full text of the Tax Levy Limitation Law should be read in order to
understand the details and implementations thereof.
' The Tax Levy Limitation Law imposes a limitation on increases in the real property tax levy, subject
to certain exceptions. The Tax Levy Limitation Law permits the government to increase its overall
real property tax levy over the tax levy of the prior year by no more than the "Allowable Levy Growth
Factor," which is the lesser of one and two-one hundredths or the sum of one plus the Inflation
Factor; provided, however that in no case shall the levy growth factor be less than one. The
"Inflation Factor' is the quotient of: (i) the average of the 20 National Consumer Price Indexes
determined by the United States Department of Labor for the twelve-month period ending six
' months prior to the start of the coming fiscal year minus the average of the National Consumer
Price Indexes determined by the United States Department of Labor for the twelve-month period
ending six months prior to the start of the prior fiscal year, divided by (ii) the average of the National
Consumer Price Indexes determined by the United States with the result expressed as a decimal to
four places. The government is required to calculate its tax levy limit for the upcoming year in
accordance with the provision above and provide all relevant information to the New York State
Comptroller prior to adopting its budget. The Tax Levy Limitation Law sets forth certain exclusions
' to the real property tax levy limitation of the government, including exclusions for certain portions of
the expenditures for retirement system contributions and tort judgments payable by the government.
The government may adopt a budget that exceeds the tax levy limit for the coming fiscal year, only if
t the government first enacts, by a vote of at least sixty percent of the total voting power of the
government, a local law to override such limit for such coming fiscal year.
E. Application of Accounting Standards
For the year ended December 31, 2012, the Town implemented:
GASB Statement 62 - Codification of Accounting and Financial Reporting Guidance
Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements -This statement
incorporates certain authoritative literature into the GASB codification.
2a
1
' Fishers Island Ferry District
Notes to Financial Statements (Continued)
' December 31, 2012
2. Stewardship, Compliance and Accountability (Continued)
• GASB Statement 63 -Financial Reporting of Deferred Outflows of Resources, Deferred
Inflows of Resources, and Net Position -This statement discusses transactions that result in
the consumption or acquisition of net assets in one period that are applicable to future periods
' and provides guidance for reporting them.
• GASB Statement 65 -Items Previously Reported as Assets and Liabilities -This statement
' further clarifies that appropriate use of the financial statement elements of deferred outflows and
deferred inflows of resources to ensure consistency in financial reporting.
F. Fund Deficit
' The Special Aid Fund and Capital Project Fund have unassigned defcits of $10,760 and $10,500
respectively at December 31, 2012. The District plans to address these deficits in the subsequent
' year.
3. Detailed Notes on All Funds
A. Cash, Cash Equivalents and Investments
' Cash and investments of the District consist of the following at December 31, 2012:
Statement of Net Postion
' Cash and equivalents $ 831,884
Cash and Cash Equivalents - As of December 31, 2012 the carrying amount of the District's
' deposits with financial institutions was:
Cash and Cash Equivalents
Deposits with financial institutions $ 831,884
' The bank balance of the deposits was $831,974 and was exposed to custodial credit risk as follows:
' Covered by Federal Depositorylnsurance $ 260,304
Collateralized by securities held in trust
In the Town's name 571,670
$ 831,974
B. Receivables, Deferred Revenue and Unearned Revenue
' Governmental funds defer revenue recognition in connection with resources that have been received,
but not yet earned. Taxes collected in advance in the amount of $144,275 are recorded as the deferred
inflows of resources unearned revenue at December 31, 2012.
1
25
' Fishers Island Ferry District
Notes to Financial Statements (Continued)
' December 31 2012
3. Detailed Notes on All Funds (Continued)
' C. Interfund Transactions
The outstanding balances between funds result mainly from the time lag between the dates that: 1)
interfund goods and services are provided or reimbursable expenditures occur; 2) transactions are
recorded in the accounting system; and 3) payments between funds are made. At December 31,
2012 these were summarized as follows
' Receivable fund Payable Fund Amount
General Fund Special Aid Fund $ 13,626
' D. Capital Assets
Changes in the District's capital assets used in the governmental activities are as follows
' Beginning Ending
Balance Increases Decreases Balance
Capital assets not being depreciated
Land $ 41,717 $ - $ _ $ 41,717
Construction in progress 8,375 32,415 40,790
50,092 32,415 82,507
Capital assets being depreciated
' Buildings and systems 12,583,229 = = 12,583,229
Machinery and equipment 2,907,113 2,907,113
Infrastructure 2,304,523 2,304,523
17,794,865 - - 17,794,865
Less accumulated depreciation (6,745,056) (577,997) _ (7,323,053)
$ 11,099,901 $ (545,582) $ $ 10,554,319
Depreciation expense was charged to functions/programs of the governmental activities as follows:
Depreciation
Expense
Ferry operations $ 577,997
E. Long-Term Liabilities
The following table summarizes changes in the District's long-term indebtedness far the year ending
December 31, 2012:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
General obligation bonds $ 2,550,000 $ 550,000 $ (825,000) $ 2,275,000 $ 725,000
Compensated absences 213,912 (64,409) 149,503 37,376
OPEB obligations 328,411 22,792 (21,918) 329,285 22,792
$ 3,092,323 $ 572,792 $ (911,327) $ 2,753,788 $ 785,168
26
' Fishers Island Ferry District
Notes to Financial Statements (Continued)
December 31.2012
3. Detailed Notes on All Funds (Continued)
Each govemmental funds liability is liquidated by the respective fund, primarily the General Fund.
Interest on these obligations is expensed to the respective fund, primarily the General Fund.
' General Obligation Bonds
The District issues general obligation bonds to provide funds for the acquisition and construction of
major capital facilities. General obligation bonds are direct obligations of the District and pledge the
' full faith and credit of the District. These bonds generally are issued as 20-year serial bonds with
equal amounts of principal maturing each year. General obligation bonds outstanding as of
December 31, 2012 consisted of the following:
Year of Original Final Interest Amount
Purpose Issue Amount Maturity Rates Outstanding
New London Ferry Terminal/Wharf 2005 $ 3,000,000 2021 3.75% $ 1,725,000
' New London Ferry Terminal/Wharf 2011 $ 650,000 2012 0.85% -
New London Ferry Terminal/Wharf 2012 $ 550,000 2013 0.40% 550,000
$ 2,275,000
' Payments to maturity on the general obligation bonds are as follows
' Governmental Activities Govemmental Activities
General Obligation Bonds General Obligation Bonds
Year End Principal Interest Year End Principal Interest
2013 $ 725,000 $ 67,588 2018 200,000 30,700
' 2014 175,000 58,825 2019 200,000 23,200
2015 175,000 52,263 2020 200,000 15,600
2016 200,000 45,700 2021 200,000 8,000
2017 200,000 38,200 $ 2,275,000 $ 340,076
' Interest cost incurred and expensed on general obligation bonds for the year ended December 31,
2012 totaled $71,740.
The Bonds due on in 2013 were refinanced with $450,000 of new financing with an interest rate of
47% per year. This is due in April 2014. And additional $500,000 of debt was included in the
' financing to fund the ramp repairs included in the 2014 budget.
Compensated Absences
' Compensated absences include vacation and compensatory time earned by employees and carried
over to the next calendar year. A maximum of 8 days is allowed to be carried into the next calendar
year. Compensated absences also include sick time that may be paid in cash when an employee
leaves. Employees hired prior to May 1, 2009 are eligible for payment on up to 120 days of
accumulated sick time. Employees hired after May 1, 2009 are eligible for payment on up to 40 days
of accumulated sick time. Each of these benefits is describe more fully in the Ferry District's Employee
Benefit Package. The value of all compensated absences has been reflected in the government-wide
financial statements.
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1
' Fishers Island Ferry District
Notes to Financial Statements (Continued)
' December_31, 2012
3. Detailed Notes on All Funds (Continued)
t Legal Debt Limit
The New York State Constitution sets debt limits for most classes of local government, and establishes
' numerous other conditions related to the issuance and repayment of debt. In addition, the Local
Finance Law (LFL) regulates the issuance of debt by local governments. Under the LFL, a local
government, including the Fishers Island Ferry District, must authorize debt through a resolution of its
local board. The Town of Southold's Town Board must also authorize debt issued on behalf of the
District though a resolution of the Town Board, which is subject to permissive referendum at the District
level. Furthermore, a local government must comply with certain regulations and statutory provisions for
the private or public sale of its debt. Other provisions set limits on the use of bond proceeds, refunding
' protocols, and the maximum number of years that certain projects, goods or services can be debt-
financed based upon probable useful life.
' F. Net Position
The components of net position are detailed below:
Net Investment in Capital Assets -the component of net position that reports the difference between
capital assets less both the accumulated depreciation and the outstanding balance of debt, excluding
unexpended proceeds, that is directly attributable to the acquisition, construction or improvement of
' those assets.
Restricted Net Position - Nonexpendable -the component of net position that reflects funds set aside in
accordance with laws, regulations, grants, and other agreements that must be kept intact and cannot be
' spent. This balance is zero in the current year.
Restricted Net Position -Expendable -the component of net position that reflects funds that can only
be spent subject to the laws, regulations, grants, and other agreements relating to these funds. This
balance is zero in the current year.
Unrestricted -all other net position that does not meet the definition of "restricted" or "invested in capital
assets, net of related debt".
G. Fund Balances
' As discussed in Note 1, governmental funds report fund classifications that comprise a hierarchy
based primarily on the extent to which the District is bound to honor constraints on the specific
purposes for which amounts in those funds can be spent. These are summarized below:
General
Fund
' Nonspendable
Not in spendable form
Prepaid expenditures $ 37,917
' Assigned
To balance next year's budget $ 281,669
28
' Fishers Island Ferry District
Notes to Financial Statements (Continued)
' December 31 2012
3. Detailed Notes on All Funds (Continued)
H. Pension Plan
Plan Description -The District participates in the New York State and Local Employees' Retirement
' System ("ERS"). This is acost-sharing multiple-employer defined benefit retirement plan. The ERS
provides retirement, death and disability benefits to plan members.
The New York State Retirement and Social Security Law ("NYSRSSL") govern obligations of
' employers to contribute benefits to employees. As set forth in the NYSRSSL, the Comptroller of the
State of New York serves as sole trustee and administrative head of the System. The Comptroller shall
adopt and may amend rules and regulations for the administration and transactions of the business of
' the System and for the custody and control of their funds.
The System issues a publicly available financial report that includes financial statements and required
' supplementary information. That report may be obtained by writing the New York State and Local
Retirement System, Gov. Alfred E. Smith State Offrce Building, 110 State Street, Albany, NY 12224.
Funding Policy -The ERS is non-contributory except for employees in tiers 3 and 4 that have let than
10 years of service, who contribute 3% of their salary and employees in tier 5 who also contribute 3% of
their salaries for the employee retirement system (the "ERS") without regard to their years of service
and employees in tier 6 who contribute between 3% and 6% depending on salary levels and also
' without regard to years of service. Contributions to ERS are certified by the State Comptroller and
expressed as a percentage of members' salary. Contribution rates are actuarially determined and
based upon membership tier and plan. Contributions to ERS consist of a life insurance portion and
regular pension contributions.
The Fishers Island Ferry District is not a separate employer under this plan. The District is included in
the plan as a part of the Town of Southold. There are no separate financial statistics available for the
District. The District contributes at an actuarially determined rate. The District's contributions made to
the System were equal to 100% of the contributions required for each year. Contribution rates for the
year ended March 31, 2013 are as follows:
Tier/Plan/Option Rate
ERS 1 751 25.2
' 2 751 23.0
3 A14 18.4
4 A15 18.4
5 A15 14.9
6 A15 9.9
Contributions were equal to 100% of the actuarially required contribution for each year. Contributions
' made to the ERS for the current and two preceding years were charged to the General Fund as follows:
Year Contribution
2012 $158,354
2011 $163,777
2010 $108,814
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1
' Fishers Island Ferry District
Notes to Financial Statements (Continued)
' December 31 2012
3. Detailed Notes on All Funds (Continued)
I. Other Post Employment BeneFts (OPEB)
Plan Description -The Fishers Island Ferry District Other Post Employment Benefit Program is a
single-employer defined benefit plan administered by the Fishers Island Ferry District. The benefits
have been established by the Board of Commissioners and can be amended by the Board. The plan
does not issue a separate fnancial statement and is unfunded.
' Eligibility The district provides medical, prescription drug and behavioral health
to retirees and their covered dependents. The District pays up to
$3,000 of the cost for retirees, disabled retirees, spouses and
dependents. All active employees who retire or are disabled directly
from the District and meet the eligibility criteria will participate.
Eligibility criteria is age 55 and 10 years of service with the District
' (20 years if hired after July 1, 2003.)
Cost Sharing Retirees pay the balance of the premium over $3,000 per year.
Actuarial Assumptions and Methods
Latest Actuarial Date January 1, 2012
Actuarial Cost Method Projected Unit Credit
Discount Rate 3.50%
Medical Infation Initial rate of 10% grading down to an ultimate inflation rate of 5%
after 2017.
Amortization Method Level percentage of projected payroll
Remaining amortization 26 years, closed
Healthy Mortality Based on male and female pre-retirement mortality rates provided.
' Turnover Based on male and female rates for age and years of service provided.
Retirement Based on mate and female rates for age and years of service provided.
Disability Based on male and female rates for age and years of service provided.
Latest Actuarial Date January 1, 2011
Actuarial Cost Method Projected Unit Credit
Discount Rate 3.50%
Medical Inflation Initial rate of 10% grading down to an ultimate inflation rate of 5%
after 2017.
Amortization Method Level percentage of projected payroll
Schedule of Funding Progress
The schedule of funding progress presents multiyear trend information about whether the actuarial
' value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for
benefits. There is no requirement for funding and the plan has not been funded. The District has not
established a formal funding plan or a trust at this time. Below is a schedule of funding progress.
30
Fishers Island Ferry District
Notes to Financial Statements (Continued)
' December 31, 2012
3. Detailed Notes on All Funds (Continued)
' Excess Excess
(Unfunded) (Unfunded)
' Actuarial Liability as a
Valuation Value of Accrued Accrued Funded Covered of Covered
Date Assets Liability Liability Ratio Payroll Payroll
1/1/2012 $ - $ 431,452 $ 431,452 0.0% $ 968,682 44.5%
1/1/2011 _ 422,080 422,080 0.0% 922,554 45.8%
1/1/2010 1,278,581 1,278,581 0.0% 1,023,395 124.9%
Schedule of Employer Contributions
The schedule of employer contributions is as follows.
' Annual Actual
Year Ended Required Contributions Percentage
June 30 Contributions Made Contributed
' 2012 $ 29,154 $ 21,918 75.2%
2011 28,373 10,639 37.5%
2010 126, 611 17, 01 1 13.4
' Annual Required Contribution (ARC)
The Annual Required Contribution ("ARC") for the OPEB program consists of two pieces:
Past Service Cost (a catch-up accrual to amortize the Unfunded Accrued Liability). The amortization
period is 30 years starting on January 1, 2009. The ARC is assumed to be paid at the beginning of
' the fiscal year. Interest is also calculated on the Unfunded Accrued Liability and added to the Annual
Required Contribution.
Normal Cost is the present value of the portion of the projected benefit attributable to the current
' year (the cost of benefits earned each year should be accrued in that year), plus
The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal
' costs each year and amortized any unfunded actuarial liabilities (or funding excess) over a period not
to exceed 30 years.
31
' Fishers Island Ferry District
Notes to Financial Statements (Continued)
' December 31, 2012
3. Detailed Notes on All Funds (Continued)
Annual OPEB Cost and Net OPEB Obligation
The following table shows the components of the annual OPEB cost for the year, the amount actually
' contributed to the plan, and the changes in the District's net OPEB obligation (asset):
Annual Required Contribution $ 29,154
Interest on Net OPEB Obligation 11,494
' Adjustment to Annual Required Contribution (17,856)
Annual OPEB Cost 22,792
Contributions made (21,918)
' Increase in net OPEB Obligation 874
Net OPEB Obligation -Beginning of the year 328,411
$ 329,285
Other Disclosures
The calculations are based on the benefits provided under the terms of the substantive plan in effect
at the time of each valuation and on the pattern of sharing costs between the employer and plan
members to that point. The actuarial valuations involve estimates of the value of reported amounts
and assumptions about the probability of events far into the future. Actuarially determined amounts
' are subject to continual revision as results are compared to past expectations and new estimates are
made about the future. The actuarial methods and assumptions used include techniques that are
designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of
assets.
1
4. Otherlnformation
' A. Litigation
' The District is a defendant in various lawsuits. Although the outcome of these lawsuits is not
presently determinable, in the opinion of the District's counsel the resolution of these matters will
not have a material adverse effect on the financial condition of the District.
' B. Contingencies
Grants -Amounts received or receivable from grant agencies are subject to audit and adjustment
by grantor agencies, principally the federal government. Any disallowed claims, including amounts
already collected, may constitute a liability of the applicable funds. The amount, if any, of
expenditures that may be disallowed by the grantor cannot be determined at this time, although the
Ferry District expects such amounts, if any, to be immaterial.
Commitments - In its December 22, 2010 Board of Commissioners meeting, the Fishers Island
Ferry District committed to appropriate up to $10,000 per year for the next three years to the Fishers
1 Island Habitat proposal for the airport properties.
32
Fishers Island Ferry District
Notes to Financial Statements (Continued)
' December_31, 2012
4. Other Information (Continued)
C. Risk Management
The District is exposed to various risks of loss related to torts; theft of, damage to, and
' destruction of assets; errors and omissions; and natural disasters for which the District carries
commercial insurance. There have been no significant reductions in insurance coverage.
Settlement amounts have not exceeded insurance coverage for the current year or three prior
years.
D. GASB Pronouncements Issued, But Not Yet Effective
' The Governmental Accounting Standards Board (GASB) is the standard setting board for
governmental entities. The following are statements which have been approved by GASB, but
are not yet effective:
• GASB Statement 61 -The Financial Reporting Entity: Omnibus -This statement modifies
certain requirements for inclusion of component units in the financial reporting entity, amends
' the criteria for reporting component units, and clarifies the reporting of equity interests in
legally separate organizations. This statement is effective for periods beginning after June
15, 2012.
• GASB Statement 66 -Technical Corrections - 2012 -This statement resolves conflicting
guidance. This statement is effective for periods beginning after December 15, 2012.
' GASB Statement 68 -Accounting and Financial Reporting for Pensions -This statement, and
GASB Statement 67 applicable to pension plans, improves information provided by state and
local government employers for better decision making, accountability, interperiod equity, and
' creating additional transparency. This statement is effective for fiscal years beginning after
June 15, 2014.
• GASB Statement 69 -Government Combinations and Disposals of Government Operations -
' This statement establishes accounting and financial reporting standards related to a variety of
transactions such as mergers, acquisitions, and transfers of operations. This statement is
effective for government combinations and disposals of government operations occurring in
' financial reporting periods beginning after December 15, 2013.
• GASB Statement 70 -Accounting and Financial Reporting for Nonexchange Financial
Guarantees -This statement improves the accounting and financial reporting by state and
' local governments that extend and receive nonexchange financial guarantees. This
statement is effective for fiscal years beginning after June 15, 2013.
33
Fishers Island Ferry District
' Required Supplementary Information
December 31, 2012
1
1
' Fishers Island Ferry District
' Required Supplementary Information
Schedule of Revenues, Expenditures and Changes in Fund Balance
Budget and Actual (Budgetary Basis) -General Fund
For the Year Ended December 31, 2012
Budgeted Amounts Variance
Appropriations Actual with
and Budgetary Final
Original Transfers Final Basis Budget
' REVENUES
Ferry Revenues
Ferry operations $ 2,365,000 $ - $ 2,365,000 $ 2,504,866 $ 139,866
Charters 15,000 - 15,000 40,283 25,283
U.S. mail 30,000 30,000 27,516 (2,484)
t Total Ferry Revenues 2,410,000 - 2,410,000 2,572,665 162,665
Property Tax Revenues
Property taxes 750,000 - 750,000 750,000 -
' Interest and penalties -real estate taxes - - - 15 15
Total Property Tax Revenues 750,000 750,000 750,015 15
Property Management Revenue
' Service to other governments 90,000 - 90,000 75452 (14,548)
Theater 8,000 8,000 10,456 2,456
Total Property Management Revenue 98,000 - 98,000 85,908 (12 092)
' Fetleral capital grant - - - 1,350 1,350
Other Revenues
Interest earnings 2,000 - 2,000 845 (1,155)
Refuntl prior year expense 5,000 - 5,000 2,235 (2,765)
Other 25 25
Total Other Revenues 7,000 7,000 3,105 (3,895)
Total Revenues 3,265,000 3,265,000 3,413,043 148,043
' E%PENDITURES
General Government
Accounting and finance 30,000 60,900 90,900 90,863 37
' Legal fees 42,560 19,763 62,323 62,248 75
Insurance 87,000 10,750 97,750 97,556 194
Insurance claims 5,000 (1,000) 4,000 3,468 532
Property taxes 48,000 800 48,800 48,799 1
MTA payroll tax 5,000 (3,200) 1,800 1,777 23
Total General Government 217,560 88,013 305,573 304,711 862
Transporation
' Elizabeth airport 15,000 5,200 20,2W 20,169 31
Dock repairs, capital 220,000 (129,500) 90,500 89,838 662
Ferry operations, personal services 1,285.440 (35,600) 1,249,840 1,249,168 672
Ferry operations, equipment 165,000 59,000 224,000 223,938 62
ferry operations, contractual expense 571,000 104,850 675,850 673,969 1,881
' Office expense, contractual expense 10,000 3,010 13,010 12,915 95
Commissioner fees 6,000 1,750 7,750 7,750
LLS. mail, contractual expense 8,000 1,100 9,100 9,100
Total Transportation 2,280,440 9,810 2,290,250 2,286,847 3,403
' Theater, contractual expense 10,000 500 10,500 10,465 35
(Continued)
34
' See Accountants' Report
1
' Fishers Island F¢rry District
' Required Supplementary Information
Schedule of Revenues, Expenditures and Changes in Fund Balance
Budget and Actual (Budgetary Basis)-General Fund
For the Year Ended December 31, 2012
Budgeted Amounts Variance
Appropriations Actual with
and Budgetary Final
Original Transfers Final Basis Budget
' Employee Benefits
NVS retirement 205,000 (46,600) 158
400 158,354 46
Social security 95,000 (1A00j 94.000 93,738 262
Unemployment insurance 5,000 6,000 11,000 10,956 44
Medical insurance 150.000 34,800 184 800 184,787 13
' Total Employee Benefits 455,000 (6 800) 448,200 447,835 365
Total general government expenditures 2,963,000 91,523 3,054,523 3,049,858 4,665
' Debt Service
Principal:
Serial bond 175,000 - 175.000 175,OW
Bond anticipation note 100,000 - 100.000 100,000 -
' Interest:
Serial bond 72,000 (50) 71,950 71,950
Bond anticipation note 5,000 (250) 4,750 4,742 8
Total debt service 352,000 (300) 351,700 351,692 8
Total Expenditures 3,315,000 91,223 3,406,223 3,401,550 4,673
Excess (deficiency) of revenues
' over expenditures-Budgetary Basis $ (50,000) $ (91,223) $ (141,223) $ 11,493 $ 152,716
AdjustmenLS to Generally Accepted Accounting Principles (GAAP)
Bond Anticipation Note proceeds netted with retirement of Bontl Anticipation Note 550,000
Retirement of Bond Anticipation Note netted with Bontl Anticipation Note proceeds (550,000)
' Excess (deficiency) of revenues and other financing sources over
expenditures and other financing (uses) -GAAP basis $ 11.493
' Notes to Required Supplementary Information: A formal, legally approved, annual budget is adopted for the General Fund
only. This budget is adapted on a basis consistent with Generally Accepted Accounting Principles (modified accrual basis) with
the following exceptions: (1) Revenues and expenditures /rom refunding or renewing long-term debtor issuing lease fnancing are
included in the budget as the net revenues or expenditures expected.
1
35
' See Accountants' Report
1
1
Fishers Island Ferry District
' Internal Control and Compliance Reports
December 31, 2012
O'CONNOR PKF
DAVIES
..~.~~.~~..,,,n..~~~~.~._.,...
Report On Internal Control over Financial Reporting and on Compliance and Other
' Matters Based on an Audit of Financial Statements Performed in Accordance with
GovernmentAuditing Standards
' Independent Auditors' Report
The Board of Commissioners
Fishers Island Ferry District
' 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
governmental activities and each major fund of the Fishers Island Ferry District ("District") as of and
' for the year ended December 31, 2012, and the related notes to the financial statements, which
collectively comprise the District's basic financial statements and have issued our report thereon
dated August 12, 2013August 12, 2013.
' Internal Control over Financial Reporting
' In planning and performing our audit of the financial statements, we considered the 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 District's
internal control. Accordingly, we do not express an opinion on the effectiveness of the District's
internal control.
Our consideration of the 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 that might be material weaknesses or significant deficiencies and therefore, material
' weaknesses or significant deficiencies my exist that were not identified. However, as described in
the accompanying schedule of findings and questioned costs, we identified certain deficiencies in
internal control that that we consider to be material weaknesses and significant deficiencies.
' A deficiency in internal control exists when the design or operation of a control does not allow
management or employees in the normal course of performing their assigned functions, to prevent,
t 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. We consider the deficiencies described in the accompanying schedule
' of findings and questioned costs to be material weaknesses (identified as 10-1, 10-3, and 10-7).
1
O'CONNOR DAVIES, LLP
' 100 Great Meadow Road, Wethersfield, CT 06109 I Tel: 860.257.1870 I Fax: 860.257.1875 I www.odpkf.com
O'Connor Oav¢z, LLP Is a member firm of the pKF International Lmlted network of legally Independent firms and does not accept any responsbllity or Ilablllry for the actions or
Inactions on the par[ of any other Individual member firm or firms.
36
' Compliance and Other Matters
As part of obtaining reasonable assurance about whether the 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 an instance of noncompliance or other
matters that is required to be reported under Government Auditing Standards and which is
described in the accompanying schedule of findings and questioned costs as item NC-10-1.
' District's Response to Findings
' The District's response to the findings identified in our audit is described in the accompanying
schedule of findings and questioned costs. We did not audit the District's response and,
accordingly, we express no opinion on it.
The purpose of this report is solely to describe the scope of our testing of internal control over
financial reporting and compliance, and the result of that testing, and not to provide an opinion on
' the effectiveness of the entity's internal control over financial reporting 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 over financial reporting and compliance. Accordingly,
' this report is not suitable for any other purposes.
Wethersfield, Connecticut
August 12, 2013
1
37
' Fishers Island Ferry District
Schedule of Findings
For the Year Ended December 31, 2012
Findings on Internal Controls
MW-10-1 -Entity Level Controls
' Condition: Internal controls are a coordinated set of policies and procedures that
management uses to achieve their objectives and meet their fundamental
responsibilities for effectiveness, efFciency, compliance and financial reporting. The
literature recognizes five sections of internal control published by the Committee of
' Sponsoring Organizations of the Treadway Commission (COSO Report) in Internal
Control -Integrated Framework. These five interrelated components include:
• Conbo/Environment- A favorable control environment exists when management
is knowledgeable about controls (entity wide and specific), is committed to
establishing controls and communicates its support for internal controls to all
individuals involved.
• Risk Assessment -This involves management's continual identification and
' assessment of the potential risks that might prevent management from fulfilling
its responsibilities and achieving its objectives.
' Information and Communication Systems -These are the systems used to
assure that appropriate individuals have timely and accurate information to carry
out their responsibilities.
• Control Activities -These are management's response to the risks identified.
These are the specific policies and procedures that are put in place to alert
management of undesired actions in a timely manner.
• Monitoring -There is a responsibility of management to follow up on the
controls that have been put in place to assure that they continue to function and
function properly, effectively and efficiently.
The Fishers Island Ferry District does not have a framework established to deal with
' each of the interrelated entity level controls over and above the specific control policies
and procedures that have been developed.
Recommendation: We recommend that as part of developing an accounting manual,
the Fishers Island Ferry District consider the entity wide controls as discussed above.
Management's Response: We have been working to develop a coordinated set of
policies and procedures. We have been working in the most critical areas first.
Ultimately, these will all be addressed.
38
1
Fishers Island Ferry District
Schedule of Findings
For the Year Ended December 31, 2012
MW-10-3 -Segregation of Duties -Revenues
Condition: The Ferry District does not maintain an adequate segregation of duties for
' proper internal control over the financial transactions in certain areas. Proper internal
control relies on the following three aspects of processing transactions being performed
by separate individuals: authorizing transactions, custody of assets, and record keeping.
This weakness in internal controls could lead to funds being expended in a manner not
' consistent with the intentions of management. These weaknesses were noted in the
following areas:
' Ticket Sales -Sales that are "no charge'are authorized and recorded by the
same individual.
• Ticket Books -Ticket Books have the same individuals able to authorize the
' purchase, have custody of the physical books and cash collected and do the
record keeping for the sale.
• Freight Sales -Freight is not always counted by the freight agent. This is not
' noted and corrected at the other end. Cash payments are collected and
recorded by the same individual. Individuals are able to collect payment, record
transactions and delete transactions from the system.
• Recording Revenues - Individuals are able to collect payment, record
' transactions and delete transactions from the system or write off transactions in
the system.
' Recommendation: The Ferry District should review the segregation of duties involved
in all the cash receipts functions. The duties of the individuals involved should be
analyzed and restructured as necessary to provide for a better system of checks and
balances. A segregation of duties is not the only tool used in internal controls, where a
segregation of duties is not possible, alternate internal control tools should be
implemented. Once a better system has been devised, it should be written, approved by
the Board of Commissioners and distributed to the individuals involved.
Management's Response: We have been working to develop a coordinated set o f
' policies and procedures. We have been working in the most critical areas first.
Ultimately, these will all be addressed.
39
' Fishers Island Ferry District
Schedule of Findings
For the Year Ended December 31, 2012
MW-30-7 -Documentation of the Components of Internal Control over Processes
' Condition: The Fishers Island Ferry District has numerous internal controls in place
over significant processes and accounts. Not all of these controls are formally
' documented. It is possible for controls to change over time or not be completely
understood by the individuals involved in the processes.
' Recommendation: We recommend that the Fishers Island Ferry District make a
listing of its significant processes and accounts. Controls in each area should be
documented in a procedures manual. Each of the procedures should be reviewed to
determine if controls are adequate.
' Management's Response: We have been working to develop a coordinated set of
policies and procedures. We have been working in the most critical areas first. As we
move through this process, we will document our policies and procedures.
Findings on Compliance
NC-10-1 Non-collusion Statements
' The enabling act states in Section 13:
All contracts for public work and all purchase contracts shall be let to the lowest responsible bidder
' after advertisement for bids where so required by section one hundred three of the general
municipal law.
Section 103-d of the New York General Municipal Law requires a statement of non-
collusion in bids and proposals to political subdivision of the state. Currently, the Fishers
Island Ferry District does not have a policy to obtain, nor does it obtain, any statements
of non-collusion in its bids and proposals.
1
ao