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Home My WebLink About2013 • • MATTITUCK FIRE DISTRICT • AUDITED FINANCIAL STATEMENTS Year Ended December 31, 2013 • • • • • • • TABLE OF CONTENTS • Page No. INDEPENDENT AUDITORS' REPORT.............................................................................................. 1-2 FINANCIAL STATEMENTS Balance Sheet—Governmental Fund................................................................................................. 3 • Statement of Revenues, Expenditures and Changes in Fund Balance—Governmental Fund.............................................................................................. 4 Statement of Assets and Liabilities—Fiduciary Fund......................................................................... 5 • Notes to Financial Statements............................................................................................................. 6-20 REQUIRED SUPPLEMENTARY INFORMATION • General Fund—Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget and Actual............................................................................. 21 General Fund—Schedule of Detailed Expenditures and Appropriations.................................................................................................................................. 22-23 • OTHER REPORT Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards................... 24-25 • • • -1- A CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITORS' REPORT To Board of Fire Commissioners Mattituck Fire District Mattituck, New York Report on the Financial Statements We have audited the accompanying financial statements of the Mattituck Fire District, New York which comprise the Balance Sheet—Governmental Fund, Statement of Revenues, Expenditures, and Changes in Fund Balance— Governmental Fund, the Statement of Assets and Liabilities— Fiduciary Fund and the related notes to the financial _ statements as of and for the year ended December 31,2013. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting practices prescribed or permitted by the Office of the New York State Comptroller's, Uniform System of Accounts for Fire Districts. Management is also responsible 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 error or fraud. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our E audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the r 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 Mattituck Fire District, New York'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 Mattituck Fire District, New York'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 that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit —_ opinion. PERSONAL SERVICE.TRUSTED ADVICE. -�-- ALBRECHT,VIGGIANO,ZURECK&COMPANY, P.C. 245 PARK AVENUE, 39TH FLOOR 25 SUFFOLK COURT -- NEW YORK, NY 10167 HAUPPAUGE, NY 11788-3715 T:212.792.4075 T. 631.434.9500 F:631.434.9518 -- - www.avz.com INDEPENDENT MEMBER OF BKR INTERNATIONAL i -2- Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles As described in Note 1C, these financial statements are prepared on the accounting practices prescribed or i permitted by the Office of the New York State Comptroller's, Uniform System of Accounts for Fire Districts which is a basis of accounting other than accounting principles generally accepted in the United States of America. The effects on the financial statements of the variances between the regulatory basis of accounting described in Note 1C and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. Adverse Opinion on U.S. Generally Accepted Accounting Principles f In our opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles paragraph, the financial statements referred to above do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of the Mattituck Fire District, New York as of December 31, 2013, or changes in financial position for the year then ended. Opinion on Regulatory Basis of Accounting In our opinion, the financial statements referred to in the first paragraph present fairly, in all material respects, the assets, liabilities and fund balance of the Mattituck Fire District, New York as of December 31, 2013, and the change in fund balance for the year then ended, in accordance with accounting practices prescribed or permitted by the Office of the New York State Comptroller's, Uniform System of Accounts for Fire Districts as described in Note 1 C. Other Matters Required Supplementary Information The accounting practices prescribed or permitted by the Office of the New York State Comptroller's, Uniform System of Accounts for Fire Districts which is a basis of accounting other than accounting principles generally accepted in the United States of America requires that the accompanying financial information listed as required supplementary information in the table of contents be presented to supplement the financial statements. Such information, although not a part of the financial statements, is required by the accounting practices prescribed or permitted by the Office of the New York State Comptroller's, Uniform System of Accounts for Fire Districts which is a basis of accounting other than accounting principles generally accepted in the United States of America, w which consider it to be an essential part of financial reporting for placing the financial statements in an appropriate operational, economic, or historical context. We have 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 financial statements, and other knowledge we obtained during our audit of the 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 April 2, 2014 on our consideration of the Mattituck Fire District, New York's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations,contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on 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 Mattituck Fire District, New York's internal control over financial reporting and compliance. L �C Hauppauge, New York April 2, 2014 -3- MATTITUCK FIRE DISTRICT GOVERNMENTAL FUND ' GENERALFUND BALANCE SHEET December 31, 2013 ASSETS Cash $ 738,528 Cash in special reserves 1,170,956 Total Assets $ 1,909,484 LIABILITIES Accounts payable $ 97,586 Accrued expenses 9,544 Total Liabilities 107,130 FUND EQUITY Restricted 1,153,513 Assigned 211,000 Unassigned 437,841 Total Fund Equity 1,802,354 • Total Liabilities and Fund Equity $ 1,909,484 • • M • See notes to financial statements. • -4- MATTITUCK FIRE DISTRICT GOVERNMENTAL FUND • GENERALFUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE Year Ended December 31, 2013 REVENUES Real property taxes $ 1,822,282 Interest and earnings 2,472 Insurance recoveries and refunds 1,000 Miscellaneous income 45 Total Revenues 1,825,799 • EXPENDITURES Personal services 182,451 Equipment and capital outlay 342,767 Fire protection 456,876 • Employee benefits 460,037 Debt service 255,186 Total Expenditures 1,697,317 Net Change in Fund Balance 128,482 Fund Balance at Beginning of Year 1,673,872 Fund Balance at End of Year $ 1,802,354 Q • • • • See notes to financial statements. r -5- MATTITUCK FIRE DISTRICT FIDUCIARY FUND • STATEMENT OF ASSETS AND LIABILITIES December 31, 2013 ASSETS Service award program assets $ 3,395,212 Total Assets $ 3,395,212 LIABILITIES Service awards $ 3,395,212 Total Liabilities $ 3,395,212 • • • • • • See notes to financial statements. -6- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2013 • 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Mattituck Fire District (the "District"), which was established in 1905, is governed by Town Law and other general laws of the State of New York. The governing body of the District is the Board of Fire Commissioners which consists of five commissioners all of whom are elected to five year terms. The primary function of the District is to provide fire protection services to the community. Services such as firefighting,fire prevention, and public education support the primary function. The more significant of the District's accounting policies are described below. A. REPORTING ENTITY S The financial reporting entity includes all functions and activities over which the elected officials exercise responsibility. No other governmental organizations have been included or excluded from the reporting entity. B. FUND FINANCIAL STATEMENTS The financial statements of the District have not been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The District prepares these financial statements on a prescribed basis of accounting that demonstrates compliance with the regulatory basis of accounting and budget laws of the State of New York, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. The accounts of the District are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund balances, revenues, and expenditures, which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. The various funds are presented by type in the fund A financial statements.Accordingly,the District maintains the following fund types: Governmental Funds- Governmental funds are those through which most governmental functions are financed.The acquisition, use and balances of expendable financial resources and the related liabilities are accounted for through governmental funds. The measurement focus of the governmental funds is upon determination of financial position and changes in financial position. The District reports the following governmental fund: General Fund — the principal operating fund of the District which includes all receipts and disbursements not required to be included in other funds. Fiduciary Fund — the Fiduciary Fund is used to account for assets held by the District in a trustee capacity or as an agent for individuals, private organizations, and other governments. The District reports the following fiduciary fund: Agency Fund — used to account for money (and/or property) received and held in a custodial capacity of trustee, custodian, or agent. C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND FINANCIAL STATEMENT PRESENTATION Measurement focus refers to what is being measured; basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurement made, regardless of the measurement focus applied. -7- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2013 • 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND FINANCIAL STATEMENT PRESENTATION (continued) The District follows the Uniform System of Accounts as described in the Fire District Accounting and Reporting Manual issued by the Office of the New York State Comptroller. Under this system the District's governmental activities use a current financial resources measurement focus and are accounted for using the modified accrual basis of accounting. Under this basis of accounting, revenues are recognized in the accounting period in which they are available and measurable, and expenditures will generally be recognized in the accounting period in which the liability is actually incurred. Available means collectible • within the current period or soon enough thereafter to be used to pay liabilities of the current period. This basis of accounting differs from accounting principles generally accepted in the United States of America for governments as promulgated by the Government Accounting Standards Board (GASB). D. ASSETS, LIABILITIES AND FUND EQUITY 1. CASH IN SPECIAL RESERVES Cash balances of the Capital Reserve for Building and Grounds and the Capital Reserve for Apparatus are classified as cash in special reserves because the use of these funds is restricted by New York State General Municipal Law. 2. RECEIVABLES Receivables are recorded and revenues recognized as earned or as specific program expenditures are incurred. 3. CAPITAL ASSETS All capital assets with an original cost of $500 or more are valued at historical cost or estimated historical costs if actual is unavailable, except for donated capital assets which are recorded at their estimated fair value at the date of donation. Depreciation is provided over the assets' estimated useful lives using the straight-line method of depreciation. The range of estimated useful lives by type of asset is as follows: . Buildings 20-50 years Infrastructure 40 years Vehicles and related equipment 5-20 years Equipment 5-20 years In accordance with the Accounting and Reporting Manual for the Fire Districts, issued by the Office of the New York State Comptroller, depreciation expense is not recorded the District's governmental f funds and instead it is disclosed in the notes to the financial statements along with the District's changes in capital assets. Additional information related to capital assets is disclosed in Note 313 to the financial statements. 4. PROPERTY TAXES Property taxes are collected by the Town of Southold on behalf of the District. Payments from the Town of Southold are normally received at various intervals during the year. -8- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2013 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) D. ASSETS, LIABILITIES AND FUND EQUITY (continued) 5. FUND EQUITY In the fund financials statements, governmental funds report aggregate amounts for five classifications of fund balances based on the constraints imposed on the use of these resources; they are 1) nonspendable, 2) restricted 3)committed, 4) assigned, or 5) unassigned. 1) Nonspendable fund balance includes amounts that cannot be spent because they are either (a) not in spendable form (i.e. prepaid items or inventories), or (b) will not convert to cash within the ! current period (i.e. long term receivables and financial assets held for resale), or (c) legally or contractually required to be maintained intact (i.e. the principal of a permanent fund). The District did not have non-spendable fund balance at December 31,2013. The spendable portion of the fund balance comprises the remaining four classifications: restricted, committed, assigned, and unassigned. 2) Restricted fund balance reflects the constraints imposed on resources either (a) externally by creditors, grantors, contributors, or laws or regulations of other governments; or(b) imposed by law through constitutional provisions or enabling legislation. The District has established the following restricted funds balances: Capital Reserve for Buildings and Grounds (GML �6-g) — The reserve is established by a resolution of the Board of Fire Commissioners and may not take effect until approved by a vote of the qualified electors of the District (i.e., mandatory referendum). The reserve established for the construction and repair of District buildings and grounds is funded by budgetary appropriations and revenues not required by law to be paid into any other fund or account.The reserve is accounted for in the General Fund. Capital Reserve for Apparatus (GML�6-g —The reserve is established by a resolution of the Board of Fire Commissioners and may not take effect until approved by a vote of the qualified electors of the District (i.e., mandatory referendum).The reserve established for the purchase and repair of District equipment and apparatus is funded by budgetary appropriations and revenues not required by law to be paid into any other fund or account. The reserve is accounted for in the General Fund. 3) Committed fund balance reflects amounts that can only be used for specific purposes by a government using its highest and most binding level of decision making authority. The Board of Fire Commissioners is not empowered to establish local law; accordingly, the District will not have committed fund balance. • 4) Assigned fund balance reflects the amounts constrained by the District's "intent" to be used for specific purposes, but are neither restricted nor committed. The Board of Fire Commissioners has the authority to assign amounts to be used for specific purposes. 5) Unassigned fund balance includes all other General Fund amounts that do not meet the definition of the above four classifications and are deemed to be available for general use by the District. When both restricted and unrestricted resources are available for use, the District uses restricted resources first, and then unrestricted resources—assigned and unassigned- in order as needed. -9- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2013 • 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) E. ENCUMBRANCES Encumbrance accounting, under which purchase orders, contracts and other commitments for the i expenditure of monies are recorded for budgetary control purpose, is employed in the governmental funds. Encumbrances are reported as restrictions, commitments, or assignments of fund balances since they do not constitute expenditures or liabilities. Expenditures for such commitments are recorded in the period in which the liability is incurred. F. USE OF ESTIMATES The preparation of financial statements in conformity with a prescribed basis of accounting that demonstrates compliance with the regulatory basis of accounting and budget laws of the State of New York, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates. G. SUBSEQUENT EVENTS Management has evaluated subsequent events for disclosure and/or recognition in the financial statements through the date of the financial statements. 2. STEWARDSHIP COMPLIANCE AND ACCOUNTABILITY A. BUDGETARY INFORMATION The District prepares an annual budget for the General Fund which is approved by the Board of Fire Commissioners. The budget is then submitted to the Town of Southold for inclusion in the Town Budget and a public hearing is held thereon.The budget is not subject to referendum. Any revisions to the annual budget are adopted by resolution of the Board of Fire Commissioners. The budget is adopted annually on a prescribed basis of accounting that demonstrates compliance with the regulatory basis of accounting and budget laws of the State of New York, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. Appropriations authorized for the current year are increased by the amount of encumbrances, if any, carried forward from the prior year. B. REAL PROPERTY TAX LEVY CAP New York State has enacted Chapter 97, Laws of 2011 Real Property Tax Levy Cap and Mandate Relief Provisions, which includes a property tax cap for fire districts. For fiscal years, beginning in 2012 and lasting through at least June 15, 2016,annually,fire district cannot increase their property tax levy by more f than 2.00% or the rate of inflation (whichever is less) plus additional adjustments unless a resolution approved by a vote of 60% of the total voting power of the Board of Fire Commissioners is obtained to override the property tax levy limit for the coming fiscal year. The District has complied with this law in adopting its 2013 budget. -10- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2013 2. STEWARDSHIP COMPLIANCE AND ACCOUNTABILITY(continued) C. CAPITAL RESERVES The District has established a Capital Reserve for Buildings and Grounds and a Capital Reserve for Apparatus. A summary of activity in each of the District's Capital Reserve Funds is as follows: Capital Reserve for Building and Grounds The Board of Fire Commissioners established a capital reserve for construction and repairs to building and grounds. A summary of activity in the Building and Grounds Capital Reserve Fund for the year ended December 31, 2013 is as follows: Fund Balance at beginning of year $ 302,007 Transfer from General Fund appropriations 85,000 Interest earned on reserve cash 368 Fund Balance at end of year $ 387,375 Capital Reserve for Apparatus The Board of Fire Commissioners established a capital reserve for purchases and repairs associated with apparatus and equipment. A summary of activity in the Apparatus Reserve Fund for the year ended December 31, 2013 is as follows: Fund Balance at beginning of year $ 822,110 Transfer from General Fund appropriations 163,000 Interest earned on reserve cash 957 Expenditures (219.929) Fund Balance at end of year 766,138 Amount due to General Fund for reimbursement of costs included in accounts payable 17.443 Cash balance at end of year $ 783,581 3. DETAILED NOTES A. CASH AND CASH IN SPECIAL RESERVES Custodial Credit Risk - Deposits - Custodial credit risk for deposits exists when, in the event of the failure of a depository financial institution, a government may be unable to recover deposits, or recover collateral securities that are in possession of an outside agency. The District's investment policies are governed by State statutes. In addition, the District has its own investment policy. District monies must be deposited in FDIC-insured commercial banks or trust companies located within the State. The Treasurer is authorized to use demand accounts and certificates of deposit. Permissible investments include obligations of the United States treasury and United States agencies, and obligations of New York State or its localities. Collateral is required for demand and time deposits at 105% of all deposits not covered by federal deposit insurance. Obligations that may be pledged as collateral are obligations of the United States and its agencies and obligations of the State or its municipalities. s -11- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2013 • 3. DETAILED NOTES (continued) A. CASH AND CASH IN SPECIAL RESERVES (continued) Deposits are required to be disclosed as exposed to custodial credit risk if they are not covered by a depository insurance, and the deposits are either: • U ncol lateral ized; • Collateralized with securities held by the pledging financial institution in the District's name; or • Collateralized with securities held by the pledging financial institution's trust department or agent, ` but not in the District's name. At December 31, 2013, the District's bank balances were $1,922,526. Of the District's bank balances, $277,279 was covered by federal deposit insurance and $1,645,247 was secured by collateral held by the District's agent, a third party financial institution, in the District's name. The District does not typically purchase investments for long enough duration to cause it to believe that it is exposed to any material interest rate risk. The District does not typically purchase investments dominated in a foreign currency, and is not exposed to foreign currency risk. The District does not have any investments subject to credit risk or concentration of risk. B. CAPITAL ASSETS Capital assets consist of the following at December 31, 2013: Balance Balance 1/1/13 Additions Deletions 12/31/13 • Capital assets, not being depreciated: Land $ 386,000 $ 386,000 Construction in progress 2,095 $ 2,095 -0- Total capital assets, not being depreciated 388,095 $ -0- 2,095 386,000 Capital assets, being depreciated: Buildings 2,622,498 2,622,498 Infrastructure 437,750 437,750 Vehicles and related equipment 4,035,376 282,703 4,318,079 Equipment 775,794 42,545 1,000 817,339 Total capital assets, being depreciated 7,871,418 325,248 1,000 8,195,666 Less accumulated depreciation for: Buildings 879,819 65,977 945,796 Infrastructure 294,181 8,249 302,430 Vehicles and related equipment 2,346,395 208,096 2,554,491 Equipment 495,557 58,426 1,000 552,983 Total accumulated depreciation $ 4,015,952 $ 340,748 $ 1,000 4,355,700 Total capital assets, being depreciated, net 3,839,966 Total capital assets, net $ 4,225,966 Total depreciation expense $ 340,748 • -12- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2013 3. DETAILED NOTES (continued) B. CAPITAL ASSETS The District evaluates prominent events or changes in circumstances affecting capital assets to determine whether impairment of a capital asset has occurred. The District's policy is to record an impairment loss in • the period when the District determines that the carrying amount of the asset will not be recoverable. At December 31, 2013,the District has not recorded any such impairment losses. C. INDEBTEDNESS LONG TERM DEBT The following is a summary of changes in long-term debt transactions for the year ended December 31, 2013: Balance Balance 1/1/13 Increases Reductions 12/31/13 General obligation serial bonds $ 683,000 $ 88,000 $ 595,000 Statutory installment bond 72,000 36,000 36,000 Capital lease obligations 350,983 86,187 264,796 $ 1,105,983 $ -0- $ 210,187 $ 895,796 General Obligation Serial Bonds - The District borrows money in order to acquire land, equipment, construct buildings or make improvements. This enables the cost of these capital assets to be borne by the present and future taxpayers receiving the benefit of the capital assets. These long-term liabilities are full faith and credit debt of the District.The provision to be made in future budgets for capital indebtedness represents the amount, exclusive of interest, authorized to be collected in future years from taxpayers and others for liquidation of the long-term liabilities. General obligation serial bonds of the District will be repaid from tax revenues. General obligation serial bonds bear interest at 3.70% and 4.20% and have final maturity dates through 2019. The following is a summary of maturity of general obligation serial bonds: Final Interest Outstanding Issue Date Maturity Rate 12/31/13 2004 2019 3.70% $ 470,000 2005 2019 4.20% 125,000 $ 595,000 Future principal and interest payments to maturity are as follows: t Year Principal Interest Total 2014 $ 89,000 $ 21,345 $ 110,345 2015 95,000 17,865 112,865 2016 100,000 14,157 114,157 2017 101,000 10,357 111,357 2018 102,000 6,515 108,515 2019 108,000 2,538 110,538 $ 595,000 $ 72,777 $ 667,777 -13- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2013 • 3. DETAILED NOTES (continued) C. INDEBTEDNESS (continued) LONG TERM DEBT(continued) Statutory Installment Bond -The District borrowed money in order to acquire land through the issuance of an $180,000 statutory installment bond. This enables the cost of this acquisition to be borne by present and future taxpayers. This long-term liability is full faith and credit debt of the District. The provision to be made in future budgets represents the amount, exclusive of interest, authorized to be collected in future years from taxpayers and others for liquidation of the long-term liabilities. The statutory installment bond bears interest at 3.20%and has a final maturity date of 2014. The following is a summary of maturity of the statutory installment bond: Year Principal Interest Total 2014 $ 36,000 $ 1,152 $ 37,152 CAPITAL LEASE OBLIGATIONS The District entered into a contract to acquire a 95 Foot Aerial Platform fire truck under a capital lease agreement. The liability for this obligation is payable annually and matures in May 2016. Interest rate is 5.15%. The cost for the underlying equipment was$764,478. Future principal and interest payments to maturity are as follows: • Year Principal Interest Total 2014 $ 85,300 $ 14,212 $ 99,512 2015 89,796 9,716 99,512 2016 89,700 9,812 99,512 $ 264,796 $ 33,740 $ 298,536 The actual allocation of principal and interest for the District's capital lease obligations may be different due to the leasing company recalculating the interest on a daily basis as opposed to a monthly basis as presented here. Management believes any differences as a result of this presentation are not significant. • D. RETIREMENT SYSTEM Plan Description The District participates in the New York State and Local Employees' Retirement System (ERS) and the Public Employees' Group Life Insurance Plan, collectively known as NYSLRS. These are cost-sharing multiple-employer retirement systems. The NYSLRS provides retirement benefits as well as death and disability benefits. Obligations of employers and employees to contribute and benefits to employees are governed by the New York State Retirement and Social Security Law (NYSRSSL). As set forth in the NYSRSSL, the Comptroller of the State of New York (Comptroller) serves as sole trustee and administrative head of the NYSLRS. The Comptroller shall adopt and may amend rules and regulations for the administration and transaction of the business of the NYSLRS and for the custody and control of its funds. The NYSLRS issues a publicly available financial report that includes financial statements and required supplementary information. That report may be found at http://www.osc.state.ny.us/retire/publications/index.php or obtained by writing to the New York State and Local Retirement System, 110 State Street, Albany, NY 12244. i -14- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2013 • 3. DETAILED NOTES (continued) D. RETIREMENT SYSTEM (continued) Funding Policy The NYSLRS are noncontributory except for employees who joined the New York State and Local Employees' Retirement System on or after July 27, 1976, who generally contribute 3.00% of their annual salary for the first ten years of membership, employees who joined on or after January 1, 2010 (ERS) who generally contribute 3.00%of their salary for their entire length of service, and employees who joined on or after April 1, 2012 (ERS) who generally contribute between 3.00% and 6.00% (based on annual wages) for the entire length of service. Under the authority of the NYSRSSL, the Comptroller annually certifies the actuarially determined rates expressly used in computing the employers' contributions based on salaries paid during the NYSLRS' fiscal year ending March 31. Contributions for the current year and two preceding years were equal to 100.00%of the contributions required, and were as follows: Percent Contribution of Covered • Year Amount Payroll 2013 $ 38,401 20.80% 2012 $ 34,783 18.40% 2011 $ 28,022 15.60% • Chapter 57 of the Laws of 2010 of the State of New York allows local employers to amortize a portion of their retirement bill for ten years in accordance with the following stipulations: • For State fiscal year 2010 - 2011, the amount in excess of the graded rate of 9.50% of employees' covered pensionable salaries, with the first payment of those pension costs not due until the fiscal year succeeding that fiscal year in which the amortization was instituted. • • For subsequent State fiscal years, the graded rate will increase or decrease by up to 1.00% depending on the gap between the increase or decrease in the NYSLRS's average rate and the previous graded rate. • For subsequent State fiscal years in which the NYSLRS's average rates are lower than the graded rates, the employer will be required to pay the graded rate. Any additional contributions made will first be used to pay off existing amortizations, and then any excess will be deposited into a reserve account and will be used to offset future increases in contribution rates. The law requires participating employers to make payments on a current basis, while amortizing existing unpaid amounts relating to the NYSLRS's fiscal years when the local employer opts to participate in the program. Chapter 57 of the Laws of 2013 of the State of New York allows local employers to amortize a portion of their retirement bill for up to twelve years in accordance with the following stipulations: • The maximum amount an employer can amortize is the difference between the normal annual contribution (total bill, excluding payments for deficiency, group life, previous amortizations, incentive costs and prior year adjustments) and the graded contribution. • For subsequent State fiscal years, the graded rate will increase or decrease by up to 0.50% depending on the gap between the increase or decrease in the NYSLRS's average rate and the previous graded rate. i • -15- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2013 3. DETAILED NOTES (continued) D. RETIREMENT SYSTEM (continued) • For subsequent State fiscal years in which the NYSLRS's average rates are lower than the graded • rates, the employer will be required to pay the graded rate. Any additional contributions made will first be used to pay off existing amortizations, and then any excess will be deposited into a reserve account and will be used to offset future increases in contribution rates. The law requires participating employers to make payments on a current basis, while amortizing existing unpaid amounts relating to the NYSLRS's fiscal years when the local employer opts to participate in the program. • The District did not participate in these programs and therefore has no outstanding liability at December 31, 2013. E. FUND BALANCE The following table provides the detail regarding fund balance categories and classifications for the General Fund which shows the components of restricted and assigned fund balance. The unassigned fund balance is also shown. Restricted for: Capital Reserve for Buildings and Grounds $ 387,375 Capital Reserve for Apparatus 766,138 Total Restricted 1,153,513 Assigned to: Buildings and Grounds 60,000 Apparatus 70,000 • Length of Service Award Program contribution 50,000 Purchases on order 31,000 Total Assigned 211,000 Unassigned 437,841 f Total Fund Equity $ 1,802,354 4. COMMITMENTS AND CONTINGENCIES A. RISK MANAGEMENT The District is exposed to various risks of loss related to torts, theft of, damage to, and destruction of assets; injuries to employees, errors and omissions; natural disasters, etc. These risks are covered by commercial insurance purchased from independent third parties. Settled claims from these risks have not exceeded commercial insurance coverage for the past two years. Management believes that all claims currently pending are either adequately covered by insurance or will not materially affect the financial . position or results of operations of the District. • • -16- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2013 4. COMMITMENTS AND CONTINGENCIES (continued) B. LENGTH OF SERVICE AWARD PROGRAM (LOSAP) The District's financial statements are for the year ended December 31, 2013. The information contained • in this note is based on information for the District's Length of Service Award Program (the "Plan") for the Plan year ended December 31, 2012, which is the most recent Plan year for which complete information is available. The District established a defined benefit Plan (referred to as "LOSAP" — Length of Service Award Program — under Section 457(e)(11) of the Internal Revenue Code) for active volunteer firefighters of the Mattituck Fire Department. The program took effect on January 1, 1992. The Plan was established i pursuant to Article 11-A of New York State General Municipal Law. The Plan provides municipally-funded pension-like benefits to facilitate the recruitment and retention of active volunteer firefighters.The District is the sponsor of the Plan and the Plan administrator(administration assistance provided by Penflex, Inc). Plan Description: Participation. Vesting and Service Credit Active volunteer firefighters who have reached the age of 18 and who have completed one year of firefighting service are eligible to participate in the Plan. Participants acquire a nonforfeitable right to a service award after being credited with five years of firefighting service or upon attaining the Plan's entitlement age. The Plan's entitlement age is age 62. In general, an active volunteer firefighter is credited with a year of firefighting service for each calendar year after the establishment of the Plan in which they accumulate fifty points. Points are granted for the performance of certain activities in accordance with a system ("Point System") established by the District on the basis of a statutory list of activities and point values. A Participant may also receive service credit for five years of active volunteer firefighting service rendered prior to the establishment of the Plan. • Benefits A Participant's benefit under the Plan is the actuarial equivalent of a monthly payment for life equal to $20 multiplied by the Participant's total number of years of firefighting service. The number of years of firefighting service used to compute the benefit cannot exceed forty. Except in the case of Pre-Entitlement Age death or total and permanent disablement, a Participant's benefit will not be paid until the Participant reaches the Entitlement Age ("EA") of 62. A Participant's benefit is paid as a ten-year certain and • continuous monthly payment life annuity. Currently, there are no other forms of payment of a Participant's earned Plan benefit. The Plan provides statutorily mandated death and disability benefits. The Plan also provides optional line of duty disability benefits. Should a volunteer firefighter of the District become totally and temporarily disabled, or partially and permanently disabled, as certified by the Workers' Compensation Board or other competent authority approved by the Board of Fire Commissioners, and the disability occurs during the course of service as a volunteer, while actively engaged in providing line of duty services, as defined in subdivision one of section five of the Volunteer Firefighters' Benefit Law, the firefighter shall receive five points for each complete calendar month of such disability under the Point System up to the earlier of the date such volunteer is no longer totally and temporarily or partially and permanently disabled or attains the EA. However, if such disability becomes a permanent and total disability and a Mattituck Fire District Service Award Program Total and Permanent Disability is awarded on account of such disablement, then no future points shall be credited under this special line of duty disability benefit provision after the date of the awarding of such Total and Permanent Disability by the Board of Fire Commissioners. • • -17- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2013 4. COMMITMENTS AND CONTINGENCIES(continued) B. LENGTH OF SERVICE AWARD PROGRAM (LOSAP) (continued) Plan Description: (continued) • Benefits (continued) If a Participant is awarded a Total and Permanent Service Award Program Disability by the Board of Fire Commissioners before attaining the EA for a disability commencing after December 31, 1991, the Participant is entitled to receive an amount equal to the Participant's Accrued Service Award earned as of the date such disability payment is awarded by the Board of Fire Commissioners and payable on the first day of every month for the lifetime of the Participant or for ten years, whichever is greater. Once a Participant is awarded a Total and Permanent Service Award Program Disability under the Plan provisions, such Participant shall no longer be eligible to participate in the District's Plan. If a Participant dies before attaining the EA, a lump-sum shall be paid to the Participant's designated beneficiary equal to the discounted actuarial present value of the Participant's Accrued Service Award • earned as of the date of death. If the Participant was an active volunteer firefighter of the District as of the date of death, the minimum death benefit payable to the Participant's designated beneficiary shall be $20,000. Participants who are active after attaining the EA and who have commenced receiving their Plan benefit have the opportunity to earn Plan credit and to thereby increase their Plan payments. In addition, Participants who are active at the time of reaching EA receive an additional death benefit of$20,000. Fiduciary Investment and Control Service credit is determined based on information certified to the Board of Fire Commissioners by the Chief of each fire company having members who participate in the Plan. Each fire company must maintain all required records on forms prescribed by the Board of Fire Commissioners. The Board of Fire Commissioners of the District has retained and designated Penflex, Inc. to assist in the administration of the Plan. The designated Plan administrator's functions include calculating the amount to be contributed at the end of each year based upon the criteria set forth in the Plan Document. Disbursements of Plan assets for the payment of benefits or administrative expenses must be approved by the Board of Fire Commissioners and delivered to the Custodian through a Payment Schedule. The Board of Fire Commissioners of the District has retained and designated Nationwide Life Insurance as the Custodian of the Plan's assets. Nationwide Life Insurance shall make payments to Plan Participants and their beneficiaries in accordance with the Payment Schedule. Plan assets are required to be held in trust by Length of Service Award Program legislation, for the exclusive purpose of providing benefits to Participants and their beneficiaries or for the purpose of • defraying the reasonable expenses of the operation and administration of the Plan. The trust agreement is dated January 1, 1992 as amended, and the trustees are the Board of Fire Commissioners of the District. Authority to invest Plan assets is vested in the Board of Fire Commissioners of the District. Subject to restrictions in the Plan document, Plan assets are invested in accordance with a statutory"prudent person" rule. The Plan document restricts the Trustee from investing in securities or obligations issued by the Mattituck Fire District, other than a de minimis amount held in common investment vehicles in which the r Trustee invests. The District is required to retain an actuary to determine the amount of the District's contributions to the plan. The actuary retained by the District for this purpose is Tony Fiorillo, ASA, MAAA of Penflex, Inc. Portions of the following information are derived from a report prepared by the actuary dated February 25, 2013. • s -18- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31,2013 • 4. COMMITMENTS AND CONTINGENCIES (continued) B. LENGTH OF SERVICE AWARD PROGRAM (LOSAP) (continued) Plan Financial Condition Assets and Liabilities: Actuarial present value of benefits at December 31, 2012 $ 3,562,341 Less: assets available for benefits • Bonds $ 1,004,351 Domestic equity 592,927 International equity 196,800 Balanced 140,437 Specialty 298,395 Other 715,213 Benefits Payable 9,700 Total net assets available for benefits 2,957,823 Total unfunded benefits 604,518 Less: unfunded liability for separately amortized costs 63,234 Unfunded normal benefits $ 541,284 Prior Service Costs • There are no prior service costs associated with the Plan. Separately Amortized Costs The unfunded liability for additional benefits earned after attainment of the EA is being amortized over three years at 6.00%. Receipts and Disbursements: Plan net assets, January 1, 2012 $ 2,595,979 Changes during the year: Plan contributions $ 250,000 Changes in fair market value of investments 248,324 Plan benefit withdrawals (136,480) Plan net assets, December 31, 2012 $ 2,957,823 Contributions Amount of District's contribution recommended by actuary: $ 238,944 Amount of District's actual contribution: $ 250,000 • -19- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2013 4. COMMITMENTS AND CONTINGENCIES (continued) B. LENGTH OF SERVICE AWARD PROGRAM (LOSAP) (continued) Plan Financial Condition (continued) Administration Fees Fees paid to designated Plan administrator/actuary: $ 6,353 Funding Methodology and Actuarial Assumptions: • Normal Costs The actuarial valuation methodology used by the actuary to determine the District's contribution is the "Attained Age Normal Frozen Initial Liability'. Under this cost method, there are two components to the annual cost each year. The first component, the "normal cost", is equal to the level annual payment • required to fund the current Participant's projected benefits based on their service credit earned after the effective date of the Plan and before the EA.The second component,the annual amortization cost, equals the level annual payments required to fund over the amortization period(s),the Participant's benefits, if any based on (1) either service credit earned before the effective date of the Plan or service credit earned after the attainment of the EA, or (2) Plan amendments that create an immediate unfunded liability and are required to be amortized. • Amortization period for liability for service after EA—3 years Amortization period for liability for service after EA, Retro—5 years Under the Attained Age Normal Frozen Initial Liability cost method, actuarial gains and losses are amortized over the future years of firefighting service before the EA for the group of firefighters participating in the Plan on the valuation date. Higher than expected investment income, for example, in any one particular year will reduce the normal cost in that year and in each of the future years based upon the ages of the current firefighters participating in the program on the valuation date. Likewise, losses to the Plan's Trust Fund will result in an increase in the future annual normal cost. The assumptions used by the actuary to determine the District's contribution and the actuarial present value of benefits are: Assumed rate of return on investment 6.00% Mortality Tables used for: Withdrawal: None Disability: None Retirement: 100%at Entitlement Age Death (Active): None Death (Inactive):1994 Uninsured Pensioner Male Mortality Table projected with scale AA to 2007 • • -20- MATTITUCK FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS December 31, 2013 4. COMMITMENTS AND CONTINGENCIES (continued) C. LEASE AGREEMENTS The District leases training space in Mattituck, New York under an operating lease agreement which commenced June 1, 2005 and was amended on September 27, 2006. The amended lease agreement expires May 31, 2031.The District has the option to renew this lease for one (1) additional twenty-five (25) year period. The lease payments are $200 per month payable annually on the anniversary date of the initial lease term and increases to $800 per month on the renewal date. Expenditures under this operating lease for the year ended December 31,2013 were$2,400. The District leases communication tower space in Sag Harbor, New York for a radio signal repeater under an operating lease agreement which commenced May 27, 2009. The term of the lease agreement is for a five (5) year period with 4 automatic renewal terms for an additional five (5) year period. The lease expires May 31, 2033. The lease payments are $500 per month increased on the anniversary of the commencement date by an annual escalator of three (3) percent. In addition, there is an annual site inspection fee of $500 increased on the anniversary of the commencement date by the three (3) percent annual escalator. Expenditures under this operating lease for the year ended December 31, 2013 were approximately$6,700. Minimum annual commitments under the operating leases described above are as follows: Year ended December 31, 2014 $ 9,263 2015 9,467 2016 9,678 2017 9,894 2018 10,117 2019-2023 54,224 2024-2028 60,955 2029 -2033 55,468 $ 219,066 • • • • • • • • REQUIRED SUPPLEMENTARY INFORMATION • • • • • • -21- MATTITUCK FIRE DISTRICT GENERALFUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE- BUDGET AND ACTUAL Year Ended December 31, 2013 Variance Original Final Positive Budget Budget Actual (Negative) REVENUES Real property taxes $ 1,822,282 $ 1,822,282 $ 1,822,282 $ -0- Interest and earnings 2,472 2,472 Insurance recoveries and refunds 1,000 1,000 Miscellaneous income 45 45 Total Revenues 1,822,282 1,822,282 1,825,799 3,517 EXPENDITURES Personal services 186,850 186,850 182,451 4,399 Equipment and capital outlay 112,500 394,857 342,767 52,090 • Fire protection 645,241 623,748 456,876 166,872 Employee benefits 399,506 466,003 460,037 5,966 Debt service 255,185 255,752 255,186 566 Total Expenditures 1,599,282 1,927,210 1,697,317 229,893 • Net Change in Fund Balance $ 223,000 $ (104,928) 128,482 $ 233,410 Fund Balance at Beginning of Year 1,673,872 Fund Balance at End of Year $ 1,802,354 r M -22- MATTITUCK FIRE DISTRICT GENERALFUND SCHEDULE OF DETAILED EXPENDITURES AND APPROPRIATIONS Year Ended December 31, 2013 Variance Original Final Positive Budget Budget Actual (Negative) • Personal Services $ 186,850 $ 186,850 $ 182,451 $ 4,399 Equipment and Capital Outlay 112,500 394,857 342,767 52,090 Fire Protection Services Administrative Expenses Office supplies 17,000 20,906 19,135 1,771 Association dues 1,000 1,365 1,365 -0- Legal and audit fees 74,500 74,990 57,380 17,610 Publications 7,750 13,226 11,516 1,710 Election expense 390 390 -0- Total Administrative Expenses 100,250 110,877 89,786 21,091 Utility and Water Expenses Gas and electric 66,500 72,084 54,110 17,974 Telephone 14,500 14,573 13,945 628 Hydrant rental 28,000 29,025 29,025 -0- Total Utility and Water Expenses 109,000 115,682 97,080 18,602 Firefighters Expense Uniforms 10,000 10,000 4,489 5,511 Medical exams 40,000 40,000 27,117 12,883 Inspection dinner 20,000 20,559 20,559 -0- Total Firefighters Expense 70,000 70,559 52,165 18,394 Travel and Convention Expenses 19,500 19,500 13,301 6,199 Building Costs Building repairs 107,869 45,417 26,610 18,807 Total Building Costs 107,869 45,417 26,610 18,807 Fire Equipment and Alarm Fire alarm service 2,500 2,500 2,500 Gas and diesel 28,000 28,612 22,671 5,941 Repairs and maintenance 120,000 142,029 95,159 46,870 Medical supplies 25,000 25,000 12,361 12,639 Total Fire Equipment and Alarm 175,500 198,141 130,191 67,950 Insurance Costs r Vehicle and property 63,122 63,572 47,743 15,829 Total Insurance Costs 63,122 63,572 47,743 15,829 Total Fire Protection Services 645,241 623,748 456,876 166,872 (continued) -23- MATTITUCK FIRE DISTRICT GENERALFUND SCHEDULE OF DETAILED EXPENDITURES AND APPROPRIATIONS Year Ended December 31, 2013 Variance Original Final Positive Budget Budget Actual (Negative) Employee Benefits Social security 14,294 14,294 13,898 396 State retirement system 33,000 38,401 38,401 -0- Service award program 250,000 308,455 308,455 -0- Workers' compensation insurance 40,062 40,075 38,020 2,055 Unemployment insurance 2,400 2,984 584 2,400 Life insurance 13,000 13,000 12,912 88 Medical and accident insurance 46,750 48,794 47,767 1,027 Total Employee Benefits 399,506 466,003 460,037 5,966 Debt Service Principal 209,620 210,187 210,187 -0- Interest 45,565 45,565 44,999 566 Total Debt Service 255,185 255,752 255,186 566 Totals $ 1,599,282 $ 1,927,210 $ 1,697,317 $ 229,893 • • • • -24- • CERTIFIED PUBLIC ACCOUNTANTS • INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS • To Board of Fire Commissioners Mattituck Fire District Mattituck, New York We have audited, in accordance with the 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 Balance Sheet — Governmental Fund, Statement of • Revenue, Expenditures, and Changes in Fund Balance — Governmental Fund, the Statement of Assets and Liabilities — Fiduciary Fund information and the related notes to the financial statements of the Mattituck Fire District, New York, as of and for the year ended December 31, 2013, which collectively comprise the Mattituck Fire District, New York's financial statements, and have issued our report thereon dated April 2, 2014. Internal Control Over Financial Reporting • In planning and performing our audit of the financial statements, we considered the Mattituck Fire District, New York'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 opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Mattituck Fire District, New York's internal control. Accordingly, we do not express an opinion on the effectiveness of the Mattituck Fire District, New • York's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the Mattituck Fire • District's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal O control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. PERSONAL SERVICE.TRUSTED ADVICE. , ALBRECHT,VIGGIANO,ZURECK&COMPANY, P.C. - - 245 PARK AVENUE, 39TH FLOOR 25 SUFFOLK COURT — NEW YORK, NY 10167 HAUPPAUGE, NY 11788-3715 T. 212.792.4075 T: 631.434.9500 F: 631.434.9518 www.avz.com _ INDEPENDENT MEMBER OF BKR INTERNATIONAL -25- Compliance and Other Matters As part of obtaining reasonable assurance about whether Mattituck Fire District, New York's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Mattituck Fire District's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Mattituck Fire District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Hauppauge, New York April 2, 2014 0 0 0 0 0