HomeMy WebLinkAbout2013 •
•
•
TOWN OF SOUTHOLD
• SINGLE AUDIT REPORTS
Year Ended December 31, 2013
•
•
•
• RECEIVED
• Southold Town Clerk
I •
•
FINANCIAL SECTION
•
IndependentAuditors' Report................................................................................................................... 1-3
REQUIRED SUPPLEMENTARY INFORMATION
Management's Discussion and Analysis................................................................................................... 4-15
BASIC FINANCIAL STATEMENTS
•
Government-Wide Financial Statements
Statementof Net Position....................................................................................................................... 16
Statementof Activities............................................................................................................................. 17
Fund Financial Statements
j • Governmental Fund Financial Statements
Balance Sheet and Reconciliation of the Governmental Funds Balance Sheet to
theStatement of Net Position............................................................................................................ 18-19
Statement of Revenues, Expenditures, and Changes in Fund Balances and
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures,
and Changes in Fund Balances to the Statement of Activities......................................................... 20-21
• Fiduciary Fund Financial Statements
Statement of Fiduciary Net Position........................................................................................................ 22
Notes to Financial Statements................................................................................................................... 23-47
REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANAGEMENT DISCUSSION AND
ANALYSIS
Schedule of Revenues, Expenditures,and Changes in Fund Balance—Budget and Actual
GeneralFund........................................................................................................................................ 48
HighwayFund....................................................................................................................................... 49
Community Preservation Fund........................................................................................ 50
Solid Waste Management District Fund............................................................................ 51
Postemployment Benefits Healthcare Costs—Schedule of Funding Progress.............................. .. 52
•
OTHER SUPPLEMENTARY INFORMATION
Combining Fund Statements:
Non-major Governmental Funds
CombiningBalance Sheet.................................................................................................................... 53
• Combining Statement of Revenues, Expenditures, and Changes in Fund Balances........................ 54
•
OTHER REPORTS
Schedule of Expenditures of Federal Awards................................................................................... 55-56
Notes to Schedule of Expenditures of Federal Awards..................................................................... 57-58
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........................................................................................................ 59-60
Independent Auditors' Report on Compliance for Each Major Program
and on Internal Control Over Compliance as Required by OMB Circular A-133 .............................. 61-62
Schedule of Findings and Questioned Costs .................................................................................... 63-71
•
4
•
•
•
•
•
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT
•
Honorable Supervisor and Town Board
Town of Southold
Southold, New York
We have audited the accompanying financial statements of the governmental activities, the aggregate
• discretely presented component units, each major fund, and the aggregate remaining fund information of the
Town of Southold, New York, as of and for the year ended December 31, 2013, and the related notes to the
financial statements, which collectively comprise the Town'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 did not audit the
financial statements of two of the seven component units, Fishers Island Ferry District and Fishers Island
Waste Management District, which represent 79.1%, 75.7%, and 78.7%, respectively, of the assets, net
position, and revenues of the aggregate discretely presented component units. Those statements were
audited by other auditors whose report thereon have been furnished to us and in our opinion, insofar as it
relates to the amounts included for those two component units, are based solely on the reports of other
auditors. We conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the 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 Town'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 Town'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
opinions. ---
• -- _
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
-1- INDEPENDENT MEMBER OF BKR INTERNATIONAL
Basis for Qualified Opinion
The financial statements of the five component units, Cutchogue-New Suffolk Park District, Southold Park
District, Orient-East Park District, Mattituck Park District and Orient Mosquito District have not been audited,
and we were not engaged to audit these financial statements as part of our audit of the Town of Southold, New
York's basic financial statements. These financial activities are included in the Town's basic financial
statements as discretely presented component units and represent 20.9%, 24.3%, and 21.3%, respectively, of
the assets, net position, and revenues of the Town's aggregate discretely presented component units.
Qualified Opinion
In our opinion, except for the possible effects of the matter discussed in the "Basis for Qualified Opinion"
paragraph, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities, the aggregate discretely presented component units, each
major fund, and the aggregate remaining fund information of the Town of Southold, New York, as of December
31, 2013, 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.
Unmodified Opinions
r
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities, each major fund and the aggregate remaining fund information
of the Town of Southold, New York as of December 31, 2013, and the respective changes in financial position
and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles
generally accepted in the United States of America.
e
Emphasis of Matter
Change in Actuarial Assumptions
As discussed in Note C.6 to the financial statements, during the year ended December 31, 2013, the Town
made changes to various actuarial assumptions used in the actuarial calculation of the unfunded actuarial
accrued liability.
New Accounting Guidance
As described in Note G to the basic financial statements, the Town of Southold, New York adopted the
provisions of Governmental Accounting Standards Board ("GASB") Statement No. 61, `The Financial Reporting
Entity. Omnibus — an amendment of GASB Statements No. 14 and No. 34,"GASB Statement No. 65, "Items
Previously Reported as Assets and Liabilities,"and GASB Statement No. 66, `Technical Corrections 2012—an
amendment of GASB Statements No. 10 and No. 62"as of and for the year ended December 31, 2013.
Other Matters
Required Supplementary Information
•
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis, scheduling of funding progress for the postemployment benefits healthcare costs and
the 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 Governmental 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 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 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.
•
-2-
•
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the Town of Southold, New York's financial statements. The combining and individual nonmajor fund
financial statements are presented for purposes of additional analysis and are not a required part of the
• financial statements. The schedule of expenditures of federal awards is presented for purposes of additional
analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local
Governments, and Non-Profit Organizations, and is also not a required part of the basic financial statements.
The combining and individual nonmajor fund financial statements and the schedule of expenditures of federal
awards are the responsibility of management and were derived from and related directly to the underlying
accounting and other records used to prepare the financial statements. Such information has been subjected
to the auditing procedures applied in the audit of the financial statements and certain additional procedures,
including comparing and reconciling such information directly to the underlying accounting and other records
used to prepare the basic financial statements or the basic financial statements themselves, and other
additional procedures in accordance with auditing standards generally accepted in the United States of
America. In our opinion, based on our audit and the report of other auditors, the information is fairly stated in
all material respects in relation to the basic financial statements as a whole.
•
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated September 24,
2014, on our consideration of the Town of Southold, 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
41 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 Town of Southold, New York's internal
control over financial reporting and compliance.
• WJAujw IV"moo 3,y,,(, s , p• c..
Hauppauge, New York
September 24, 2014
f
•
•
-3-
•
•
•
•
REQUIRED SUPPLEMENTARY INFORMATION
Management's Discussion and Analysis
•
f
•
•
•
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2013
As management of the Town of Southold, New York (the `Town"), we offer readers of the financial statements
this narrative overview and analysis of the financial activities for the year ended December 31,2013.
FINANCIAL HIGHLIGHTS
• The assets of the Town exceed its liabilities and deferred inflows at the close of 2013 by
$96,008,055 (net position).
« • The Town's governmental net position increased by$880,865.
• As of the close of 2013, the Town's governmental funds reported combined ending fund balances
of $22,399,347. Of this amount, $1,182,884 is not in spendable form or is required to remain intact.
The remaining of$21,216,463 or approximately 95% of total fund balance is in spendable form with
various levels of spending constraint: restricted, assigned, or unassigned making them available for
spending at the Town's discretion (See Note A.4.)
• At the end of 2013, the Town's total fund balance for the general fund was $8,783,331, a decrease
of$116,163 or 1.3%from the prior year. The assigned and unassigned fund balance for the general
fund was$7,839,964 or 29.2%of total general fund expenditures and other uses.
• The Town's total bonded debt was $37,635,000, and is a decrease of 5.9%from the prior year.
OVERVIEW OF THE FINANCIAL STATEMENTS
• The discussion and analysis is intended to serve as an introduction to the Town's basic financial statements.
The Town's basic financial statements comprise components: 1) government-wide financial statements, 2)
fund financial statements 3)fiduciary fund financial statements and 4) notes to basic financial statements. This
report also contains supplementary information in addition to the basic financial statements themselves.
Government-wide Financial Statements
•
The government-wide financial statements are designed to provide readers with a broad overview of the
Town's finances, in a manner similar to a private-sector business. The intent of the government-wide financial
statements is to give the reader a long-term view of the Town's financial condition.
The Statement of Net Position presents financial information on all of the Town's assets and liabilities, with the
difference between the two reported as net position. This combines and consolidates the Town's current
financial resources with capital assets and long-term obligations. The purpose of this statement is to give the
reader an understanding of the Town's total net worth. Over time, increases or decreases in the Town's net
position 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 Town's property tax base and the condition of the
Town's buildings, roads, drainage and other assets to assess the overall health of the Town.
The Statement of Activities presents information showing how the Town's net position changed during the
most recent year. Revenues and expenses are reported by activity to give the reader an understanding of
how each of the Town's activities is being supported. All changes in net position are reported as soon as the
underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus,
revenues and expenses are reported in this statement for some items that will only result in cash flows in
future periods. This method is known as the accrual basis of accounting and is different from the modified
accrual basis of accounting used in the Town's fund financial statements.
The Town's government-wide financial statements includes both the governmental activities of the Town itself
(known as the primary government) and of its legally separate component units for which the Town is
financially accountable. Financial information for all component units is reported separately (discretely
presented) from the financial information presented for the primary government.
-4-
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2013
OVERVIEW OF THE FINANCIAL STATEMENTS (continued)
S Government-wide Financial Statements (continued)
Governmental Activities - The Town's basic services are reported here, including: general government
support; public safety; transportation; economic assistance and opportunity; culture and recreation and home
and community services. Property taxes, mortgage taxes, franchise fees, fines, and state and federal grants
finance these activities. The Town also charges fees to customers to help it cover the cost of certain services
• it provides.
Component Units- Component units are legally separate organizations for which the Town is either financially
accountable, or the nature and significance of their relationship with the Town is such that exclusion would
cause the Town's financial statements to be misleading or incomplete. All of these entities are reported in a
separate column in the government-wide statements as discretely presented.
Information on separately issued financial statements is shown in Note E to the financial statements.
Fund Financial Statements
The fund financial statements focus on current available resources and are organized and operated on the
basis of funds, each of which is defined as an accounting entity with a self-balancing set of accounts
established for the purpose of carrying on specific or attaining certain objectives in accordance with special
regulations, restriction or limitations. The Town, like other governments, uses fund accounting to ensure and
demonstrate compliance with finance-related legal requirements. All of the funds of the Town can be divided
into two categories: governmental funds and fiduciary funds.
Governmental Funds
The Town's activities are reported in governmental funds. Governmental funds are used to account for
essentially the same functions reported as governmental activities in the government-wide financial
statements. However, unlike the government-wide financial statements, governmental fund financial
statements focus on near-term inflows and outflows of spendable resources, as well as on balances of
spendable resources available at the end of the year. Such information may be useful in evaluating a
government's near-term financial requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it
is useful to compare the information presented for governmental funds with similar information presented for
governmental activities in the government-wide financial statements. By doing so, readers may better
understand the long-term effect of the Town's near term financial decisions. Both the governmental fund
balance sheet and governmental fund statement of revenues, expenditures, and change in fund balances
provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.
•
The Town maintains ten (10) individual governmental funds. Information is presented separately in the
governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and
changes in fund balances for the five (5) major funds. The general fund, highway fund, capital projects fund,
solid waste district fund and the community preservation fund are reported as major funds. Data from the five
(5) other governmental funds are combined into a single, aggregated presentation.
• The Town adopts an annual appropriated budget for its general and special revenue funds, except for the
capital projects fund and special grant fund. A budgetary comparison schedule for the general fund, highway
fund, community preservation fund and solid waste management district fund can be found in the section
labeled "Required Supplementary Information Other Than Management's Discussion and Analysis".
Fiduciary Funds
All of the Town's fiduciary activities are reported in a separate Statement of Fiduciary Net Assets. We exclude
these activities from the Town's other financial statements because the Town cannot use these assets to
finance its operations. The Town is responsible for ensuring that the assets reported in these funds are used
for their intended purposes.
•
-5-
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2013
OVERVIEW OF THE FINANCIAL STATEMENTS (continued)
Notes to the financial statements
The notes provide additional information that is essential to a full understanding of the data provided in the
government-wide and fund financial statements. The notes to the financial statements can be found following
the basic financial statements.
Other information
In addition to the basic financial statements this report contains supplementary information immediately
following the notes to the financial statements.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the
case of the Town, assets exceeded liabilities and deferred inflows by$96,008,055 at the close of the most recent
year.
Condensed Statement of Net Position
Primary Governmental Activities
December 31,
2013 2012
Assets
Current and other assets $ 33,857,503 $ 30,851,657
Capital assets 151,264,299 149,314,250
• Total Assets 185,121,802 180,165,907
Liabilities
Current and other liabilities 5,991,799 12,115,066
Long-term liabilities 75,098,137 72,833,381
Total Liabilities 81,089,936 84,948,447
Deferred Inflows of Resources
Unavailable revenue from real property taxes 8,023,811 -0-
Total Deferred Inflows of Resources 8,023,811 -0-
Net Position
Net Investment in Capital Assets 112,924,654 109,401,091
Restricted 10,544,634 10,392,932
Unrestricted (27,461,233) (24,576,563)
Total Net Position $ 96,008,055 $ 95,217,460
Total assets of the primary government as of December 31, 2013 were $185,121,802, an increase of
t $4,955,895 from December 31, 2012. Total liabilities and deferred inflows as of December 31, 2013 were
$89,113,747, which represents an increase of $4,165,300 from December 31, 2012. This resulted in a net
position of $96,008,055 an increase of $880,865 from December 31, 2012. Of the Town's net position,
$112,924,654 was invested in capital assets and $10,544,634 was restricted for future land acquisition and
capital projects leaving a$27,461,233 unrestricted deficit.
By far the largest portion of the Town's net position $112,924,654, reflects its investment in capital assets (i.e.
land, buildings, machinery and equipment, intangibles, and infrastructure); less any related debt used to
acquire those assets that is still outstanding. The Town uses these capital assets to provide services to
citizens; consequently, these assets are not available for future spending. Although the Town's investment in
its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt
must be provided from other sources, since the capital assets themselves will not be used to liquidate these
liabilities.
r
-6-
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2013
GOVERNMENT-WIDE FINANCIAL ANALYSIS (continued)
The deficit in the unrestricted net position does not necessarily indicate fiscal stress. At the end of the current
year, the Town is able to report a positive balance in the categories of investment in capital assets, and
restricted net position. The same situation held true for the prior year. The deficit balance in unrestricted arose
primarily due to long-term liabilities which include other postemployment benefits, compensated absences,
claims and judgments and landfill closure and postclosure costs that will be funded through future budgetary
appropriations when they become payable in future periods.
Changes in Net Position
Primary Governmental Activities
For the years ended December 31,
2013 2012
Program Revenues
Charges for services $ 4,392,802 $ 3,985,019
Operating grants and contributions 888,929 1,528,069
Capital grants and contributions 2,096,761 986,593
7,378,492 6,499,681
General Revenues
Real property taxes 30,961,687 30,414,642
Other real property tax items 97,836 95,672
Non-property tax items 6,476,812 5,258,726
Interest earnings 82,495 99,292
State aid - unrestricted 1,242,058 1,031,030
Other 708,362 814,118
39,569,250 37,713,480
Total Revenues 46,947,742 44,213,161
Program Expenses
General government support 9,458,248 10,172,551
Public safety 18,487,572 19,270,909
Public health 33,300 33,800
Transportation 7,196,909 8,391,915
Economic assistance and opportunity 2,094,274 2,271,426
Culture and recreation 546,772 575,234
Home and community services 6,802,623 6,954,101
. Interest on debt 1,447,179 1,528,142
Total Expenses 46,066,877 49,198,078
Increase/(Decrease) in Net Position $ 880,865 $ (4,984,917)
Net position, from all government activities, increased by$880,865 in the current year.
Key elements of the governmental activities are:
• Overall program revenues increased by$878,811 from the prior year. Charges for services increased by
$407,783 due to an increase in building permits and solid waste fees due to cleanup and rebuilding from
Hurricane Sandy. Operating grants and contributions decreased by $639,140 primarily due to the
decrease in FEMA aid relating to Hurricane Sandy which occurred in 2012. Capital grants increased by
$1,110,168 which is primarily related to Federal aid received to fund land acquisitions in the current year
a of $756,317. General revenues increased $1,855,770 due to a combination of increased real property
taxes of$547,045,an increase in mortgage tax of$211,028 and an increase in the transfer tax revenue of
$1,218,086.
• Overall expenses decreased by $3,131,201. This is due to a decrease in the depreciation expense as
certain major capital assets were fully depreciated in the prior year. In addition the increase in the current
year OPEB expense was less than in the prior year of$2,449,064. This was due to a change in actuarial
assumptions. See Note C.6 for additional details.
-7-
• TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2013
GOVERNMENT-WIDE FINANCIAL ANALYSIS (continued)
Total Cost of Services
Primary Governmental Activities
For the years ended December 31,
Total Cost of Services Program Revenues Net Cost of Services
2013 2012 2013 2012 2013 2012
General government support $ 9,458,248 $ 10,172,551 $ 463,797 $ 395,476 $ (8,994,451) $ (9,777,075)
Public safety 18,487,572 19,270,909 1,001,443 756,665 (17,486,129) (18,514,244)
Public health 33,300 33,800 9,527 9,527 (23,773) (24,273)
Transportation 7,196,909 8,391,915 558,961 898,345 (6,637,948) (7,493,570)
Economic assistance and opportunity 2,094,274 2,271,426 443,405 458,996 (1,650,869) (1,812,430)
Culture and recreation 546,772 575,234 288,018 229,624 (258,754) (345,610)
• Home and community services 6,802,623 6,954,101 4,613,341 3,751,048 (2,189,282) (3,203,053)
Interest on debt 1,447,179 1,528,142 (1,447,179) (1,528,142)
$ 46,066,877 $ 49,198,078 $ 7,378,492 $ 6,499,681 $ (38,688,385) $ (42,698,397)
The total cost of all governmental activities this year was $46,066,877. The net cost of these services after
' being subsidized by program revenues of$7,378,492 was$38,688,385.
$20,000,000
Expenses and Program Revenues
Governmental Activities
$18,000,000
• $16,000,000 Ezpenses
Program Revenues
$14,000,000
$12,000,000
$10,000,000
r
$8,000,000
$6,000,000
$4,000,000
• $2,000,000
Geneal government support Public sat sly Publichealth Tr wwbon Ecronorricassistanceard Cultureandrecremon Home and community Interest on debt
opport unty rvices
•
.8.
• TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2013
FINANCIAL ANALYSIS OF THE TOWN'S FUNDS
Governmental Funds
Operating Capital
grants and grants and
contributions contributions
4% 2%
r
Other
general
revenues
16%
• Charges for
ikl
services
9%
Real
State aid property
taxes
unrestricted 66%
3%
40
•
Revenue by Source
Primary Governmental Activities
for the year ended December 31,
2013 2012
Real property taxes $ 30,961,687 $ 30,414,642
State aid - unrestricted 1,242,058 1,031,030
Charges for services 4,392,802 3,985,019
Other general revenues 7,365,505 6,267,808
Operating grants and contributions 888,929 1,528,069
Capital grants and contributions 2,096,761 986,593
$ 46,947,742 $ 44,213,161
-9-
•
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2013
FINANCIAL ANALYSIS OF THE TOWN'S FUNDS (continued)
Governmental Funds (continued)
The focus of the Town's governmental funds is to provide information on near term inflows, outflows, and
balances of spendable resources. Such information is useful in assessing the Town's financing requirements.
In particular, spendable fund balance may serve as a useful measure of a government's net resources
available for spending at the end of the year.
• Nonspendable fund balance - $1,182,884 (inherently non spendable) includes the portion of net
resources that cannot be spent because they must be maintained intact.
• Restricted fund balance - $10,544,634 (externally enforceable limitations on use) include amounts
subject to limitations imposed by creditors, grantors, contributors, or laws and regulations of other
governments.
• Assigned fund balance - $7,024,724 (limitation resulting from intended use) consists of amounts
where the intended use is established by the highest level of decision making.
• Unassigned fund balance - $3,647,105 (residual net resources) is the total fund balance in the
general fund in excess of nonspendable, restricted and assigned fund balance.
The following schedule presents a summary of the Governmental Funds - (general, special revenue, and
capital projects) revenues and expenditures for the year ended December 31, 2013, and the amount of
change and percentage of total in relation to the prior year.
Increase
2013 2012 (Decrease)
REVENUES
• Real property taxes $ 30,961,687 $ 30,414,642 $ 547,045
Other real property tax items 97,836 95,672 2,164
Non-property tax items 6,476,812 5,258,726 1,218,086
Departmental income 3,123,809 2957707 166,102
Intergovernmental charges 302,119 265,515 36,604
Use of money and property 255,816 298,609 (42,793)
! Licenses and permits 608,834 441,501 167,333
Fines and forfeitures 209,013 171,918 37,095
Sale of property and compensation for loss 676,643 1,672,031 (995,388)
Miscellaneous local sources 273,158 362,976 (89,818)
Interfund revenues 30,000 30,000 -0-
State aid 2,619,985 2,206,577 413,408
Federal aid 1,266,434 1,023,265 243,169
Total Governmental Fund Revenues $ 46,902,146 $ 45,199,139 $ 1,703,007
General government support $ 5,527,090 $ 5,766,083 $ (238,993)
Public safety 10,554,180 9,977,973 576,207
Public health 33,300 33,800 (500)
Transportation 3,948,017 3,732,867 215,150
Economic assistance and opportunity 1,231,227 1,229,260 1,967
Culture and recreation 298,472 285,985 12,487
Home and community services 8,109,632 6,632,639 1,476,993
Employee benefits 11,859,095 11,161,657 697,438
Capital 570,254 416,447 153,807
Debt service principal and interest 3,837,654 4,076,812 (239,158)
Total Governmental Fund Expenditures $ 45,968,921 $ 43,313,523 $ 2,655,398
-10-
•
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2013
FINANCIAL ANALYSIS OF THE TOWN'S FUNDS (continued)
Governmental Funds (continued)
The Town appropriated a total of $3,321,779 of prior year fund balance for the 2013 budget. Governmental
revenues increased by $1,703,007. The increase is due to the following: increases in real property taxes of
$547,045 and an increase in non-property tax items of $1,218,086 which is due to an increase in the 2%
transfer tax. In addition, the Town received additional state aid of $413,408 which includes a $153,369
increase in mortgage tax, $96,146 additional CHIPS funding, and $146,783 for reimbursements of
expenditures from solid waste management grants. These increases were offset by a decrease in sale of
property and compensation for loss of$995,388.
Overall, governmental expenditures increased $2,655,398. The increase is due to the following: increases in
public safety salaries of $604,743 and increases in home and community expenditures of $1,406,240 due to
more land being purchased with community preservation funds than the prior year. In addition, there were
increases in employee benefits primarily relating to retirement benefits of $1,124,788 with offsetting decreases
to medical benefits of$439,717.
General Fund
The general fund is the chief operating fund of the Town. At the end of the current year, the total fund balance
of the general fund was $8,783,331 decreasing by $116,163 or 1% from the prior year. Of this amount,
$943,367 is not in spendable form (i.e. inventory and prepaid items). The remaining $7,839,964 of the fund
balance is in spendable form as follows: $1,327,759 is assigned for insurance claims; $2,775,000 has been
assigned b the Town Board for the subsequent budget and $90,100 has been assigned for
9 Y q year's9 $ � 9
encumbrances resulting from open purchase orders, and the remaining $3,647,105 represents spendable,
unassigned fund balance.
As a measure of the general funds' liquidity, it may be useful to compare spendable fund balance and total
fund balance to total fund expenditures and other financing uses. Spendable and total fund balance
represents 29%and 33%of total general fund expenditures and other financing uses.
The key elements of the fund balance decrease of$116,163 are as follows:
• There was a planned fund balance reduction of$2,780,000, a result of appropriations in the current year's
budget.
• General government support was$849,249 under budget due to unallocated insurance and judgment and
claims expenditures $139,000 under budget, $129,000 in the Town Board department due to delay in a
project which will occur in the subsequent year, $80,000 in buildings and grounds due to budgeted
salaried positions not being filled and improvements budgeted that were $53,000 lower than anticipated
and the general implementation of expenditure reductions providing additional savings of$448,000.
• Employee benefits were $849,922 under budget due to the Town conservatively budgeting for health
insurance premiums and retirement contributions which amounted to approximately$761,000. In addition,
the Town estimates Social Security benefits since collective bargaining agreement settlements are
unknown.These costs were approximately$78,000 under budget.
t
Highway Fund
At the end of the current year, the total fund balance of the highway fund was $1,223,909 decreasing by$89,409
or 7% from the prior year. Of this amount, $104,291 is not in spendable form (i.e. prepaid items). The remaining
$1,119,618 of the fund balance is in spendable form as follows: $500,650 has been assigned by the Town Board
for the subsequent year's budget, $7,442 has been assigned for encumbrances resulting from open purchase
orders, and the remaining$611,526 is assigned for highway purposes.
•
-11-
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2013
FINANCIAL ANALYSIS OF THE TOWN'S FUNDS (continued)
•
Governmental Funds (continued)
Highway Fund (continued)
The key elements of the fund balance decrease of$89,409 are as follows:
• There was a planned fund balance reduction of $336,150, a result of appropriations in the current year's
budget.
• Transportation savings of$204,141 resulted from budgeted road stabilization costs which did not occur in
2013 and additional budgeted expenditures relating to severe weather(i.e. snow removal) which were not
incurred during 2013.
Capital Projects Fund
At the end of the current year, the capital projects fund had a total fund balance of$27,542.
The fund balance increased in the capital projects fund by$404,243 from the prior year.
• The increase resulted from differences in timing between project expenditures and encumbrances
and the recognition of corresponding permanent financing.
Community Preservation Fund
At the end of the current year, the community preservation fund had a total restricted fund balance of
$10,517,092 as a result of an increase in the 2% land preservation transfer tax of $1,180,566 and federal aid
of$726,280, which was then offset by additional purchases of land with these additional funds.
Solid Waste Management District
At the end of the current year, the total fund balance of the solid waste management district fund was $745,525
increasing by$338,525 or 83%from the prior year. Of this amount, $88,318 is not in spendable form (i.e. prepaid
items). The remaining $657,207 of the fund balance is in spendable form as follows: $78,365 has been assigned
by the Town Board for the subsequent year's budget, $6,290 has been assigned for encumbrances resulting from
open purchase orders and the remaining$572,552 is assigned for waste management services.
The key elements of the fund balance increase of$338,525 are as follows:
• Departmental income was $222,509 over budget due to the Town conservatively budgeting for these
revenues. The Town had an increase in yard debris removal due to the cleanup from the aftermath of
Hurricane Sandy.
• State aid was over budget $113,591 due to the Town receiving additional grant funds for Household
Hazardous Waste and a screening plant.
Nonmajor Governmental Funds
At the end of the current year, the total fund balance of the nonmajor governmental funds was $1,101,948,
increasing $271,217 or 33%, from the prior year. Of this amount $46,908 is not in spendable form (i.e.
prepaids). The remaining $1,055,040 of the fund balance is in spendable form as follows; $239,050 for
subsequent year's budget, $385 assigned for encumbrances resulting from open purchase orders, and the
remaining $815,605 of fund balance is assigned for nonmajor governmental fund purposes.
-12-
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2013
FINANCIAL ANALYSIS OF THE TOWN'S FUNDS (continued)
Governmental Funds (continued)
Nonmajor Governmental Funds (continued)
The key elements of the fund balance increase of$271,217 are as follows:
• There was an increase in real property taxes to cover an increase in appropriations, a decrease in
S budgeted revenues and a decrease in appropriated fund balance.
General Fund Budgetary Highlights
The Town appropriated expenditures in the original general fund budget in excess of estimated revenues in the
amounts of$2,880,366, inclusive of$100,366 of encumbrances, by assigning fund balance from the prior year.
Actual revenues were more than anticipated by$472,469. Actual expenditures in all budgetary line items were
less than the budgetary appropriation by$2,266,686. Over the course of the year, the Town Board revises the
budget as needed so that expenditures do not exceed appropriations. In all Town funds, various transfers
between appropriations were approved for this purpose. The following are the main components of the
increase in appropriations:
• Federal aid increased by$99,200 due to additional grants being received.
• Additional appropriations of $217,476 for employee benefits due to increases for retirement
contributions.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
As of December 31, 2013 the primary government had $151,264,299 in net capital assets including land, land
development rights, buildings, improvements, machinery and equipment, and infrastructure. The Town's
component units had $16,701,873 in net capital assets including land, buildings, improvements, machinery and
equipment, and infrastructure.
Capital Assets at December 31,
Primary Government 2013 2012
Land $ 7,540,466 $ 7,358,344
Land development rights 112,046,093 108,449,317
Construction in progress 53,344 19,618
Buildings 13,234,190 13,226,240
Improvements other than buildings 15,756,291 15,756,291
Machinery and equipment 11,433,217 11,011,357
Software 1,055,638 1,027,556
Infrastructure 76,784,978 76,059,090
Total Capital Assets 237,904,217 232,907,813
Less: accumulated depreciation 86,639,918 83,593,563
Primary Government -Total Net Capital Assets $ 151,264,299 $ 149,314,250
Component Units
Land $ 2,193,353 $ 2,193,353
Buildings 14,145,321 14,254,332
Improvements other than buildings 2,545,238 2,427,227
Machinery and equipment 3,625,245 3,565,204
f Infrastructure 4,037,643 2,899,442
Total Capital Assets 26,546,800 25,339,558
Less: accumulated depreciation 9,844,927 9,041,857
Component Units -Total Net Capital Assets $ 16,701,873 $ 16,297,701
-13-
•
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2013
CAPITAL ASSET AND DEBT ADMINISTRATION (continued)
Capital Assets (continued)
In 2013, the Town of Southold's major capital asset expenditures were as follows:
• Land and land development rights of$3,596,776
• Machinery and equipment of$541,922
• Highway resurfacing and drainage of$725,888
The capital program is a long range financing guide and not a definitive plan. Each appropriation must be
authorized by Town Board resolution before being undertaken. Each may be financed by issuance of general
obligation bonds, which, at times, are preceded by issuance of bond anticipation notes for various periods of
• time depending on the probable usefulness of the purpose of expenditure. The Town's capital plan for both
2014 and 2015 of$60,000 for each year include the purchases of vehicles.
Additional information on the Town's capital assets can be found in Note C.3 to the financial statements.
Long-Term Debt
The Town of Southold's bond credit rating from Moody's Investors Services was Aa2 as of December 31,2013.
Debt Limit - The Town has the power to contract indebtedness for any Town purpose so long as the principal
amount thereof, subject to certain limited exceptions, shall not exceed seven percent of the average full
valuation of taxable real estate of the Town, and subject to certain enumerated exclusions and deductions
such as water and certain sewer facilities and cash or appropriations for current debt service.
The constitutional method for determining full valuation is calculated by taking the assessed valuation of
taxable real estate as shown upon the latest completed assessment roll and dividing the same by the
equalization rate as determined by the State Board of Equalization and Assessment. The State Legislature is
required to prescribe the manner by which such ratio shall be determined. Average full valuation is
determined by taking the sum of the full valuation of the last completed assessment roll and the four preceding
assessment rolls and dividing such sum by five. Percentage of debt contracting power exhausted at December
31, 2013 was 5.57%.
At December 31, 2013, the Town had approximately $39.2 million in long term general obligation bonds
outstanding, of which $37.6 million was for the primary government. Also outstanding at year-end were bond
anticipation notes in the amount of$1.5 million, $573 thousand which was for the primary government.
Additional information on the Town's debt activity can be found in Note C.4 to the financial statements.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
Property Tax
The Town has adopted a budget for the 2014 fiscal year which factors in inflation and other adjustments to
revenues and expenditures as well as prior year positive and negative fund balances. The 2014 budget
includes an overall increase in real property tax revenues from the prior year of approximately 1.48% for the
general Town governmental activities.
In June 2011, New York State enacted Chapter 97, Laws of 2011 Real Property Tax Levy Cap and Mandate
Relief Provisions, which includes a 2% property tax cap for municipalities that affects the Town and its
municipal component units. Beginning in 2012, and lasting through at least June 15, 2016, no local
government is authorized to increase its property tax levy by more than 2%or the rate of inflation (whichever is
less); however the permitted increase will not be less than 1%. Local governments can exceed the tax levy
limit by a 60% vote of the governing body, or local law. There are permitted exceptions and adjustments. The
Town is currently evaluating the effect of the cap on future year's budgets.
-14-
• TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2013
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES (continued)
• State Aid and Local Assistance
The Town receives financial assistance from New York State and from Suffolk County. During 2013, financial
assistance included state aid consisting of mortgage tax of $1,142,523, consolidated highway aid of $422,755,
$678,225 in capital grants and other state aid of approximately $288,154. State aid per capita was $88,328
and County local government assistance was $250,803. Additionally, if the State should not adopt its budget
in a timely manner, municipalities and school districts in the State, including the Town, may be affected by a
delay in the payment of state aid. The State is not constitutionally obligated to maintain or continue state aid
to the Town. The Town's 2014 budget included similar amounts for this financial assistance.
CONTACTING THE TOWN'S FINANCIAL MANAGEMENT
• This financial report is designed to provide our citizens, taxpayers, customers, and creditors with a general
overview of the Town's finances and to show the Town's accountability for the money it receives. If you have
questions about this report or need additional financial information, contact the Town of Southold, Office of the
Town Comptroller, Southold, New York.
r
•
•
-15-
I •
BASIC FINANCIAL
STATEMENTS
•
r
•
• II'
•
•
a
TOWN OF SOUTHOLD
GOVERNMENT-WIDE FINANCIAL STATEMENT
STATEMENT OF NET POSITION
December 31, 2013
Primary Nonmajor
Governmental Component
Activities Units
ASSETS
• Current Assets:
Cash and investments $ 29,157,257 $ 2,463,619
Accounts receivable 331,284 71,946
Due from other governments 2,295,136
Due from primary government 590,248
State and federal aid receivables 890,942
Prepaid charges 1,180,322 107,611
Inventory of material and supplies 2,562
Total Current Assets 33,857,503 3,233,424
Non-Current Assets:
Non-depreciable capital assets 119,639,903 2,193,353
Depreciable capital assets, net of depreciation 31,624,396 14,508,520
w Total Non-Current Assets 151,264,299 16,701,873
Total Assets 185,121,802 19,935,297
LIABILITIES
Current Liabilities:
Accounts payable and accrued liabilities 1,519,487 243,032
Accrued interest payable 372,465 22,771
• Bond anticipation notes payable 573,000 950,000
Due to other governments 86,107
Due to component units 590,248
Unearned revenue 73,127
Grant advances 8,718
Non-current liabilities due within one year
General obligation bonds payable 2,400,000 175,000
Compensated absences 127,000 45,514
Claims and judgments payable 215,842
Estimated liability for landfill closure
and postclosure care costs 25,805
Total Current Liabilities 5,991,799 1,436,317
Non-Current Liabilities:
` General obligation bonds payable 35,235,000 1,375,000
Due to employees retirement system 129,151
Compensated absences 8,110,997 136,542
Estimated liability for landfill closure
and postclosure care costs 895,930
Other postemployment benefits payable 30,727,059 331,079
• Total Non-Current Liabilities 75,098,137 1,842,621
Total Liabilities 81,089,936 3,278,938
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue from real property taxes 8,023,811 590,248
NET POSITION
Net Investment in Capital Assets 112,924,654 13,619,914
Restricted 10,544,634
Unrestricted (27,461,233) 2,446,197
Total Net Position $ 96,008,055 $ 16,066,111
See notes to the financial statements.
-16-
•
TOWN OF SOUTHOLD
GOVERNMENT-WIDE FINANCIAL STATEMENT
STATEMENT OF ACTIVITIES
Year Ended December 31, 2013
•
Net Expenses and
Program Revenues Change in Net Position
Operating Capital
Charges for Grants and Grants and Primary Component
Function/Program Expenses Services Contributions Contributions Government Units
PRIMARY GOVERNMENT
Government Activities:
General government support $ 9,458,248 $ 318,099 $ 110,234 $ 35,464 $ (8,994,451)
Public safety 18,487,572 641,835 176,355 183,253 (17,486,129)
Public health 33,300 9,527 (23,773)
Transportation 7,196,909 23,429 92,537 442,995 (6,637,948)
Economic assistance and opportunity 2,094,274 186,008 257,397 (1,650,869)
Culture and recreation 546,772 288,018 (258,754)
Home and community services 6,802,623 2,935,413 242,879 1,435,049 (2,189,282)
Interest on debt 1,447,179 (1,447,179)
Total Primary Government 46,066,877 4,392,802 888,929 2,096,761 (38,688,385)
'. COMPONENT UNITS
General government support 171,080 $ (171,080)
Public health 75,843 (75,843)
Transportation 3,455,960 2,909,257 33,688 1,557 (511,458)
Culture and recreation 1,025,548 9,615 98,286 (917,647)
Home and community services 557,155 42,997 11,517 (502,641)
Interest on debt 68,099 (68,099)
Total Component Units $ 5,353,685 $ 2,961,869 $ 143,491 $ 1,557 (2,246,768)
GENERAL REVENUES
Real property taxes 30,961,687 2,284,561
Other real property tax items 97,836
Non-property tax items 6,476,812
Interest earnings 82,495 6,608
State aid-unrestricted 1,242,058
Other 708,362 86,781
Total General Revenues 39,569,250 2,377,950
Change in Net Position 880,865 131,182
• Net Position at Beginning of Year 95,217,460 15,934,929
Cumulative Effect of Change in Accounting Principle (90,270)
Net Position at End of Year $ 96,008,055 $ 16,066,111
•
'r
See notes to financial statements.
-17-
•
TOWN OF SOUTHOLD
BALANCE SHEET
GOVERNMENTAL FUNDS
December 31, 2013
•
MAJOR GOVERNMENTAL FUNDS
Solid Waste Non-Major
Capital Community Management Governmental
General Highway Projects Preservation District Funds Totals
ASSETS
Cash and investments $ 16,219,638 $ 1,261,004 $ 379,895 $ 9,764,130 $ 623,014 $ 909,576 $ 29,157,257
• Accounts receivable 55,354 37,473 91,916 146,541 331,284
Due from other funds 162,013 1,205,406 330,562 559,641 477,592 2,735,214
State and federal aid receivable 430,783 29,766 295,362 119,362 15,669 890,942
Due from other governments 1,062,516 93,404 26,519 720,663 24,218 1,927,320
Supply inventory 2,562 2,562
Prepaids 940,805 104,291 88,318 46,908 1,180,322
Total Assets $ 18,873,671 $ 2,693,871 $ 1,032,338 $ 10,522,266 $ 1,506,469 $ 1,596,286 $ 36,224,901
LIABILITIES AND FUND BALANCES
• LIABILITIES
Accounts payable and accrued liabilities 826,307 159,498 270,206 5,174 218,925 39,377 1,519,487
Judgments and claims 215,842 215,842
Bond anticipation notes payable 573,000 573,000
Due to other funds 2,539,197 34,427 161,590 2,735,214
Due to component units 590,248 590,248
Due to other governments 21,238 62,256 2,613 86,107
Unearned revenue 12,863 60,264 73,127
Grant advances 8,718 8,718
Total Liabilities 4,205,695 264,899 1,004,796 5,174 221,538 99,641 5,801,743
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue from real property taxes 5,884,645 1,205,063 539,406 394,697 8,023,811
FUND BALANCE
Nonspendable 943,367 104,291 88,318 46,908 1,182,884
Restricted 27,542 10,517,092 10,544,634
Assigned 4,192,859 1,119,618 657,207 1,055,040 7,024,724
Unassigned 3,647,105 3,647,105
Total Fund Balance 8,783,331 1,223,909 27,542 10,517,092 745,525 1,101,948 22,399,347
s,Deferred Inflows of Resources and Fund Balance $ 18,873,671 $ 2,693,871 $ 1,032,338 $ 10,522,266 $ 1,506,469 $ 1,596,286 $ 36,224,901
•
II�
See notes to the financial statements.
-18-
• TOWN OF SOUTHOLD
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE
STATEMENT OF NET POSITION
December 31, 2013
•
Total Fund Balances-Governmental Funds $ 22,399,347
Amounts reported for governmental activities in the
• Statement of Net Position are different because:
Capital assets less accumulated depreciation are
included in the Statement of Net Position:
• Capital assets - non-depreciable $ 119,639,903
Capital assets-depreciable 118,264,314
Accumulated depreciation (86,639,918)
151,264,299
Long-term liabilities applicable to the Town's
governmental activities are not due and payable
in the current period and accordingly are not
reported in the funds. However these liabilities
are included in the Statement of Net Position:
•
General obligation bonds payable $ (37,635,000)
Due to employees retirement system (129,151)
Compensated absences (8,237,997)
Estimated liability for landfill closure
• and postclosure care costs (921,735)
Other postemployment benefits payable (30,727,059)
(77,650,942)
Revenues in the Statement of Activities that do not provide current
financial resources are not reported as revenues in the funds. 367,816
Interest payable applicable to the Town's governmental
activities are not due and payable in the current period
and accordingly are not reported in the funds. However
these liabilities are included in the Statement of Net Position. (372,465)
•
Net Position of Governmental Activities $ 96,008,055
•
See notes to financial statements.
•
-19-
TOWN OF SOUTHOLD
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTALFUNDS
For the year Ended December 31, 2013
MAJOR GOVERNMENTAL FUNDS
Solid aste Non-Major
Capital Community Management Governmental
General Highway Projects Preservation District Funds Totals
REVENUES
Real property taxes $ 22,215,752 $ 4,935,817 $ 2,107,276 $ 1,702,842 $ 30,961,687
Other real property tax items 88,672 7,749 41 1,374 97,836
Non-property tax items 885,473 $ 5,023,334 568,005 6,476,812
Departmental income 371,612 2,051,559 700,638 3,123,809
Intergovernmental charges and local aid 281,879 20,240 302,119
Use of money and property 218,061 9,778 $ 1,474 16,443 5,432 4,628 255,816
Licenses and permits 399,053 17,808 172,813 19,160 608,834
Fines and forfeitures 209,013 209,013
Sale of property and compensation for loss 330,688 5,624 340,331 676,643
• Miscellaneous local sources 238,438 27,757 54 6,909 273,158
Interfund revenues 30,000 30,000
State aid 1,267,765 422,878 144,360 533,864 147,121 103,997 2,619,985
Federal aid 190,639 78,979 183,253 769,753 15,375 28,435 1,266,434
Total Revenues 26,727,045 5,498,873 356,844 6,343,448 4,846,857 3,129,079 46,902,146
EXPENDITURES
Current:
General government support 5,463,810 6,831 22,264 34,185 5,527,090
Public safety 9,308,943 1,245,237 10,554,180
Public health 33,300 33,300
Transportation 495,712 3,452,305 3,948,017
Economic assistance and opportunity 1,231,227 1,231,227
Culture and recreation 298,472 298,472
Home and community services 403,734 3,841,198 3,090,955 773,745 8,109,632
Employee benefits 8,526,179 1,970,194 704,522 658,200 11,859,095
Capital Outlay 570,254 570,254
Debt Service:
Principal 503,400 70,000 1,282,300 508,300 6,000 2,370,000
Interest 173,449 26,281 1,095,138 167,291 5,495 1,467,654
Total Expenditures 26,438,226 5,525,611 570,254 6,218,636 4,493,332 2,722,862 45,968,921
Excess(Deficiency)of Revenues Over
Expenditures 288,819 (26,738) (213,410) 124,812 353,525 406,217 933,225
Other Financing Sources(Uses)
Transfers in 95,000 687,653 782,653
• Transfers out (404,982) (157,671) (70,000) (15,000) (135,000) (782,653)
Total Other Financing Sources(Uses) (404,982) (62,671) 617,653 -0- (15,000) (135,000) -0-
Net Change in Fund Balance (116,163) (89,409) 404,243 124,812 338,525 271,217 933,225
Fund Balances(Deficit)at Beginning of Year 8,899,494 1,313,318 (376,701) 10,392,280 407,000 830,731 21,466,122
Fund Balances(Deficit)at End of Year $ 8,783,331 $ 1,223,909 $ 27,542 $ 10,517,092 $ 745,525 $ 1,101,948 $ 22,399,347
• See notes to the financial statements.
-20-
TOWN OF SOUTHOLD
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES
For the Year Ended December 31, 2013
Net Change in Fund Balance $ 933,225
Governmental funds report capital outlays as expenditures. However, in
the Statement of Activities the cost of those assets is allocated over their
estimated useful lives and reported as depreciation expense. The amount
by which capital outlay exceeds depreciation in the current period is:
s Capital outlay $ 5,141,955
Depreciation expense (3,166,226)
Loss on dispositions (25,680)
1,950,049
Revenues in the Statement of Activities that do not provide current financial
resources are not reported as revenues in the funds. 99,532
The issuance of long-term debt and increase in obligations under capital
leases provides current financial resources to governmental funds, while the
repayment of the principal of long term debt and capital leases consumes
the current financial resources of governmental funds.
Neither transaction has any effect on net position.
Repayment of bond principal 2,370,000
Due to employees retirement system 57,899
Compensated absences 89,397
Estimated liability for landfill closure
and postclosure care costs 22,831
Other postemployment benefits payable (4,662,543)
Accrued interest payable 20,475
•
Change in Net Position of Governmental Activities $ 880,865
r
See notes to financial statements.
-21-
TOWN OF SOUTHOLD
STATEMENT OF FIDUCIARY NET POSITION
December 31, 2013
Totals
• ASSETS
Cash and investments $ 23,401,948
Other receivables 591
Total Assets $ 23,402,539
LIABILITIES
Due to other governments $ 22,836,497
Other liabilities 376,171
Deposits held 189,871
Total Liabilities $ 23,402,539
See notes to financial statements.
-22-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2013
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
•
The Town of Southold (the "Town"), which was established in 1640, is governed by Town Law and other
general laws of the State of New York and various local laws. The Town Board is the legislative body
responsible for overall operations. The Town Board consists of the Supervisor who is elected for a term of
four years and five council members who are elected for terms of four years. The Town Board appoints the
Town Attorney and Town Comptroller whose terms are fixed by Town Law. The Town Clerk, Receiver of
Taxes, Superintendent of Highways, Justices and Town Trustees are all elected and serve for four years,
respectively. The Town provides a full range of municipal services, including public safety, transportation,
home and community services, public works and road maintenance, recreation and parks, and general and
administrative services.
The financial statements of the Town of Southold have been prepared in conformity with accounting principles
• generally accepted in the United States of America (GAAP) as applied to governmental units. The
Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing
governmental accounting and financial reporting principles.
The more significant of the government's accounting policies are described below.
1. REPORTING ENTITY
I•
The financial reporting entity consists of: (a) the primary government, which is the Town of Southold; (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.
• The decision to include a potential component unit in the Town of Southold reporting entity is based on
several criteria including legal standing, dependency and financial accountability. The current guidance
also clarifies the status as major or nonmajor component unit. Based on the application of these criteria,
the following is a summary of certain entities considered in determining the Town's reporting entity.
Discretely Presented Component onent Units:
• The following entities are discretely presented component units of the Town of Southold:
a) Fishers Island Ferry District was established in 1947 by a special act of legislation within the State of
New York, known as the Ferry District Enabling Act. The Board of Commissioners is the legislative
body responsible for the overall operations. The Board of Commissioners consists of five members,
• all of whom are elected by the residents of the District. The primary function of the District is to
provide ferry operations and services to district residents. Special districts cannot issue bonded debt
without the approval and the backing of the full faith and credit of the Town. The Town issues
indebtedness on behalf of the District which is responsible for the payment of annual debt service on
the obligations. Budgets and tax rates are not approved by the Town. Tax levies of the District are
collected by the Town Receiver of Taxes. This district is included in the Town's reporting entity since
the primary government issues debt on behalf of the District.
•
b) Fishers Island Waste Management District was established in 1952 and is governed by the laws of
New York State. The Board of Commissioners is the legislative body responsible for the overall
operations. The Board of Commissioners consists of five members, all of whom are elected by the
residents of the District. The primary function of the District is to provide waste management and
disposal services to district residents. Special districts cannot issue bonded debt without the approval
I• and the backing of the full faith and credit of the Town. The Town issues indebtedness on behalf of
the District which is responsible for the payment of annual debt service on the obligations. Tax levies
of the District are collected by the Town Receiver of Taxes. This district is included in the Town's
reporting entity since the primary government issues debt on behalf of the District
•
-23-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2013
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
1. REPORTING ENTITY(continued)
Discretely Presented Component Units(continued):
c) Cutchogue-New Suffolk Park District was established in 1953 and is governed by the laws of New
• York State.The Board of Commissioners is the legislative body responsible for the overall operations.
The Board of Commissioners consists of three members, all of whom are elected by the residents of
the District.The primary function of the District is to maintain and operate the specific private beaches
of residents who reside within the park district. Special districts cannot issue bonded debt without the
approval and the backing of the full faith and credit of the Town. The Town issues indebtedness on
behalf of the District which is responsible for the payment of annual debt service on the obligations.
Tax levies of the District are collected by the Town Receiver of Taxes. This district is included in the
Town's reporting entity since the primary government issues debt on behalf of the District
d) Southold Park District was established in 1907 and is governed by the laws of New York State. The
Board of Commissioners is the legislative body responsible for the overall operations. The Board of
Commissioners consists of three members, all of whom are elected by the residents of the District.
The primary function of the District is to maintain and operate the specific private beaches of residents
who reside within the park district. Special districts cannot issue bonded debt without the approval
and the backing of the full faith and credit of the Town. The Town issues indebtedness on behalf of
the District which is responsible for the payment of annual debt service on the obligations. Tax levies
of the District are collected by the Town Receiver of Taxes. This district is included in the Town's
reporting entity since the primary government issues debt on behalf of the District
e) Orient-East Marion District was established in 1969 and is governed by the laws of New York State.
The Board of Commissioners is the legislative body responsible for the overall operations.The Board
of Commissioners consists of three members, all of whom are elected by the residents of the District.
The primary function of the District is to maintain and operate the specific private beaches of residents
who reside within the park district. Special districts cannot issue bonded debt without the approval
and the backing of the full faith and credit of the Town. The Town issues indebtedness on behalf of
the District which is responsible for the payment of annual debt service on the obligations. Tax levies
of the District are collected by the Town Receiver of Taxes. This district is included in the Town's
reporting entity since the primary government issues debt on behalf of the District.
f) Mattituck Park District was established in 1941 and is governed by the laws of New York State. The
Board of Commissioners is the legislative body responsible for the overall operations. The Board of
Commissioners consists of three members, all of whom are elected by the residents of the District.
• The primary function of the District is to maintain and operate the specific private beaches of residents
who reside within the park district. Special districts cannot issue bonded debt without the approval
and the backing of the full faith and credit of the Town. The Town issues indebtedness on behalf of
the District which is responsible for the payment of annual debt service on the obligations. Tax levies
of the District are collected by the Town Receiver of Taxes. This district is included in the Town's
reporting entity since the primary government issues debt on behalf of the District.
•
-24-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2013
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)
1. REPORTING ENTITY(continued)
Discretely Presented Component Units(continued):
g) Orient Mosquito District was established in 1916 and is governed by the laws of New York State.The
Board of Commissioners is the legislative body responsible for the overall operations. The Board of
Commissioners consists of five members, all of whom are elected by the residents of the District.The
primary function of the District is to provide pest control services to district residents. Special districts
cannot issue bonded debt without the approval and the backing of the full faith and credit of the Town.
The Town issues indebtedness on behalf of the District which is responsible for the payment of
annual debt service on the obligations.Tax levies of the District are collected by the Town Receiver of
Taxes. This district is included in the Town's reporting entity since the primary government issues
i
debt on behalf of the District.
All of the Town of Southold's discretely presented component units are considered non-major.
2. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
The Town's basic financial statements include both government-wide (reporting the Town as a whole)
and fund financial statements (reporting the Town's major funds).
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 of the non-fiduciary activities of the Town as a whole with separate
columns for the primary governmental activities as well as the discretely presented component units.
For the most part, the effect of interfund activity has been eliminated from the government-wide
financial statements, except for interfund services provided and used.
The government-wide Statement of Activities demonstrates the degree to which the direct expenses of
a given function are offset by program revenue. Direct expenses are those that are clearly identifiable
with a specific function. Program revenues include (1) charges to customers or applicants who
purchase, use, or directly benefit from goods, services, or privileges provided by a given function, (2)
grants and contributions that are restricted to meeting the operation and capital requirements of a
particular function, (3) interest earned on grants or capital projects that is required to be used to
support a particular program or project. Taxes and other items not properly included among program
revenues are reported as general revenues. The Town does not allocate indirect expenses to specific
functions in the Statement of Activities.
Fund Financial Statements
Separate financial statements are provided for governmental funds and fiduciary funds, even though the
fiduciary funds are excluded from the government-wide financial statements. Major individual
governmental funds are reported as separate columns in the fund financial statements.
The accounts of the Town 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, deferred inflows of resources, 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 financial statements. Certain funds of the Town are utilized to account for
resources derived from and/or expenditures applicable to an area less than the entire Town. The focus of
the governmental funds financial statements is on the major funds. Accordingly, the Town maintains the
following fund types:
-25-
•
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2013
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
• 2. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (continued)
Fund Financial Statements(continued)
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 the determination of financial position and changes in financial position. Governmental funds are
further classified as major and nonmajor funds.
The Town reports the following major governmental funds:
General Fund - is the principal operating fund of the Town. This fund is used to account for all financial
resources not accounted for and reported in another fund.
Special Revenue Funds — are used to account for and report the proceeds of specific revenue
sources that are restricted or committed to expenditures for specified purposes other than debt
service or capital projects.
Highway Fund — is a Special Revenue Fund used to account for revenues and expenditures for
highway purposes. The major areas of expenditures are repairs and improvements, machinery,
snow and miscellaneous. The major source of revenue is real property taxes.
Solid Waste Management District Fund — is a Special Revenue Fund used to account for
revenues and expenditures for waste management purposes. The major areas of expenditures
are contractual expenditures for refuse and garbage removal. The major source of revenue is real
property taxes and waste disposal fees.
Community Preservation Fund — is used to account for and report financial resources that are
restricted for the purchase of land and land development rights.
f' Capital Projects Fund - used to account for and report financial resources that are restricted,
committed, or assigned to expenditure for capital outlays, including the acquisition or construction of
major capital facilities and other capital assets.
Additionally,the Town accounts for and reports the following non-major funds:
General Fund Part Town — is used to account for revenues and expenditures for certain services
provided by the area of the Town located outside of the Village of Greenport. The major source of
revenue is real property taxes and building permits.
Special Grant Fund — is used to account for Federal Aid for the Community Development Block
Grant Program.
• Special District Funds — are used to account for taxes or other revenues, which are raised or
received to provide special services to areas that encompass less than the whole town. The
Special District Funds consist of a number of separate districts, which are administered by the
Town Board as follows: East-West Fire Protection District, Southold Wastewater District, and
Fishers Island Sewer District.
• Fiduciary Funds - Fiduciary Funds are used to account for assets held by the Town in a trustee or
custodial capacity.
Agency Fund - is used to account for money (and/or property) received and held in the capacity of
trustee,custodian or agent.
•
-26-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2013
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
3. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT
PRESENTATION
Measurement focus refers to what is being measured whereas the 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.
The government-wide statements are reported using the economic resources measurement focus and the
accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when
earned and expenses are recorded when the 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
measureable and available. Revenues are considered available when they are collectible within the
current period or soon enough thereafter to pay liabilities of the current period. For this purpose,the Town
generally considers revenues to be available if they are collected within 60 days after the year end. In
certain circumstances this application of the Town's normal availability period for a given revenue source
might distort revenue trends from one year to the next. In such unusual circumstances, revenues may be
considered available if received beyond 60 days. However, to the extent the revenue remains uncollected
after one year the Town would classify the fund balance as nonspendable.
Revenues susceptible to accrual include Suffolk County local assistance at year end on behalf of the
Town, franchise fees, mortgage taxes and certain charges for services and intergovernmental revenues.
Permits, fees, and other similar revenues are not susceptible to accrual because generally they are not
measurable until they are received in cash. In those instances where expenditures are the prime factor in
determining eligibility for state and federal grants, revenues are recognized when the expenditure is
incurred. In the capital projects fund and community preservation fund, long-term debt is recognized as
revenue upon receipt of the proceeds. Expenditures generally are recorded when a liability is incurred, as
t' under accrual accounting. However, debt service expenditures, as well as expenditures related to
compensated absences, claims and judgments, landfill closure and postclosure care costs, and other
postemployment healthcare cost benefits are recorded when payment is due. General capital asset
acquisitions are reported as expenditures in governmental funds. Issuance of long-term debt is reported
as other financing sources and uses.
` Because governmental fund statements are presented using a measurement focus and a basis of
accounting different from that used in the government-wide statements governmental column, a
reconciliation is presented that briefly explains the adjustment necessary to reconcile ending net position
and the change in net position.
4. ASSETS, LIABILITIES, DEFERRED OUTFLOWS/INFLOWS OF RESOURCES, AND NET
POSITIOWFUND BALANCE
f
CASH AND INVESTMENTS
Cash consists of funds deposited in demand accounts, time deposit accounts and certificates of deposit
with maturities of less than three months.
State statutes govern the Town's investment policies.The Town's investments are governed by a formal
investment policy. The Town's monies must be deposited in FDIC-insured commercial banks or trust
companies located within the State. The Town is authorized to use demand accounts and certificates
of deposit. Permissible investments include obligations of the U.S. Treasury, U.S. Agencies and
investments made by the Cooperative Liquid Asset Security System (CLASS).
•
-27-
•
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2013
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
• 4. ASSETS, LIABILITIES DEFERRED OUTFLOWS/INFLOWS OF RESOURCES, AND NET
POSITION/FUND BALANCE (continued)
CASH AND INVESTMENTS(continued)
w Collateral is required for demand deposits and time deposit accounts at 100% of all deposits not covered
by federal deposit insurance. Obligations that may be pledged as collateral include obligations of the
United States and its agencies, obligations of the State and its municipalities, and school districts. The
Town's collateral agreements are based on the Town's available balance.
RECEIVABLES AND PAYABLES
Receivables include amounts due from Federal, State and other governments or entities for services
provided by the Town. Receivables are recorded as revenues recognized as earned or as specific
program expenditures are incurred.
Interfund transactions, exclusive of interfund services provided and used, have been eliminated from the
government-wide financial statements. In the funds statements interfund transactions include:
•
a) Interfund Revenues
In the general fund, interfund revenues, which are quasi-external transactions, represent amounts
charged for services or facilities provided by the general fund. The amount paid by the fund receiving
the benefit of the service or facilities is reflected as an expenditure of that fund.
• b) Transfers
Transfers primarily represent payments to the capital projects fund from the other funds for their
appropriate share of the capital project costs or related BAN debt service amounts.
DUE FROM/TO OTHER FUNDS
During the course of operations the government has activity between funds for various purposes. Any
residual balance outstanding at year-end are reported as due from/due to other funds. While these
balances are reported in fund financial statements, certain eliminations are made in the preparation of
the government-wide financial statements.
it INVENTORY AND PREPAID ITEMS
Inventory is valued at cost and consists of supplies on hand. Inventory in these funds is accounted
for under the consumption method.
Certain payments to vendors reflect costs applicable to future accounting periods and are reported as
prepaid items in both the government-wide and fund financial statements. Prepaids in the general and
special revenue funds represent retirement benefits that will benefit a future period.
In governmental funds, amounts reported as inventories and prepaid items are equally offset by
nonspendable fund balance amounts, indicating that they do not constitute "available spendable
resources"even though they are a component of net current assets.
•
•
-28-
II
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2013
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)
4. ASSETS, LIABILITIES, DEFERRED OUTFLOWS/INFLOWS OF RESOURCES, AND
NET/POSITIOWFUND BALANCE (continued)
CAPITAL ASSETS
Capital assets purchased or acquired with an original cost of $5,000 or more are reported at historical
cost or estimated historical cost. Donated assets are reported at estimated fair market value as of the
date of donation. Additions, improvements and other capital outlays that significantly extend the
useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed
as incurred. Depreciation and amortization on all assets is provided on the straight-line basis over the
following estimated useful lives:
Buildings 10-40 years
Improvements and other 20 years
Machinery and equipment 5-10 years
Software 5-10 years
Infrastructure 20-30 years
Infrastructure assets, consisting of certain improvements other than buildings including roads, curbs,
• sidewalks, bridges, and street lighting are capitalized along with other capital assets.
Intangible assets lack physical substance, are nonfinancial in nature, and have an estimated useful life
extending beyond a single reporting period. The term depreciation, as used in these footnotes, includes
amortization of intangible assets.
In the fund financial statements, capital assets are recorded as capital outlay expenditures in the
governmental fund upon acquisition.
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. Deferred outflows of resources represent a consumption of net position
that applies to a future period(s) and so will not be recognized as an outflow of resources
(expenditures/expense) until that time.
In addition to liabilities, the statement of financial position will sometimes report a separate section for
deferred inflows of resources. This separate financial element, deferred inflows of resources, represents
an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of
resources (revenues) until that time. The Town has only one type of item, which arises only under a
• modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item,
unavailable revenue, is reported in the governmental funds balance sheet and the statement of net
position. The governmental funds report unavailable revenues from property taxes. These amounts are
deferred and recognized as an inflow of resources in the period the amounts become available.
LONG-TERM OBLIGATIONS
In the government-wide financial statements, liabilities for long-term obligations consisting of general
obligation bonds, compensated absences, claims and judgments, liability for landfill closure and
postclosure costs, other postemployment benefits, and due to employees retirement system are
recognized in the statement of net position. Bond premiums or discounts, as well as issuance costs, are
deferred and amortized on a straight-line basis over the life of the bonds. Bonds payable are reported net
• of applicable bond premium or discount. Bond issuance costs are charged as a general fund operating
expense.
In the fund financial statements, governmental funds recognized bond premiums and discounts, as well
as bond issuance costs, during the current period. The face amount of the 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 actual debt proceeds received, are reported as debt service expenditures.
-29-
•
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2013
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
4. ASSETS, LIABILITIES, DEFERRED OUTFLOWS/INFLOWS OF RESOURCES, AND NET
POSITION/FUND BALANCE(continued)
NET POSITION AND FUND EQUITY CLASSIFICATIONS
In the government-wide statements, equity is classified as net position and displayed in three
components:
a) Net investment in capital assets — Consists of capital assets including restricted capital assets,
net of accumulated depreciation and reduced by the outstanding balances of any bonds, notes, or
other borrowings that are attributable to the acquisition, construction, or improvement of those
assets. Accounts payable in the capital projects fund are capital related debt and are used in the
• calculation of net investment in capital assets.
b) Restricted net position — Consists of net position with constraints placed on the use either by (1)
external groups such as creditors, grantors, contributors, or laws or regulations of other
governments; or(2) law through constitutional provisions or enabling legislation.
c) Unrestricted — All other net position that does not meet the definition of "restricted" or "net
investment in capital assets."
In the fund financial 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 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 regulation of other governments; or (b) imposed by law
through constitutional provisions or enabling legislation.
• 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 Town's
highest decision making authority is the Town Board, who by adoption of a Town ordinance prior
to year end, can commit fund balance. Those committed amounts cannot be used for any other
purpose unless the Town Board removes or changes the specified use by taking the same type of
action imposing the commitment.
I •
4) Assigned fund balance reflects the amounts constrained by the Town's "intent" to be used for
specific purposes, but are neither restricted nor committed. The Town Board has the authority to
assign amounts to be used for specific purposes. Assigned fund balances include all remaining
amounts (except negative balances) that are reported in governmental funds, other than the
general fund,that are not classified as nonspendable and are neither restricted nor committed.
I•
5) Unassigned fund balance is the residual classification for the general fund. It is also used to report
negative fund balances in other governmental funds.
•
-30-
•
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2013
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
4. ASSETS, LIABILITIES, DEFERRED OUTFLOWSANFLOWS OF RESOURCES, AND NET
POSITION/FUND BALANCE (continued)
NET POSITION AND FUND BALANCE FLOW ASSUMPTIONS
When outlays for a particular purpose can be funded from both restricted and unrestricted net position
resources it is the Town's policy to consider restricted — net position to have been depleted before
unrestricted—net position is applied.
When both restricted and unrestricted resources are available for use, it is the Town's default policy to
use restricted resources first, and then unrestricted resources — committed, assigned and unassigned
—in order as needed.
•
FUND BALANCE POLICIES
The Town has, by resolution, adopted a fund balance policy that states the Town must maintain a
minimum unassigned fund balance in the general fund equal to 10% of general fund expenditures. In
the event that the balance drops below the established minimum level, the Town's Board will develop
• a plan to replenish the fund balance to the established minimum level within the current or ensuing
fiscal year.
5. REVENUES AND EXPENDITURES
REAL PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES
II •
Real property taxes are levied annually no later than December 1st and are recognized as revenue
January 1st of the year for which they were levied. The Town has its own Assessor's Office whose
responsibilities are independent and distinct from those of the Receiver of Taxes ("Receiver"). The Town
assessment rolls are used for the levy of property taxes by the Town and the school districts, as well as by
the County of Suffolk, New York("County') and by special districts based upon a single tax bill.
The Town of Southold Receiver of Taxes collects all real property taxes for the Town, Suffolk County,
Town Special Districts and School Districts. These taxes are levied on December 1, and are due in two
installments, 50% on December 1 and 50% on May 10, payable without penalty to January 10 and May
31, respectively. Penalties are imposed thereafter at the rate of one-twelfth of the rate of interest
determined by the State Commissioner of Taxation and Finance, after which taxes are payable to the
County Treasurer. The Town retains the total amount of Town, Highway and Town Special Districts
levies from the amount collected, and forwards the balance collected to the County which assumes
collection responsibility. The Town and Town's Special Districts therefore realize annually the 100%
collection of real property taxes.
OTHER POSTEMPLOYMENT BENEFITS
j In addition to providing pension benefits, the Town provides health insurance coverage and survivor
benefits for retired employees. Substantially all of the Town's employees may become eligible for these
benefits if they reach normal retirement age while working for the Town.
Health care benefits in accordance with New York State Health Insurance Rules and Regulations
(administered by the New York State Department of Civil Service), are provided through the New York
State Empire Plan (the "Empire Plan") whose premiums are based on the benefits paid throughout the
State during the year or under the Town of Southold's self-insurance plan which is further described in
Note D.
-31-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31,2013
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
5. REVENUES AND EXPENDITURES(continued)
OTHER POSTEMPLOYMENT BENEFITS (continued)
The Town recognizes the cost of providing benefits by recording its share of insurance premiums as an
• expenditure in the year paid. The Town's union contracts and ordinances require that it provide its eligible
enrollees with Empire Plan benefit coverage, or if another provider is utilized, the equivalent coverage.
Under the provisions of the Empire Plan, premiums are adjusted on a prospective basis for any losses
experienced by the Empire Plan.The Town has the option to terminate its participation in the Empire Plan
at any time without liability for its respective share of any previously incurred loss. The liability for
postemployment benefits payable is recorded as a non-current liability in the government-wide
statements.The current year increase in the liability is based on the most recent actuarial valuation.
COMPENSATED ABSENCES
The liability for vested or accumulated vacation or sick leave (compensated absences) is recorded as
current and non-current obligations in the government-wide statements. The current portion of this
debt is estimated based on historical trends and currently known facts. Compensated absence
liabilities and expenses are reported in governmental funds only if they have matured, for example, as
a result of employee resignations, terminations, and retirements.
The amount that is expected to be liquidated with expendable available financial resources is reported as
expenditures and a liability in the funds statement in the respective fund that will pay the liability.
ENCUMBRANCES
Encumbrance accounting, under which purchase orders, contracts and other commitments for the
expenditures of monies are recorded for budgetary control purposes, 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.
6. USE OF ESTIMATES
The preparation of basic 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 disclosure of contingent assets and liabilities, at the date of
• the financial statements, and the reported amounts of revenues and expenditures during the reporting
period.Actual results could differ from those estimates.
7. NEW ACCOUNTING PRINCIPLES
The Town has adopted all of the current Statements of the Governmental Accounting Standards Board
(GASB)that are applicable. During the year ended December 31,2013,the Town adopted:
GASB Statement No. 61, The Financial Reporting Entity.Omnibus—an Amendment of GASB Statements
No. 14 and No. 34.The implementation of this statement resulted in limiting component units to those that
maintain a financial benefit or burden relationship with the Town or those that would be misleading to
exclude.
GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. The implementation of this
Statement resulted in reporting a restatement of the Town's net position (see Note G) and a change in the
presentation of the statement of net position and the statement of activities.
-32-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2013
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
• 8. SUBSEQUENT EVENTS
Management has evaluated subsequent events for disclosure and/or recognition in the financial
statements through the date of the financial statements.
• B. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
1. BUDGETARY INFORMATION
Budgets are adopted annually on a basis consistent with generally accepted accounting principles.
Appropriations authorized for the current year are increased by the amount of encumbrances carried
forward from the prior year.
I •
Budgets for the general and special revenue funds exclusive of the special grant fund, are legally
adopted for each year. The budgets are adopted on a basis of accounting consistent with GAAP,
except that appropriations authorized for the current year are increased by the amount of
encumbrances carried forward from the prior years. In the event that unanticipated revenues are
received (i.e. specific grant revenues) and exceed budgeted amounts, additional budgetary
appropriations may be made. The capital projects and special grant funds are budgeted on a project
or grant basis.
The Town follows the procedures enumerated below in establishing the budgetary data reflected in the
financial statements:
• a) No later than October 1, the Supervisor submits a tentative budget to the Town Board for the fiscal
year commencing the following fiscal year. The tentative budget includes the proposed means of
financing for all funds.
b) After public hearings are conducted to obtain taxpayer comments, no later than November 20, the
Town Board adopts the budget.
r c) The Town Board must approve all modifications of the budget. However, the Supervisor is
authorized to transfer certain budgeted amounts within departments.
d In June 2011 York New e o k State enacted Chapter 97, Laws of 2011 Real Property Tax Levy Cap
and Mandate Relief Provisions, which includes a 2% property tax cap for municipalities. Beginning
in 2012 and lasting through at least June 15, 2016, no local government is authorized to increase
• its property tax levy by more than 2% or the rate of inflation (whichever is less); however local
governments can exceed the tax levy limit by a 60% vote of the governing body and annually
adopting a local law.
•
•
-33-
i
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2013
B. STEWARDSHIP,COMPLIANCE AND ACCOUNTABILITY(continued)
2. FUND EQUITY
FUND BALANCE
The following table provides the detail regarding fund balance categories and classifications for the
governmental funds which show components of nonspendable fund balances, as well as the purposes for
restricted, and assigned fund balance.The unassigned fund balance is also shown.
Capital Community Other
General Highway Projects Preservation Refuse& Governmental
Fund Fund Fund Fund Garbage Funds Total
Fund Balances:
Nonspendable:
Inventory $ 2,562 $ 2,562
Prepaid items 940,805 $ 104,291 $ 88,318 $ 46,908 1,180,322
Total Nonspendable 943,367 104,291 $ -0- $ -0- 88,318 46,908 1,182,884
Restricted for:
Capital projects 27,542 27,542
Other reserves 10,517,092 10,517,092
Total Restricted -0- -0- 27,542 10,517,092 -0- -0- 10,544,634
Assigned to:
Subsequent year's budget 2,775,000 500,650 78,365 239,050 3,593,065
Purchases on order or contractual obligations 90,100 7,442 6,290 385 104,217
Special revenue funds 611,526 572,552 815,605 1,999,683
Judgments and claims 1,327,759 1,327,759
Total Assigned 4,192,859 1,119,618 -0- -0- 657,207 1,055,040 7,024,724
Unassigned,reported in
General Fund 3,647,105 3,647,105
Total Unrestricted 3,647,105 -0- -0- -0- -0- -0- 3,647,105
Total Fund Balances $8,783,331 $1,223,909 $ 27,542 $10,517,092 $ 745,525 $1,101,948 $22,399,347
C. DETAILED NOTES ON ALL FUNDS
1. CASH AND INVESTMENTS
Custodial Credit Risk — Deposits/ Investments — 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. Custodial credit
IIS risk for investments exists when, in the event of the failure of the counterparty, a government will not
be able to recover the value of its investments or collateral securities that are in possession of an
outside party.
CLASS is a cooperative investment plan consisting of U.S. Treasury Obligations and repurchase
agreements relating to treasury obligations. Investments are stated at cost, which approximates market
value. CLASS was established as a cooperative investment arrangement organized under the CLASS
Municipal Cooperation Agreement made pursuant to New York General Municipal Law, Article 3A and 5-
G.
Collateral is required for demand deposits and certificates of deposit not covered by federal depository
insurance. Obligations that may be pledged as collateral are obligations of the United States and its
agencies and obligations of the state and its municipalities and school districts.
-34-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2013
C. DETAILED NOTES ON ALL FUNDS(continued)
1. CASH AND INVESTMENTS(continued)
Deposits are required to be disclosed as exposed to custodial credit risk if they are not covered by
depository insurance, and the deposits are either:
• Uncollateralized
• • Collateralized with securities held by the pledging financial institution,or
• Collateralized with securities held by the pledging financial institution's trust department or agent but
not in the Town's name
At December 31, 2013 the Town's cash book balance was approximately $52,556,696. This amount is
inclusive of Fiduciary Fund deposits of$23,401,948 but exclusive of petty cash of $2,509. The available
bank balance was $52,803,764. Of the bank balance, $2,613,477 was covered by Federal deposit
insurance, and $52,921,740 was covered by collateral held by the Town's agent, a third-party financial
institution, in the Town's name. The Town's $53,766 CLASS investment consists of U.S Treasury
Obligations and repurchase agreements relating to Treasury obligations and is not subject to risk
categorization.
Credit Risk— State law and Town law limit investments to those authorized by State statutes. The Town
has a written investment policy.
Interest-Rate Risk— Interest-rate risk arises because potential purchasers of debt securities will not agree
to pay face value for those securities if interest rates substantially increase, thereby affording potential
purchasers more favorable rates on essentially equivalent securities. Accordingly, such investments
would have to be held to maturity to avoid a potential loss.
Concentration of Credit Risk — Credit risk can arise as a result of failure to adequately diversify
investments. Concentration risk disclosure is required for positions of 5 percent or more in securities of a
single issuer.
As of December 31, 2013, the Town did not have any investments subject to credit risk, interest-rate risk
! or concentration of credit risk.
2. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS
Interfund receivable and payable balances for the primary government at December 31, 2013 are
expected to be paid currently. These balances represent various temporary loans, recharges, and
! reimbursements between funds and are stated as follows:
Amount Amount
Receivable Payable
Major Governmental Funds:
General Fund-Town wide $ 162,013 $ 2,539,197
Highway Fund 1,205,406 34,427
Capital Projects Fund 330,562 161,590
Solid Waste Management District 559,641
Non-Major Governmental Funds:
General Fund- Part Town 237,575
Special Grant 16,150
East-West Fire District 196,924
Southold Wastewater District 26.943
Total $ 2.735.214 $ 2,735.214
•
-35-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31,2013
C. DETAILED NOTES ON ALL FUNDS (continued)
2. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS (continued)
Interfund transfer balances for the primary government at December 31, 2013 represent primarily the
payment of BAN debt service expenditures and capital project transfers and are stated as follows:
Transfers Transfers
In Out
Major Governmental Funds:
General Fund -Town wide $ 404,982
Highway Fund $ 95,000 157,671
Capital Projects Fund 687,653 70,000
Solid Waste Management District 15,000
• Non-Major Governmental Funds:
General Fund-Part Town 25,000
Southold Wastewater District 110,000
Total $ 782,653 $ 782.653
3. CAPITAL ASSETS
Balance Balance
Primary government 1/1/13 Additions Subtractions 12/31/13
Capital assets not being depreciated
Land $ 7,358,344 $ 184,911 $ 2,789 $ 7,540,466
Land development rights 108,449,317 3,596,776 112,046,093
S Construction in progress 19,618 33,726 53,344
Total capital assets not being depreciated 115,827,279 3,815,413 2,789 119,639,903
Depreciable capital assets
Buildings 13,226,240 7,950 13,234,190
Improvements other than buildings 15,756,291 15,756,291
I. Machinery and equipment 11,011,357 541,922 120,062 11,433,217
Software 1,027,556 50,782 22,700 1,055,638
Infrastructure 76,059,090 725,888 76,784,978
Total depreciable capital assets 117,080,534 1,326,542 142,762 118,264,314
Less accumulated depreciation
Buildings 4,159,930 368,484 4,528,414
Improvements other than buildings 5,905,651 599,362 6,505,013
Machinery and equipment 8,657,721 702,876 97,171 9,263,426
Software 636,261 14,131 22,700 627,692
Infrastructure 64,234,000 1,481,373 65,715,373
Total accumulated depreciation $ 83,593,563 $ 3,166,226 $ 119,871 $ 86,639,918
Total net depreciable capital assets 31,624,396
Total net capital assets $151,264,299
Depreciation expense was charged to governmental functions as follows:
General government support $ 364,375
• Public safety 271,563
Transportation 1,848,498
Economic assistance and opportunity 19,507
Culture and recreation 98,347
Home and community services 563,936
$ 3,166,226
-36-
' TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2013
C. DETAILED NOTES ON ALL FUNDS (continued)
3. CAPITAL ASSETS (continued)
The Town evaluates prominent events or changes in circumstances affecting capital assets to
determine whether impairment of a capital asset has occurred. The Town's policy is to record an
impairment loss in the period when the Town determines that the carrying amount of the asset will not
be recoverable. At December 31, 2013,the Town has not recorded any such impairment losses.
Balance Balance
Nonmaiorcomponent units 1/1/13 Reclassifications Additions Subtractions 12/31/13
Capital assets not being depreciated
Land $ 2,193,353 $ 2,193,353
Construction in progress 40,790 $ 40,790
Total capital assets not being depreciated 2,234,143 $ -0- $ -0- $ 40,790 2,193,353
Depreciable capital assets
Buildings 14,254,332 (109,011) 14,145,321
Improvements other than buildings 2,427,227 109,011 9,000 2,545,238
Machinery and equipment 3,565,204 60,041 3,625,245
Infrastructure 2,899,442 1,138,201 4,037,643
Total depreciable capital assets 23,146,205 -0- 1,207,242 -0- 24,353,447
Less accumulated depreciation
Buildings 3,502,438 452,403 3,954,841
Improvements other than buildings 566,481 97,547 664,028
Machinery and equipment 3,038,185 123,853 3,162,038
Infrastructure 1,934,753 129,267 2,064,020
Total accumulated depreciation $ 9,041,857 $ -0- $ 803,070 $ -0- 9,844,927
Total net depreciable capital assets 14,508,520
Total net capital assets $ 16,701,873
4. INDEBTEDNESS
SHORT TERM DEBT
Bond Anticipation Notes (BANs)— Bond anticipation notes (BANS) are used as a temporary means of
financing capital expenditures in the capital projects fund. State law requires that BANs issued for capital
purposes be converted to long-term obligations within five years after the original issue date. The notes or
renewal thereof may not extend more than two years beyond the original date of issue unless a portion is
redeemed within two years and within each 12 month period thereafter. Liabilities for BANs are generally
♦ accounted for in the capital projects fund. BANs are expected to be paid from the proceeds of future bond
issues after renewal of these notes. These BANs bear interest at various rates from .47% to .57% and
are due at various dates through 2014.
A summa of changes in short term BANs for the year ended December 31, 2013 is as follows:
summary 9 Y
Balance Balance
• 1/1/13 Increases Reductions 12/31/13
Primary Government $ 965,000 $ $ 392,000 $ 573,000
Component Units 550,000 500.000 100.000 950.000
$ 1.515.000 $ 500.000 $ 492,000 $ 1,523.000
The reduction in the BANs payable for the primary government is included as a transfer in for the capital
projects fund.
-37-
I �
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2013
C. DETAILED NOTES ON ALL FUNDS(continued)
4. INDEBTEDNESS (continued)
LONG TERM DEBT
General Obligation Bonds -The Town borrows money in order to acquire land, equipment or construct
i buildings and 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 backed by the full faith and credit of the Town, including bonds of the Town
Special Districts which are payable from tax revenues of the Special District. Interest rates on these
bonds vary from 2.00%to 5.00%and have maturity dates in 2014 through 2030.
Future principal and interest payments to maturity for both the primary government and the component
units are as follows:
Primary Government Component Units
Years Ending
December 31, Principal Interest Totals Principal Interest Totals
2014 $ 2,400,000 $ 1,394,165 $ 3,794,165 $ 175,000 $ 58,825 $ 233,825
2015 2,425,000 1,317,324 3,742,324 175,000 52,263 227,263
2016 2,360,000 1,239,004 3,599,004 200,000 45,700 245,700
2017 2,440,000 1,156,153 3,596,153 200,000 38,200 238,200
2018 2,505,000 1,064,740 3,569,740 200,000 30,700 230,700
2019-2023 10,365,000 4,136,150 14,501,150 600,000 46,800 646,800
2024-2028 10,740,000 2,077,969 12,817,969
2029-2030 4,400,000 217,353 4,617,353
Total $37,635,000 $ 12,602,858 $50,237,858 $ 1,550,000 $ 272,488 $ 1,822,488
CHANGES IN LONG-TERM LIABILITIES
Long-term liability activity for the year ended December 31, 2013 is as follows:
Liabilities for general obligation bonds, general liability claims and judgments and landfill closure and
post closure care costs are liquidated through future budgetary appropriations in the general fund. The
liabilities for compensated absences, claims and judgments, other postemployment benefits, and Due
To Employees' Retirement System are liquidated through future budgetary appropriation in the fund
that gave rise to the liability.
Non-current
Balance Balance liabilities due Non-current
1/1/13 Increases Reductions 12/31/13 within one year liabilities
'. Primary Government:
General obligation bonds $40,005,000 $ 2,370,000 $37,635,000 $ 2,400,000 $35,235,000
Due to Employees Retirement
System 187,050 57,899 129,151 129,151
Compensated absences 8,327,394 $ 448,843 538,240 8,237,997 127,000 8,110,997
Claims and judgments 296,521 3,512,300 3,592,979 215,842 215,842
Estimated liability for landfill closure
and post-closure care costs 944,566 22,831 921,735 25,805 895,930
Other postemployment benefits payable 26,064,516 6,161,498 1,498,955 30,727,059 30,727,059
Component Units:
General obligation bonds 1,725,000 175,000 1,550,000 175,000 1,375,000
Compensated absences 149,503 32,553 182,056 45,514 136,542
Other postemployment benefits payable 329,285 23,480 21,686 331,079 331,079
-38-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2013
C. DETAILED NOTES ON ALL FUNDS(continued)
5. RETIREMENT SYSTEM
Plan Description
The Town of Southold participates in the New York State and Local Employees' Retirement System
(ERS) and Local Police and Fire Retirement System (PFRS). This is a cost-sharing multiple-employer
retirement system. The System provides retirement benefits as well as death and disability benefits.
Obligation 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 System. The Comptroller shall adopt and may amend rules and regulations for the administration
and transaction 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
supplemental information. That report may be found at hftp://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 12244-0001.
Funding Policy
The System is noncontributory except for employees who joined the New York State and Local
Employees' Retirement System after July 27, 1976 who contribute 3%of their salary for the first ten years
of membership , employees who joined on or after January 1, 2010 who generally contribute 3% of their
salary for the entire length of service, and employees who joined on or after April 1, 2012 who contribute
3% to 6% of their salary, depending upon their annual wages, for the entire length of service. Under the
authority of the NYSRSSL, the Comptroller annually certifies the actuarially determined rates expressed
as proportions of payroll members, used in computing the employers'contributions based on salaries paid
during the System's fiscal year ending March 31.
The Town is required to contribute at an actuarially determined rate. The actual contributions were equal
to 100% of the actuarially required amounts and also include additional contributions to fund various early
retirement incentives made available to the Town employees. The credits and miscellaneous adjustments
represent modification made by the NYSERS to the prior year's contributions due to differences between
estimated and actual salaries for the plan year.
The required contributions,for the Town,for the current year and two preceding years were:
ERS
PFRS
2013 $ 2,554,814 $ 2,073,878
2012 2,066,738 1,209,715
2011 1,827,936 1,308,331
Pursuant to Chapter 105 of the Laws of 2010, the New York State Legislature authorized local
governments to make available a retirement incentive program with estimated total costs to the Town
of $312,837. The cost of the program is being billed and paid over five years beginning in 2012 and
will include interest at 7.5%. The 2014 installment was paid during 2013. Future principal and interest
payments to maturity are as follows:
Total
Principal
Principal Interest and Interest
For years ending December 31,2015 $ 62,242 $ 9,686 $ 71,928
2016 66.909 5.019 71.928
Totals $ 129.151 $ 14.705 $ 143.856
-39-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2013
C. DETAILED NOTES ON ALL FUNDS(continued)
• 6. OTHER POSTEMPLOYMENT BENEFITS(OBLIGATIONS FOR HEALTH INSURANCE)
In the government-wide financial statements, the cost of postemployment healthcare benefits, like the
cost of pension benefits, generally should be associated with the period in which the cost occurs,
rather than in the future year when it will be paid. The Town recognizes the costs of postemployment
healthcare in the year when the employee benefits are received, reports the accumulated liability from
• prior years, and provide information useful in assessing potential demands on the Town's future cash
flows. Recognition of the liability accumulated from prior years will be phased in over 30 years, which
commenced with the 2008 liability.
Plan Description:
The Town, as a single-employer defined benefit OPEB plan, per its contracts with employees, will pay
full premium costs for medical (currently provided by the Empire Plan and the Town's self-funded
medical plan) insurance coverage at retirement. Employees are eligible for retiree health insurance
provided that the employee has been eligible for coverage under the Town's health insurance plan for
at least 10 consecutive years and is employed by the Town on the last date immediately prior to
retirement into the NYS Employees Retirement System. The retiree and spouse are eligible for full
• Medicare premium reimbursement. Healthcare benefits for non-union employees are similar to those
of union employees. Surviving spouses of deceased employees may continue coverage by paying the
premium equivalent for participants.
The number of participants as of January 1, 2013, the effective date of the OPEB valuation is as follows.
There have been no significant changes in the number or type of coverage since that date.
• Active employees 191
Retirees 202
Spouses of retired employees 3
• Total 396
Funding Policy
The Town currently pays for postemployment health care benefits on a pay-as-you-go basis.
Summary of Changes from Prior Actuarial Valuation
Since the prior valuation as of January 1, 2011, several changes were made that resulted in a change of
the liability. The following summarizes the changes that were made and are disclosed in more depth
elsewhere in this footnote:
• Increase in the discount rate
• Plan changes made by NYSHIP including adopting an Employer Group Waiver Plan
• Assumption changes made in NYSHIP's report for termination, retirement, and
terminated vested election probabilities
• Change in the attribution methodology to reflect changes in NYSHIP's assumptions
• Lower than expected premium rates by NYSHIP
• Lower than expected claim costs for the self-insured group
• Lower future healthcare trend rates in NYSHIP's report and for the self-insured group
•
-40-
•
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2013
C. DETAILED NOTES ON ALL FUNDS(continued)
• 6. OTHER POSTEMPLOYMENT BENEFITS(OBLIGATIONS FOR HEALTH INSURANCE) (continued)
Summary of Changes from Prior Actuarial Valuation (continued)
The following shows the impact of the assumptions on the liability:
Project UAAL as of January 1,2013 based on prior assumptions: $ 87,200,129
Change due to demographic changes 344,211
Change due to increase in discount rate (3,919,264)
Change due to Plan changes made by NYSHIP (2,043,036)
•
Change due to NYSHIP assumption changes, including a change
in the attribution methodology (7,845,977)
Change due to lower than expected premium rates and trend rates
by NYSHIP (1,357,534)
Change due to lower than expected claims costs and trend rates
for the self-insured group (6.496,850)
Projected AAL and UAAL as of January 1, 2013 65.881.679
Annual Other Postemployment Benefits Cost and Net Obligation:
For theear ended December 31, 2013, the Town's annual other
y postemployment benefits cost
(expenses) were $6,161,498. Considering the annual expense as well as the payment of current health
insurance premiums, which totaled $1,498,955 for retirees and their beneficiaries, the result was an
increase in the other postemployment benefits liability of $4,662,543 for the year ended December 31,
2013.The Town's component units annual other postemployment benefits cost(expenses)were$23,480.
• Considering the annual expense as well as the payment of current health insurance premiums, which
totaled $21,686 for retirees, the result was an increase in the other postemployment benefits liability of
$1,794 for the year ended December 31, 2013.
Benefit Obligations and Normal Cost
Retired employees $ 35,903,558
Active employees 29.978,121
Unfunded actuarial accrued liability(UAAL) $ 65.881.679
The Town's annual other postemployment benefit cost is calculated based on the annual required
• contribution (ARC) of the employer, an amount actuarially determined. The ARC represents a level of
funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any
unfunded actuarial liabilities(or funding excess)over a period not to exceed thirty years.
•
-41-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2013
C. DETAILED NOTES ON ALL FUNDS(continued)
6. OTHER POSTEMPLOYMENT BENEFITS(OBLIGATIONS FOR HEALTH INSURANCE) (continued)
Annual Other Postemplovment Benefits Cost and Net Obligation: (continued)
The Town's annual other postemployment benefits cost, the amount actually paid and changes to the
Town's net other postemployment benefits obligation to the Plan for the year ended December 31, 2013
are as follows:
Normal Cost $ 2,707,968
Amortization of unfunded actuarial
liability(UAAL) over 30 years 3,663,408
Interest 254.855
Annual required contribution (ARC) 6,626,231
Interest on net other
postemployment benefits obligation 1,042,581
Adjustment to ARC (1,507.314)
Annual OPEB cost(expense) 6,161,498
Less: contribution for year ended
December 31, 2013 1.498.955
I•
Increase in net OPEB obligation 4,662,543
Net OPEB obligation-beginning of
year 26.064.516
Net OPEB obligation-end of year 30.727.059
Percent of annual OPEB cost contributed 24.33%
Funded Status and Funding Progress:
The percentage contributed, as it relates to the Town of Southold, for the current year and preceding year
was:
• Annual
Annual Contribution Percentage Net OPEB
OPEB Cost Made Contributed Obliaation
2013 $ 6,161,498 $ 1,498,955 24.33% $ 30,727,059
2012 7,438,199 1,178,894 15.85% 26,064,516
2011 6,895,930 1,650,960 23.94% 18,952,909
The schedule of funding progress presents trend information about whether the actuarial value of plan
assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits.
The funded status of the plan as of January 1, 2013 is as follows:
Actuarial Accrued Unfunded UAAL as a Percentage
Value of Liability AAL Funded Covered of
Assets (AAL) (UAAL) Ratio Payroll Payroll
Town $ -0- $ 65,881,679 $ 65,881,679 0% $ 14,268,937 461.71%
Component Units -0- 426,393 426,393 0% 1,017,116 41.9%
-42-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2013
C. DETAILED NOTES ON ALL FUNDS(continued)
6. OTHER POSTEMPLOYMENT BENEFITS (OBLIGATIONS FOR HEALTH INSURANCE) (continued)
Actuarial Methods and Assumptions:
The projection of future benefits for an ongoing plan involves estimates of the value of reported amounts
and assumptions about the probability of occurrence of future events far into the future. Amounts
determined regarding the funded status of a plan and the employer's annual required contributions are
subject to continual revision as actual results are compared with past expectations and new estimates are
made about the future.
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood by the employer and the plan members) and include the types of benefits provided at the time
of each valuation and the historical pattern of sharing benefit costs between the employer and plan
members to that point. The actuarial methods and assumptions used include techniques that are
designed to reduce the effects of short-term liability in actuarial accrued liabilities, consistent with the long-
term perspective of the calculations.
In the January 1, 2013 actuarial valuation, the liabilities were computed using the projected unit credit
cost method and the level dollar amortization method. The actuarial assumptions utilized a 4%
discount rate. The valuation assumes a 9% healthcare cost trend increase for the year, reduced by
decrements down to 5% in fiscal year 2020. The remaining amortization period at December 31, 2013
was twenty four years.
7. COMPENSATED ABSENCES
Town employees are granted vacation and sick leave and earn compensatory absences in varying
amounts. In the event of termination or upon retirement, an employee is entitled to payment for
accumulated vacation and sick leave and unused compensatory absences at various rates subject to
certain maximum limitations. Estimated vacation, sick leave and compensatory absences accumulated
by governmental fund type employees have been recorded in the statements of net position. Payment of
vacation time and sick leave is dependent upon many factors; therefore, timing of future payments is not
readily determinable. However, management believes that sufficient resources will be made available for
the payments of vacation, sick leave and compensatory absences when such payments become due. As
of December 31, 2013, the value of the accumulated vacation time and sick leave was $8,237,997 for the
primary government.
D. COMMITMENTS AND CONTINGENCIES
Risk Management
In common with other municipalities, the Town receives numerous notices of claims. The Town established
a self-insurance risk management program for general liability and health insurance which are both
accounted for in the Risk Retention Fund.
For the year ended December 31, 2013, the Town has a deductible liability exposure of $50,000 per claim
for general liability, $25,000 per claim for automobile liability, police liability and employee benefits, and
$10,000 per claim for public officials and employment practices. Any liability exposure above the
deductible amounts is covered by primary insurance policies up to $1,000,000 per claim for general
liability, public officials, police and employment practices, and employee benefits.
Aggregate exposures are $1,000,000 per claim for public officials, police and employment practices,
• $3,000,000 for employee benefits and general liability. After primary policy limits are exhausted, the
excess exposure above the per claim or aggregate limits is covered by an umbrella liability policy of
$10,000,000 per claim and $10,000,000 in the aggregate.
•
-43-
� i
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2013
D. COMMITMENTS AND CONTINGENCIES(continued)
Risk Management(continued)
In relation to the health insurance benefits that are self-insured, the Town has insurance policies which
provide coverage for specific medical cases in excess of$100,000 incurred during the year and paid within
three months after year end, as well as coverage for all other claims in the aggregate. The exposure to
the Town under the aggregate policy is based on monthly enrollment. Considering the changes to
enrollment during 2013, the attachment point for the aggregate policy was $4,045,385.
There have been no significant reductions in insurance coverage as compared to the prior year and there
were no settlements in excess of insurance coverage over the last three years.
The Town reserves for general liability claims are determined by a third party administrator, and are reported
A when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated.
Claims reserves for general liability claims are re-evaluated periodically to take into consideration recently
settled claims and any new developments and changes.
The Town's liabilities for medical claims outstanding at year end are reported by the third party administrator
and are recorded when the claim has been incurred and paid within 60 days of the year end.
The Town's discretely presented component units are not included in the Town's self-insurance risk
management program for any claims.
Fund balance is assigned for future catastrophic losses and is not available for other uses. Changes in the
liability for claims and judgments for the year ended December 31, 2013 and 2012 are as follows:
General
• Medical Liability
2013 2012 2013 2012
Unpaid Claims as of December 31,
prior year $ 279,106 $ 1,289,970 $ 17,415 $ 6,365
Incurred Claims:
Provision for insured events
of the current fiscal year 3,448,897 3,944,732 56,231 59,155
Increase(decrease) in net provision for
insured events of prior fiscal years 7.172 37.139 -0- 13,928
Total Incurred Claims and
Claim adjustments 3,735,175 5.271.841 73.646 79,448
Payments of:
Claims during the current year 3.534,176 4.992,735 58,803 62,033
Unpaid Claims as of December 31,
. current year $ 200.999 $ 279,106 $ 14.843
Contingent Liabilities
Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor
agencies, principally the federal and state 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 Town expects such amounts, if
any, to be immaterial.
i
-44-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2013
D. COMMITMENTS AND CONTINGENCIES(continued)
Landfill Closure and Post-Closure Care Costs
State and federal laws and regulations required the Town to place a final cover on its landfill sites and to
perform certain maintenance and monitoring functions at the sites for thirty years after closure. The Town
ceased accepting waste at its Cutchogue landfill as of October 8, 1993. Accordingly, as of December 31,
2013 the Town has recorded a liability of $921,735, in the government-wide financial statements which
represents the provision to be made in future budgets for unfunded closure and postclosure landfill costs. As
the liability is based on 100% of capacity there are no estimated costs of closure or postclosure remaining to
be recognized. Actual costs may vary due to inflation or deflation, changes in technology, or changes in
regulations or applicable laws.
Construction and Other Capital Acquisition Commitments
The Town is committed to capital improvements to its various facilities and infrastructure. At December 31,
2013, these commitments, reported in the Capital Projects Fund amounted to $2,408,989.
Animal Shelter Agreement
In May 2011, the Town entered into an agreement with The North Fork Animal Welfare League to operate
and manage the Town of Southold Animal Shelter. The agreement is for a term of four years commencing
• on June 1, 2011. The future payments associated with this agreement are as follows:
2014 $ 217,484
2015 96.183
$ 313,667
Lease Commitments and Leased Assets
The Town leases property and equipment under operating leases. Total rental expenditures on such
leases for the year ended December 31, 2013 were $248,956. Future obligations over the primary terms
of the Town's leases as of December 31, 2013 are as follows:
2014 $ 234,437
S 2015 233,332
2016 142,516
2017 112,382
2018 and thereafter 174,728
Total $ 897,395
E. CONDENSED FINANCIAL STATEMENTS FOR THE DISCRETELY PRESENTED COMPONENT UNITS
The following represents condensed financial statements for the discretely presented component units as of
and for the year ended December 31,2013:
Condensed Statement of Net Position:
• Due from Capital Assets Other
Current Primary Net of Current Long-Tenn Net
Assets Government Depreciation Liabilities Liabilities Position
Fishers Island Ferry District $ 1,033,864 $ 197,298 $ 10,724,249 $ 1,419,903 $ 1,842,621 $ 8,495,589
Fishers Island Waste Management District 1,020,604 139,854 2,660,809 11,547 3,669,866
Cutchogue-New Suffolk Park District(unaudited) 98,323 35,750 116,697 215,020
Southold Park District(unaudited) 24,465 82,045 868,433 - 892,898
Orient-East Marion Park District(unaudited) 18,969 10,214 432,985 451,954
Mattituck Park District(unaudited) 429,853 103,382 1,897,816 4,867 2,322,802
Orient Mosquito District(unaudited) 17,098 21,705 884 17,982
$ 2,643,176 $ 590,248 $ 16,701,873 $ 1,436,317 $ 1,842,621 $ 16,066,111
-45-
i
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2013
E. CONDENSED FINANCIAL STATEMENTS FOR THE DISCRETELY PRESENTED COMPONENT UNITS
i (continued)
Condensed Statement of Activities:
Program General Revenue Net Position
Property
Expenses Revenue Net Expense Tax Other Change 1/1/13 12/31/13
• Fishers Island Ferry District $3,712,075 $2,944,502 $ 767,573 $ 765,015 $ 10,619 $ 8,061 $ 8,487,528 $ 8,495,589
Fishers Island Waste
Management District 557,155 54,514 502,641 536,950 3,872 38,181 3,631,685 3,669,866
Cutchogue-New Suffolk Park
District(unaudited) 161,370 20,186 141,184 130,000 289 (10,895) 225,915 215,020
• Southold Park District(unaudited) 406,197 406,197 321,300 48,612 (36,285) 929,183 892,898
Orient-East Marion
Park District(unaudited) 29,840 29,840 39,986 6 10,152 441,802 451,954
Mattituck Park District(unaudited) 411,205 87,715 323,490 406,310 29,970 112,790 2,210,012 2,322,802
Orient Mosquito District(unaudited) 75,843 75,843 85,000 21 9,178 8,804 17,982
$5,353,685 $3,106,917 $2,246,768 $2,284,561 $ 93,389 $ 131,182 $15,934,929 $16,066,111
Complete financial statements of these component units can be obtained from their respective
administrative offices:
Orient Mosquito District Fishers Island Waste
145 Platt Road Management District
Orient, NY 11957 Fishers Island, NY 06390
Cutchogue-New Suffolk Orient-East Marion
Park District Park District
P.O. Box 311 P.O. Box 12
Cutchogue, NY 11935 Orient, NY 11957
Southold Park District Mattituck Park District
P.O. Box 959 P.O. Box 1413
Southold, NY 11971 Mattituck, NY 11952
Fishers Island Ferry District
P.O. Box H
Fishers Island, NY 06390
F. 2%TRANSFER TAX
Transfer tax receipts are recorded in the Community Preservation Fund, and are used for the purchase and/or
preservation of agricultural land, open space, parks, or historic preservation sites. The tax applies to sales of
vacant land amounts in excess of$100,000 or sales of improved land in excess of$250,000. Conveyance of
real property for open space, parks or historic preservation purposes are exempt from this tax.
I•
G. EFFECT OF NEW ACCOUNTING STANDARD ON CURRENT PERIOD FINANCIAL STATEMENTS
During the year ended December 31, 2013, the Town implemented GASB Statement No. 65, Items
Previously Reported as Assets and Liabilities. One of the provisions of this Statement is to recognize debt
issuance costs as an outflow of resources/expense in the period incurred, as these costs no longer meet
the definition of an asset or deferred outflow of resources, as defined in Statement No. 65 or Concepts
Statement No. 4.
The implementation of this Statement required the Town to retroactively recognize costs of debt issuance
as outflows of resources and restate its net position as of January 1, 2013. As a result the Town's January
1, 2013 net position was reduced by $90,270 from a balance of $95,217,460 to $95,127,190. The
difference represents a restatement for unamortized bond issuance costs that were amortized under the
prior standard but expensed in the period incurred under the new standard.
-46-
•
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2013
H. SUBSEQUENT EVENTS
•
Management has evaluated subsequent events for disclosure and/or recognition in the financial statements
through the date of the financial statements.
In April 2014, the Town redeemed $143,000 on the $1,058,000 BAN resulting in a BAN renewal of
$915,000. The interest rate is.74% and is due April 2015.
In July 2014, the New York State Environmental Facilities Corporation (EFC) refunded the Town's Clean
Water and Drinking Water State Revolving Funds, Series 2004A, 20048, and 2004D. This refunding will
provide interest savings of approximately$62,000 over the term of the bond.
In August 2014, the Town redeemed $231,000 and added $1,810,000 on the$465,000 BAN, resulting in a
BAN renewal of$2,044,000. The interest rate is .73%and is due August 2015.
•
I. NEW PRONOUNCEMENTS
The Governmental Accounting Standards Board (GASB) has issued Statement No. 68 `Accounting and
Financial Reporting for Pensions"an amendment of GASB Statement No. 27. The primary objective of
this Statement is to improve accounting and financial reporting by state and local governments for
pensions. It also improves information provided by state and local governmental employers about financial
support for pensions that is provided by other entities. The requirements of the new statement become
effective for fiscal periods beginning after June 15,2014.
The Governmental Accounting Standards Board (GASB) has issued Statement No. 69 "Governmental
Combinations and Disposals of Governmental Operations" The statement establishes accounting and
• financial reporting standards related to governmental combinations and disposals of governmental
operations. As used in this Statement, the term government combination includes a variety of transactions
referred to as mergers, acquisitions, and transfers of operations. The requirements of this statement are
effective for government combinations and disposals of government operations occurring in financial
reporting periods beginning after December 15, 2013, and should be applied on a prospective basis.
The Governmental Accounting Standards Board (GASB) has issued Statement No. 70 `Accounting and
Reporting for Nonexchange Financial Guarantees" The objective of this Statement is to improve
accounting and financial reporting by state and local governments that extend and receive nonexchange
financial guarantees. The provisions of this Statement are effective for reporting periods beginning after
June 15, 2013.
The Governmental Accounting Standards Board (GASB) has issued Statement No. 71 "Pension Transition for
Contributions Made Subsequent to the Measurement Date—an amendment of GASB Statement No.68. The
objective of this Statement is to improve accounting and financial reporting for a governmental financial
reporting entity by resolving conflicting guidance that resulted from the issuance of two pronouncements,
Statements No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, and No. 62.
Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB
and AICPA Pronouncements. The provisions of this Statement should be applied simultaneously with the
provisions of Statement 68.
The Town is currently evaluating the impact of the above pronouncements.
•
•
-47-
I •
•
•
•
REQUIRED SUPPLEMENTARY
• INFORMATION OTHER THAN
MANAGEMENT DISCUSSION AND
ANALYSIS
•
•
•
•
• TOWN OF SOUTHOLD
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 $ 22,215,752 $ 22,215,752 $ 22,215,752
Other real property tax items 87,000 87,000 88,672 $ 1,672
Non-property tax items 885,473 885,473 885,473
Departmental income 373,200 394,950 371,612 (23,338)
• Intergovernmental charges and local aid 442,637 442,637 281,879 (160,758)
Use of money and property 266,000 266,000 218,061 (47,939)
Licenses and permits 298,740 298,740 399,053 100,313
Fines and forfeitures 185,500 185,500 209,013 23,513
Sale of property and compensation for loss 52,625 52,625 330,688 278,063
Miscellaneous local sources 275,924 283,173 238,438 (44,735)
Interfund revenues 30,000 30,000 30,000
III State aid 994,376 994,376 1,267,765 273,389
Federal aid 19,150 118,350 190,639 72,289
Total Revenues 26,126,377 26,254,576 26,727,045 472,469
EXPENDITURES
General government support 6,537,378 6,313,059 5,463,810 849,249
Public safety 9,676,359 9,684,727 9,308,943 375,784
Public health 34,800 34,800 33,300 1,500
Transportation 510,600 522,059 495,712 26,347
Economic assistance and opportunity 1,346,670 1,339,870 1,231,227 108,643
Culture and recreation 319,160 319,160 298,472 20,688
Home and community services 347,786 438,086 403,734 34,352
Employee benefits 9,158,625 9,376,101 8,526,179 849,922
Debt service-principal and interest 678,300 677,050 676,849 201
Total Expenditures 28,609,678 28,704,912 26,438,226 2,266,686
Excess(Deficiency)of Revenues
Over Expenditures (2,483,301) (2,450,336) 288,819 2,739,155
Other Financing Uses
Transfers out (397,065) (468,819) (404,982) 63,837
Total Other Financing Uses (397,065) (468,819) (404,982) 63,837
Net Change in Fund Balance $ (2,880,366) $ (2,919,155) (116,163) $ 2,802,992
Fund Balance at Beginning of Year 8,899,494
Fund Balance at End of Year $ 8,783,331
• See notes to the financial statements.
-48-
TOWN OF SOUTHOLD
HIGHWAY FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCES- BUDGET AND ACTUAL
Year Ended December 31, 2013
Variance
Original Final Positive
• REVENUES Budget Budget Actual (Negative)
Real property taxes $ 4,935,817 $ 4,935,817 $ 4,935,817
Other real property tax items 7,450 7,450 7,749 $ 299
Intergovernmental charges and local aid 20,240 20,240
Use of money and property 9,500 9,500 9,778 278
Licenses and permits 10,000 10,000 17,808 7,808
Sale of property and compensation
for loss 3 3 5,624 5,621
State aid 326,819 422,950 422,878 (72)
Federal Aid 7,472 78,979 71,507
Total Revenues 5,289,589 5,413,432 5,498,873 85,441
EXPENDITURES
General government support 8,700 8,700 6,831 1,869
Transportation 3,402,789 3,656,446 3,452,305 204,141
Employee benefits 1,983,247 1,985,397 1,970,194 15,203
Debt service -principal and interest 98,050 111,900 96,281 15,619
Total Expenditures 5,492,786 5,762,443 5,525,611 236,832
• Excess(Deficiency)of Revenues
Over Expenditures (203,197) (349,011) (26,738) 322,273
Other Financing Sources and Uses
Transfers In 70,000 95,000 (25,000)
Transfers out (145,000) (159,000) (157,671) 1,329
. Total Other Financing Sources and Uses (145,000) (89,000) (62,671) (23,671)
Net Change in Fund Balance $ (348,197) $ (438,011) (89,409) $ 298,602
Fund Balance at Beginning of Year 1,313,318
Fund Balance at End of Year $ 1,223,909
I�
I�
See notes to the financial statements.
-49-
•
TOWN OF SOUTHOLD
COMMUNITY PRESERVATION FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCES - BUDGET AND ACTUAL
Year Ended December 31, 2013
•
Variance
Original Final Positive
REVENUES Budget Budget Actual (Negative)
Non-property tax items $ 3,600,000 $ 3,600,000 $ 5,023,334 $ 1,423,334
Use of money and property 5,000 6,282 16,443 10,161
Miscellaneous local sources 54 54
State aid 311,000 311,000 533,864 222,864
Federal Aid 769,753 769,753
• Total Revenues 3,916,000 3,917,282 6,343,448 2,426,166
EXPENDITURES
Home and community services 3,920,698 4,831,057 3,841,198 989,859
Debt service-principal and interest 2,377,441 2,381,760 2,377,438 4,322
Total Expenditures 6,298,139 7,212,817 6,218,636 994,181
•
Excess(Deficiency)of Revenues
Over Expenditures (2,382,139) (3,295,535) 124,812 3,420,347
Net Change in Fund Balance $ (2,382,139) $ (3,295,535) 124,812 $ 3,420,347
Fund Balance at Beginning of Year 10,392,280
Fund Balance at End of Year $ 10,517,092
•
•
•
•
See notes to the financial statements.
-50-
•
TOWN OF SOUTHOLD
SOLID WASTE MANAGEMENT DISTRICT
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCES- BUDGET AND ACTUAL
Year Ended December 31, 2013
•
Variance
Original Final Positive
REVENUES Budget Budget Actual (Negative)
Real property taxes $ 2,107,276 $ 2,107,276 $ 2,107,276
Other real property tax items 41 $ 41
Departmental Income 1,700,500 1,829,050 2,051,559 222,509
Use of money and property 5,000 5,000 5,432 432
Licenses and permits 144,000 144,000 172,813 28,813
• Sale of property and compensation
for loss 390,000 390,000 340,331 (49,669)
Miscellaneous local sources 6,909 6,909
State aid 25,000 33,530 147,121 113,591
Federal Aid 15,375 15,375
Total Revenues 4,371,776 4,508,856 4,846,857 338,001
EXPENDITURES
General government support 23,600 23,600 22,264 1,336
Home and community 2,993,850 3,151,130 3,090,955 60,175
Employee benefits 734,276 734,276 704,522 29,754
Debt service-principal and interest 679,550 679,550 675,591 3,959
Total Expenditures 4,431,276 4,588,556 4,493,332 95,224
• Excess(Deficiency)of Revenues
Over Expenditures (59,500) (79,700) 353,525 433,225
Other Financing Uses
Transfers out (18,500) (15,000) (15,000) -0-
Total Other Financing Uses (18,500) (15,000) (15,000) -0-
Net Change in Fund Balance $ (78,000) $ (94,700) 338,525 $ 433,225
Fund Balance at Beginning of Year 407,000
Fund Balance at End of Year $ 745,525
•
•
•
See notes to the financial statements.
-51-
•
TOWN OF SOUTHOLD
POSTEMPLOYMENT BENEFITS HEALTHCARE COSTS -SCHEDULE OF FUNDING PROGRESS
Year Ended December 31, 2013
•
Unfunded
Actuarial Actuarial Liability as a
Valuation Date Actuarial Value Accrued Unfunded Percentage of
January 1, of Assets Liability Liability Funded Ratio Covered Payroll Covered Payroll
2013 $ -0- $ 65,881,679 $ 65,881,679 0.00% $ 14,268,937 461.71%
2012 -0- 82,121,236 * 82,121,236 0.00% 14,316,488 573.61%
2011 -0- 74,366,808 74,366,808 0.00% 13,634,750 545.42%
2010 -0- 66,597,849 * 66,597,849 0.00% 15,492,700 429.87%
2009 -0- 62,493,280 * 62,493,280 0.00% 14,754,952 423.54%
2008 -0- 45,806,258 45,806,258 0.00% 13,830,871 331.19%
•
* Rollfoward projection year
•
•
•
•
•
-52-
•
•
OTHER SUPPLEMENTARY
INFORMATION
' w
•
•
•
TOWN OF SOUTHOLD
COMBINING BALANCE SHEET
NON-MAJOR GOVERNMENTAL FUNDS
December 31, 2013
East-West Fire Southold Fishers
General Fund Special Protection Wastewater Island Sewer
Part Town Grant District District District Totals
• ASSETS
Cash and investments $ 813,901 $ $ 27,942 $ 24,372 $ 43,361 $ 909,576
Accounts receivable 146,541 146,541
Due from other funds 237,575 16,150 196,924 26,943 477,592
State and federal receivables 15,669 15,669
Prepaids 46,908 46,908
Total Assets $ 1,260,594 $ 16,150 $ 224,866 $ 51,315 $ 43,361 $ 1,596,286
41
LIABILITIES AND FUND BALANCE
LIABILITIES
Accounts payable $ 9,981 $ 16,150 $ 13,136 $ 110 $ 39,377
Collections in advance 60,264 60,264
Total Liabilities 70,245 16,150 13,136 110 99,641
DEFERRED INFLOWS OF RESOURCES
Unearned property taxes 170,910 196,924 $ 26,863 394,697
FUND BALANCE
Nonspendable 46,908 46,908
Assigned 972,531 14,806 24,452 43,251 1,055,040
. Total Fund Balance 1,019,439 -0- 14,806 24,452 43,251 1,101,948
Total Liabilities and Fund Balance $ 1,260,594 $ 16,150 $ 224,866 $ 51,315 $ 43,361 $ 1,596,286
II�
II�
r
-53-
•
TOWN OF SOUTHOLD
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCES-NON-MAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2013
•
East-West Fire Southold Fishers
General Fund Special Protection Wastewater Island Sewer
Part Town Grant District District District Totals
REVENUES
Real property taxes $ 864,689 $ 731,853 $ 106,300 $ 1,702,842
Other real property tax items 1,358 14 2 1,374
Non-property tax items 568,005 568,005
Departmental income 672,559 930 $ 27,149 700,638
Use of money and property 3,496 589 406 137 4,628
Licenses and permits 19,160 19,160
State aid 103,997 103,997
• Federal aid $ 28,435 28,435
Total Revenues 2,233,264 28,435 732,456 107,638 27,286 3,129,079
EXPENDITURES
General government support 34,185 34,185
Public safety 511,708 733,529 1,245,237
Home and community services 690,081 29,087 39,350 15,227 773,745
Employee benefits 658,200 658,200
Debt service:
Principal 6,000 6,000
Interest 1,650 3,845 5,495
Total Expenditures 1,894,174 29,087 733,529 41,000 25,072 2,722,862
Excess(Deficiency)of Revenues
Over Expenditures 339,090 (652) (1,073) 66,638 2,214 406,217
Other Financing Uses:
Transfers out (25,000) (110,000) (135,000)
Total Other Financing Uses (25,000) -0- -0- (110,000) -0- (135,000)
Net Change in Fund Balance 314,090 (652) (1,073) (43,362) 2,214 271,217
Fund Balances at Beginning of Year 705,349 652 15,879 67,814 41,037 830,731
Fund Balances at End of Year $ 1,019,439 $ -0- $ 14,806 $ 24,452 $ 43,251 $ 1,101,948
•
i
•
-54-
I �
TOWN OF SOUTHOLD
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Year ended December 31,2013
Pass-
Federal Through
Federal Grantor/Pass-through Grantor/ CFDA Identifying Federal
Proaram or Cluster Title Number Number Expenditures
U.S. Department of Housing and Urban Development
Pass-through program from:
Suffolk County, New York
Community Development Block Grant Program 14.218 $ 28,435
U.S. Department of Justice
Direct program from:
Bulletproof Vest Partnership Program 16.607 803
U.S. Department of Agriculture
Direct program from:
National Resource Conservation Service
Farm and Ranchland Protection Program 10.913 756,317
U.S. Department of Health and Human Services
Pass-through program from:
Suffolk County, New York
Special Programs for the Aging—Title III,
Part C—Nutrition 93.045 SCS10000001792 43,574
Special Programs for the Aging—Title III,
Part C—Home Delivered Meals 93.045 SCS10000001792 47,695
Nutrition Services Incentive Program 93.053 SCS10000001792 27,730
U.S. Department of Transportation
Pass-through program from:
New York State
Highway Planning and Construction 20.205 CO22403/D030245 13,436
Pass-through program from:
New York State
Safety Incentive Grants for the Use of Seatbelts 20.604 PT-5259081 2,100
U.S. Department of the Interior
�+ Pass-through program from:
New York State
Clean Vessel Act 15.616 5,000
U.S. Department of Homeland Security
Pass-through program from:
New York State
Severe Storms and Flooding, March 2010 97.036 FEMA-1899-DR-NY 1,316
Hurricane Sandy, October 2012 97.036 FEMA-4085-DR-NY 119,782
Severe Winter Storm, February 2013 97.036 FEMA-4111-DR-NY 115,663
•
-55-
TOWN OF SOUTHOLD
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Year ended December 31,2013
U.S. Department of Homeland Security(continued)
Pass-through program from:
New York State and Suffolk County
Port Security Grant Program 97.056 2,770
Pass-through program from:
New York State
•
Buffer Zone Protection Program 97.078 183,253
Pass-through program from:
New York State and Suffolk County
Homeland Security Grant Program 97.067 3.553
• Total expenditures of federal awards 1.351.427
t
•
See accompanying notes to schedule of expenditures of federal awards
-56-
TOWN OF SOUTHOLD
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
December 31, 2013
Note A—Basis of Presentation
r
The accompanying schedule of expenditures of federal awards (the `schedule') includes the federal grant activity
of the primary government of the Town of Southold, New York under programs of the federal government for the
year ended December 31, 2013. The information in this schedule is presented in accordance with the
requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. As the
schedule presents only a selected portion of the operations of the Town of Southold, it is not intended to and does
S not present the financial position,changes in net position, or cash flows for the Town of Southold.
Note B—Summary of Significant Accounting Policies
(1) Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such
expenditures are recognized following the cost principles contained in OMB Circular A-87, Cost
Principles for State, Local and Indian Tribal Governments,wherein certain types of expenditures are not
allowable or are limited as to reimbursement.
(2) Pass-through entity identifying numbers are presented where available.
(3) Federal grants received by the Town are subject to audit and adjustment. If any expenditures are
disallowed by the grantor agencies as a result of such an audit, the grantor agencies could make claims
for reimbursement, which would become a liability of the Town.
(4) The federal expenditures for U.S. Department of Homeland Security and Federal Emergency
Management Agency CFDA# 97.036 include expenditures related to the following Federally declared
disasters:
• Hurricane Sandy—FEMA 4085 DR NY
• NEMO—FEMA 4111 DR NY
• Severe Storm—FEMA 1899 DR NY
The federal disaster declaration 4085 NY DR enables the reimbursement of certain costs incurred
related to debris removal and approved permanent work through the Federal Emergency Management
Agency(FEMA) of the U.S. Department of Homeland Security. Significant costs incurred include debris
removal costs during 2012 and permanent work costs during 2012 and 2013.
The federal disaster declaration 4111 DR NY enables the reimbursement for certain costs incurred
related to snow removal, through the Federal Emergency Management Agency (FEMA) of the U.S.
Department of Homeland Security. Significant snow removal costs were incurred during 2013.
The federal disaster declaration 1899 NY DR enables the reimbursement of certain costs incurred
related to debris removal and approved permanent work through the Federal Emergency Management
Agency(FEMA) of the U.S. Department of Homeland Security. Significant costs incurred include debris
removal costs during 2010.
Expenditures reported in the Schedule related to the U.S. Department of Homeland Security for FEMA
grants include the following Project Worksheets:
Hurricane Sandy—FEMA 4085 DR NY
Management is reporting federal expenditures relating to Severe Storm Hurricane Sandy (4085
DR NY) based on federally funded costs incurred during the year ended December 31, 2012 and
2013 for which the Town has approved Project Worksheets in place. Federal expenditures
included in the schedule of expenditures of federal awards for Hurricane Sandy relates to the
following Project Worksheets:
6946301/01221 (v3)
6946303/02310 `*
• 6946308/02830
-57-
TOWN OF SOUTHOLD
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
December 31, 2013
Note B—Summary of Significant Accounting Policies(continued)
Hurricane Sandy—FEMA 4085 DR NY(continued)
" Project worksheet includes expenditures were incurred during 2012
** Project worksheet includes expenditures were incurred during both 2012 and 2013
• Severe Winter Storms—FEMA 4111 DR NY
Management is reporting federal expenditures relating to Severe Winter Storm NEMO (4111 DR
NY) based on federally funded costs incurred during the year ended December 31, 2013 for which
the Town has an approved Project Worksheet in place. Federal expenditures included in the
schedule of expenditures of federal awards for Winter Storm NEMO includes Project Worksheet
6946301/00019.
Severe Storm and Flooding—FEMA 1899 DR NY
Management is reporting federal expenditures relating to Severe Storm and Flooding (1899 DR
NY) based on federally funded costs incurred during the year ended December 31, 2010 for which
the Town has approved Project Worksheets in place and/or revisions made during the current
a year. Federal expenditures included in the schedule of expenditures of federal awards for the
severe storm and flood relates to the following Project Worksheets:
SD003JR/519(v2)*
SD004JR/518(v3)*
SD008FG/713 (v2)*
•
* Expenditures were incurred in 2010
•
•
r
-58-
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 GOVERNMENTAUDITING STANDARDS
Honorable Supervisor and Town Board
Town of Southold
Southold, New York
We have audited, in accordance with the auditing standards generally accepted in the United States of America
• and the standards applicable to the financial audits contained in Government Auditing Standards issued by the
Comptroller General of the United States, the financial statements of the governmental activities, the aggregate
discretely presented component units, each major fund, and the aggregate remaining fund information of Town of
Southold, New York, as of and for the year ended December 31, 2013, and the related notes to the financial
statements, which collectively comprise the Town of Southold, New York's basic financial statements and have
issued our report thereon dated September 24,2014.
The financial statements of the Town of Southold's discretely presented component units with the exception of
two, the Fishers Island Ferry District and the Fishers Island Waste Management District, were not audited as of
the report date, nor were we able to satisfy ourselves as to those financial activities by other auditing procedures.
The discretely presented component units audited represent 79.1%, 75.7%, and 78.7%, respectively, of the
assets, net position, and revenues of the aggregate discretely presented component units. The financial
statements of the Fishers Island Ferry District and the Fishers Island Waste Management District were audited by
other auditors whose report thereon have been furnished to us and in our opinion, insofar as it relates to the
amounts included for those two component units, are based solely on the reports of other auditors. The financial
statements of the Fishers Island Ferry District were audited in accordance with Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered Town of Southold, New York's
internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in
the circumstance for the purposes of expressing our opinions on the financial statements, but not for the purpose
of expressing an opinion on the effectiveness of the Town of Southold, New York's internal control. Accordingly,
we do not express an opinion on the effectiveness of the Town of Southold, New York's internal control.
• Our consideration of internal control 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 may 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 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, 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 Town of
Southold, New York's financial statements will not be prevented, or detected and corrected on a timely basis.
We consider the deficiency described in the accompanying schedule of findings and questioned costs 2013-01
to be a material weakness. - --
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 _
-59-
INDEPENDENT MEMBER OF BKR INTERNATIONAL
-.
•
Internal Control Over Financial Reporting (continued)
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. We
consider the deficiencies described in the accompanying schedule of findings and questioned costs as 2013-
02 through 2013-06 to be significant deficiencies.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Town of Southold, New York's financial statements
are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on compliance with those provisions
was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests
disclosed no instances of noncompliance or other matters that are required to be reported under Government
Auditing Standards.
Town of Southold.New York's Response to Findings
The Town of Southold, New York's responses to the findings identified in our audit are described in the
accompanying schedule of findings and questioned costs. The Town of Southold, New York's response was not
subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express
no opinion on it.
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 Town of Southold, New
York'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 Town of Southold, New York's internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
We noted certain other matters that we reported to management of the Town of Southold in a separate letter
dated September 24,2014.
V4 -
-
Hauppauge, New.
September 24, 2014
r
-60-
I' •
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE
FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER
COMPLIANCE AS REQUIRED BY OMB CIRCULAR A-133
Honorable Supervisor and Town Board
Town of Southold
Southold, New York
•
Report on Compliance for Each Maior Federal Program
We have audited the Town of Southold, New York's compliance with the types of compliance requirements
described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on the
Town of Southold, New York's major federal program for the year ended December 31, 2013. The Town of
Southold, New York's major federal programs are identified in the summary of auditors' results section of the
accompanying schedule of findings and questioned costs.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants
applicable to its federal programs.
Auditors' Responsibility
Our responsibility is to express an opinion on compliance the Town of Southold, New York's major federal
programs based on our audit of the types of compliance requirements referred to above. We conducted our audit
• of compliance in accordance with auditing standards generally accepted in the United States of America; the
standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit
Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain
reasonable assurance about whether noncompliance with the types of compliance requirements referred to above
that could have a direct and material effect on a major federal program occurred. An audit includes examining, on
a test basis, evidence about Town of Southold, New York's compliance with those requirements and performing
• such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for the major federal
program. However, our audit does not provide a legal determination of Town of Southold, New York's compliance.
Opinion on Each Maior Federal Program
•
In our opinion, the Town of Southold, New York, complied, in all material respects, with the types of compliance
requirements referred to above that could have a direct and material effect on its major federal programs for the _ _year ended December 31, 2013. --—
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
-61-
INDEPENDENT MEMBER OF BKR INTERNATIONAL
Report on Internal Control Over Compliance
Management of Town of Southold, New York, is responsible for establishing and maintaining effective internal
control over compliance with the types of requirements referred to above. In planning and performing our audit,we
considered the Town of Southold, New York's internal control over compliance with the requirements that could
• have a direct and material effect on each major federal program to determine the auditing procedures that are
appropriate in the circumstances for the purpose of expressing an opinion on compliance for its major federal
program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but
not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly,
we do not express an opinion on the effectiveness of the Town of Southold, New York's internal control over
compliance.
•
A deficiency in internal control over compliance exists when the design or operation of a control over compliance
does not allow management or employees, in the normal course of performing their assigned functions,to prevent,
or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely
basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in
internal control over compliance, such that there is a reasonable possibility that material noncompliance with a
type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely
basis. A significant deficiency in internal control over compliance is a deficiency or a combination of deficiencies, in
internal control over compliance with a type of compliance requirement of a federal program that is less severe
than a material weakness in internal control over compliance, yet important enough to merit attention by those
charged with governance.
. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph
of this section and was not designed to identify all deficiencies in internal control over compliance that might be
material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may
exist that were not identified. We did not identify any deficiencies in internal control over compliance that we
consider to be material weaknesses. However, we identified a certain deficiency in internal control over
compliance, as described in the accompanying schedule of findings and questioned costs as item 2013-07 that we
consider to be significant deficiency.
•
The Town of Southold, New York's response to the internal control over compliance findings identified in our audit
is described in the accompanying schedule of findings and questioned costs. The Town of Southold, New York's
response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we
express no opinion on the response.
• Purpose of this Report
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of
internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133.
Accordingly,this report is not suitable for any other purpose.
II •
ILC Q C .
Hauppauge, New York
September 24, 2014
•
•
-62-
TOWN OF SOUTHOLD
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended December 31, 2013
SUMMARY OF AUDITORS' RESULTS
1. The auditors' report expresses a qualified opinion on the basic financial statements of the Town of
Southold, New York.
2. There are six control deficiencies relating to the audit of the financial statements, which are reported in
the "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" One of the deficiencies is reported as material weaknesses.
3. No instances of noncompliance material to the financial statements of the Town of Southold, New York
were disclosed during the audit.
4. One deficiency relating to the audit of the major federal award programs is reported in the
"INDEPENDENT AUDITORS' REPORT ON COMPLIANCE ON EACH MAJOR PROGRAM AND ON
INTERNAL CONTROL OVER COMPLANCE REQUIRED BY OMB CIRCULAR A-133", this deficiency
is not considered to be a material weakness.
5. The auditors' report on compliance for the major federal awards programs for the Town of Southold,
New York expresses an unmodified opinion on all major federal programs.
6. There were no audit findings that are required to be reported in accordance with Section 510(a) of
OMB Circular A-133.
7. The programs tested as major programs were:
•
CFDA Number Name of Federal Program or Cluster
97.036 Disaster Grants— Public Assistance
10.913 Farm and Ranchland Protection Program
8. The threshold for distinguishing Types A and B programs was $300,000.
9. The Town of Southold was not determined to be a low-risk auditee.
•
•
•
-63-
•
TOWN OF SOUTHOLD
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended December 31, 2013
FINDINGS AND QUESTIONED COSTS—FINANCIAL STATEMENTS AUDIT
2013-01 JUSTICE COURT—CASH AND CASH RECEIPTS—MATERIAL WEAKNESS
Condition
We noted that the following deficiencies in internal controls over the Justice Court's cash receipts process:
Lack of segregation of duties over the receipting, depositing and reconciling the bank accounts cycle.
• Improper preparation of bank reconciliations including old reconciling items and stale dated checks that
are not being addressed or adjusted
• There was no evidence that the bank reconciliations are being reviewed for correctness and
completeness.
Criteria
• Although the size of the Justice Court's office staff limits the extent of separation of duties, we believe
certain steps could be taken to separate incompatible duties. Proper segregation of duties states that
for each employee, there should be separation of all of the following: 1) physical custody of assets; 2)
• authorization or approval of related transactions affecting those assets, and 3) recording or reporting
of related transactions.
• To aid in the preparation of bank reconciliations and to reflect an accurate cash balance in the
financial statements, all checks outstanding more than one year should be investigated. These funds
should then be turned over to the State Comptroller as abandoned property or paid back into the
Town's general fund. In addition, differences and any old reconciling items should be investigated and
adjusted if deemed necessary.
• • A good system of internal control provides for a proper segregation of the various accounting functions
including proper review and approval of reconciliations.
Effect
Intentional or unintentional errors could be made and go undetected. As a result of these weaknesses in
internal control, fraudulent activity has occurred within this department which the Town is currently addressing
and rectifying this situation.
Recommendation
As cash is received, in addition to filling out the receipt in the receipt book, we recommend that when bail is
• delivered by the police or collected at court it is entered on a daily control sheet and signed by the clerk and
the police officer. This control sheet would include the receipt number, date, defendant's name, type of receipt
(cash, check) and amount of bail collected. This would allow the other clerk who will be preparing the deposit
slip to ensure that all receipts collected for the day have been properly accounted. The control sheet should
then be used to prepare the deposit slip and entered into the system. Deposits at the bank can then be made
by the first clerk. A copy of the deposit slip should be attached to the daily control sheet. Monthly bank
reconciliations should be done separately/independently and compared to the computer system. In addition,
the bank statements should be mailed directly to the Justices and should be reviewed by the Justices so it can
be reviewed by them before given to the clerks for reconciliation. Once the bank reconciliation is prepared by
the clerks, it should be reviewed and initialed by the Town Justice.
II•
•
-64-
•
TOWN OF SOUTHOLD
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended December 31, 2013
FINDINGS AND QUESTIONED COSTS—FINANCIAL STATEMENTS AUDIT (continued)
2013-01 JUSTICE COURT—CASH AND CASH RECEIPTS—MATERIAL WEAKNESS(continued)
Management's Response
The Court has established a procedure to record bail delivered by the police on a control sheet that is signed
by both the clerk and the police officer. Bail collected at court is entered on the same control sheet, which is
signed by the clerk and a second person. The control sheet includes the receipt number, date, defendant's
name, type of receipt (cash, check) and amount of bail collected. The control sheet is used to prepare the
deposit slip for entry into the Justice Court computer system. Deposits at the bank are made by a clerk other
than the clerk who prepared the deposit slip. A copy of the deposit slip is attached to the control sheet.
Monthly bank reconciliations are done separately and are compared to the Justice Court computer system.
• Bank statements are mailed directly to each Justice, which is reviewed by them before being given to the
clerks for reconciliation. Once the bank reconciliation is prepared by the clerks, it is reviewed and initialed by
the Town Justice.
2013-02 RECEIVER OF TAXES—SEGREGATION OF DUTIES(Repeat Finding)
Condition
•
We noted a lack of segregation of duties within the Office of the Receiver of Taxes. The Receiver of Taxes is
the only authorized check signer, prepares the deposit slips, brings the deposit to the bank, receives the bank
statements, and reconciles the bank accounts.
Criteria
Internal controls should be in place to provide for segregation of duties within accounting functions relating to
cash receipts, check signing and bank reconciliations to reduce the risk of potential errors and fraud.
Effect
Intentional or unintentional errors could be made and go undetected.
Recommendation
We recommend that the Receiver of Taxes separates these duties relating to the cash receipts and reconciliation
cycle to another employee so that no one person handles all elements of a single transaction. We recommend
that the Receiver of Taxes duties of preparing the bank deposit, depositing the funds and reconciling the bank
statement be assigned to some other employee in order to establish a proper segregation of duties over cash
receipts.
Management's Response
Due to the small size of the Tax Receiver's office, certain functions have been separated to alleviate the
segregation of duties condition. The office staff is limited and the full attention to the tax collection process is
the major duty of the staff. During the conduct of business during 2013, several bank deposit forms were
completed by the Deputy Receiver and the physical deposits were made by the Deputy or another staff
person.
•
-65-
•
TOWN OF SOUTHOLD
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended December 31, 2013
FINDINGS AND QUESTIONED COSTS—FINANCIAL STATEMENTS AUDIT (continued)
2013-03 TAX RECEIVER - STALE DATED CHECKS
Condition
During our audit, we noted that certain outstanding checks for the Tax Receiver's accounts were more than
one year old.
Criteria
To aid in the preparation of bank reconciliations and to reflect an accurate cash balance in the financial
statements, all checks outstanding more than one year should be investigated. These funds should then be
• turned over to the State Comptroller as abandoned property or paid back into the Town's general fund.
Effect
Cash balances in the financial statements may not be properly recorded.
• Recommendation
To aid in the preparation of bank reconciliations and to reflect an accurate cash balance in the financial
statements, all checks outstanding more than six months should be investigated and written-off and disposed
of in accordance with NYS Comptroller guidance.
Management's Response
•
The Tax Receiver has addressed the above in sending letters to taxpayers requesting an attestation that a
refund check has not been received or deposited by them and upon receipt of that attestation, a replacement
check has been issued.
2013-04 TOWN CLERK—BANK RECONCILIATIONS
Condition
During our audit, we noted that the bank reconciliation was improperly prepared and the balances per the
reconciliation did not agree to the general ledger. In addition, there was no evidence that the monthly bank
reconciliations were reviewed.
Criteria
Bank reconciliations should be performed timely and accurately to provide assurance that all transactions have
been entered and properly recorded in the general ledger. Variances/differences and any old reconciling items
should be investigated and adjusted appropriately if deemed necessary. In addition, internal controls over cash
balances are most effective when bank reconciliations are prepared by an individual not responsible for entries
in the receipts and disbursements records, respectively.
Effect
There is the potential for cash transactions to be misposted and general ledger balances to be misstated,
resulting in inaccurate financial reporting.
•
•
-66-
•
TOWN OF SOUTHOLD
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended December 31, 2013
FINDINGS AND QUESTIONED COSTS—FINANCIAL STATEMENTS AUDIT (continued)
•
2013-04 TOWN CLERK—BANK RECONCILIATIONS (continued)
Recommendation
We recommend that accurate bank reconciliations should be prepared and reconciled the bank balance to the
general ledger to determine that all cash transactions have been recorded properly and to discover bank
errors. We also recommend that the bank reconciliations be reviewed for accuracy and completeness on a
timely basis and the review should be documented by a sign off on the reconciliation. This review should
include a test of mechanical accuracy and a review of the composition of reconciling items. In addition, these
items should be identified and followed up on, and any journal entries deemed necessary as a result should be
communicated to and recorded by the Comptroller's office.
Management's Response
After receiving input earlier in 2014 from the New York State Office of the State Comptroller, the Town Clerk
implemented procedures to more accurately reconcile bank records to the Town Clerk's records, and is also
currently working on reconciling prior years and months records.
2013-05 SEGREGATION OF DUTIES—TOWN CLERK
Condition
During the 2013 audit, we noted that the employees in the Town Clerk's office share in the daily accounting
functions, including: access to cash receipts, recording receipts in the accounting software, depositing cash
receipts into the bank and preparing bank reconciliations. Although the recoding, depositing and bank
reconciliation functions are separated and assigned to each Deputy Town Clerk, due to the small office staff
the Deputy Town Clerks are also receiving the cash.
Criteria
Although the size of the Town Clerk's office staff limits the extent of separation of duties, we believe certain
steps could be taken to separate incompatible duties. Proper segregation of duties states that for each
employee, there should be separation of all of the following: 1) physical custody of assets; 2) authorization or
approval of related transactions affecting those assets, and 3) recording or reporting of related transactions.
Effect
Intentional or unintentional errors could be made and go undetected.
Recommendation
We recommend that the Town Clerk's office consider separating the accounting functions as described above
to mitigate significant risks of error and/or misappropriation of the Town's assets. Such consideration could
include one Town Clerk employee receipting cash receipts and preparing deposit slips, while a second
employee could verify cash receipts and record cash receipts into the accounting software prior to the first
employee depositing cash into the bank account. In addition, the bank statements should be mailed directly to
the Town Clerk for review before giving it to the Deputy Town Clerk to reconcile.
. I
-67-
r
TOWN OF SOUTHOLD
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended December 31, 2013
FINDINGS AND QUESTIONED COSTS—FINANCIAL STATEMENTS AUDIT (continued)
2013-05 SEGREGATION OF DUTIES—TOWN CLERK (continued)
Management's Response
The Town Clerk's software application makes internal accounting entries for each transaction when completed
and generates a receipt. That receipt provides information including the date, customer's name, amount(s)
paid, payment method, and a description of the transaction, and is given to each customer. At the end of each
day, a report is generated from the system which includes a listing of the date, customer's name, transaction
description, amount received and payment method. This report is generated for each staff member, who also
maintains a separate cash drawer. The cash drawer is counted and reconciled to the daily report, and is
recounted and double-checked by a second staff member, who indicates their review by initialing the daily
• report. The bank statements are being reviewed by the Town Clerk on-line.
2013-06 SEGREGATION OF DUTIES—RECREATION
Condition
During the 2013 audit, we noted a lack of segregation of duties within the recreation office. Employees share
in the daily accounting functions, including: access to cash receipts, recording receipts in the department's
records and depositing cash receipts into the bank account.
Criteria
Although the small size and availability of the Town's recreation office staff limits the extent of separation of
duties, we believe certain steps could be taken to separate incompatible duties. Proper segregation of duties
states that for each employee, there should be separation of all of the following: 1) physical custody of assets;
2) authorization or approval of related transactions affecting those assets, and 3) recording or reporting of
related transactions.
Effect
Intentional or unintentional errors could be made and go undetected.
Recommendation
We recommend that the Recreation office consider separating the accounting functions as described above to
. mitigate significant risks of error and/or misappropriation of the Town's assets. Such consideration could
include one Recreation employee receipting cash receipts and preparing deposit slips, while a second
employee could verify cash receipts.
Management's Response
The recreation department receives payments by cash, check and credit cards. During 2014, procedures
have been implemented for cash and checks whereby one employee prepares the deposit and a second
employee verifies the deposit to the registration records. A procedure to verify the credit card detail and batch
totals to the registration records has also been implemented.
-68-
•
TOWN OF SOUTHOLD
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended December 31, 2013
FINDINGS AND QUESTIONED COSTS- MAJOR FEDERAL AWARD PROGRAMS
• U.S. DEPARTMENT OF HOMELAND SECURITY
2013-07 ALLOWABLE COSTS
Federal Program
• Disaster Grants, Public Assistance, 1899 DR NY, 4085 DR NY, 4111 DR NY—CFDA Number 97.036
Criteria
OMB Circular A-87 establishes principles and standards for determining allowable direct and indirect costs for
Federal awards. Additionally, in accordance with OMB Circular A-87, Cost Principles for State, Local and Indian
• Tribal Governments, all eligible costs must be supported by adequate documentation. Additionally, the New York
State Office of Emergency Management Public Assistance Handbook of Policies and Procedures (the
"Handbook"), addresses cost reimbursement as well. Reimbursement of wages should be based on compensation
paid in accordance with Town policy. The Town is responsible for reviewing project worksheets before submitting
them for reimbursement.
• Condition
During the course of our audit we noted instances where the employee hourly payroll rate per the payroll
register did not agree to amounts submitted for reimbursement as indicated on the FEMA Force Account
Labor Record as part of the respective project worksheet. The instances identified were isolated to Federal
Disaster 4085 DR NY.
Effect
The Town may have received reimbursement/grant proceeds in excess of allowable costs.
Recommendation
• We recommend the Town establish policies to review the supporting documentation to the project worksheets
prepared by FEMA before submitting them for reimbursement to ensure the pay rates agree to the Town's
payroll records.
Management's Response
• The Town will continue to review and enhance procedures to verify supporting documentation for amounts
reported on the project worksheets.
I•
•
-69-
TOWN OF SOUTHOLD
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended December 31, 2013
FINDINGS AND QUESTIONED COSTS- MAJOR FEDERAL AWARD PROGRAMS
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
2012-03 ALLOWABLE COSTS
Federal Program
Disaster Grants, Public Assistance, 1957 DR NY, 4020 DR NY, 4085 DR NY—CFDA Number 97.036
Criteria
OMB Circular A-87 establishes principles and standards for determining allowable direct and indirect costs for
Federal awards. Additionally, in accordance with OMB Circular A-87, Cost Principles for State, Local and Indian
Tribal Governments, all eligible costs must be supported by adequate documentation. Additionally, per the New
• York State Office of Emergency Management Public Assistance Handbook of Policies and Procedures (the
"Handbook"), addresses cost reimbursement as well. Reimbursement of wages based on compensation paid in
accordance with Town policy and actual time devoted to the project. Eligibility guidelines for applicant-owned
equipment is limited to operating time only and calculated based on the hourly rates per the established FEMA
Schedule of Equipment Rates. Equipment not in actual use is considered standby time and is not eligible for
reimbursement. The Town is responsible for reviewing project worksheets before submitting them for
reimbursement.
Condition
During the audit we noted the following:
• Instances where the hours worked per the Daily Activity Reports did not agree to the Project
Worksheets
• Instances where the payroll hourly rate per the Daily Activity Reports did not agree to the Project
Worksheets
• Instances where the Project Worksheets used an incorrect fringe benefits percentage to determine
reimbursement
Instances where the equipment rate per the Daily Activity Report did not agree to the Project
Worksheets
• Instances where the equipment hours worked per the Daily Activity Reports did not agree to the
Project Worksheets
Effect
The Town may have received reimbursement/grant proceeds in excess of allowable costs.
Recommendation
We recommend the Town establish policies to review the supporting documentation to the project worksheets
prepared by FEMA before submitting them for reimbursement to ensure the hours and pay rates agree to the
Town's payroll records. In addition, Town personnel should be familiar with certain calculations including fringe
benefits when performing the calculation of full payroll expenditures which can be submitted for
• reimbursement.
Management's Response
The Town is working with representatives from SEMO to revise the project worksheets prepared by FEMA to
ensure accuracy and completeness. The Town continues to review supporting documentation for all project
worksheets submitted for reimbursement.
Current Status
During our current year audit, it was noted that the Town used the correct employee hours worked and equipment
hours utilized in accordance with Daily Activity Reports,the correct fringe benefit rate was calculated and the Town
used the correct equipment rates in accordance with the FEMA Equipment Rate Schedule.
However, it was noted that the payroll hourly rates per review of the Payroll Register did not agree to rates
charged on the FEMA Force Account Labor Record. See finding 2013-07.
-70-
TOWN OF SOUTHOLD
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended December 31, 2013
FINDINGS AND QUESTIONED COSTS- MAJOR FEDERAL AWARD PROGRAMS (continued)
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS (continued)
2012-04 REPORTING
Federal Program
Disaster Grants, Public Assistance, FEMA 4020 DR NY—CFDA Number 97.036
Criteria
In accordance with the provision listed in the Public Assistance Program Handbook of Policies and Guidelines for
Applicants related to FEMA 4020 DR NY Hurricane Irene (`Handbook"), within thirty days of completion of all work
associated with a project or a defined Blue Book date, the grantee is required to notify New York State Division of
Homeland Security and Emergency Services of the project completion using the FEMA Project Listing worksheet
(PA certification) included in the Project Application Supplement.
Condition
During the audit we noted the following with respect to the completion and filing of the PA certification forms:
FEMA 4020 DR NY: it was determined that the Town did not file a PA form certifying that the project
was complete, therefore the Town is required to file quarterly reports for all four quarters of 2012. The
Town only filed one quarterly report for the first quarter ending 3/31/12.
Effect
The Town is not in compliance with the reporting requirements of the Handbook and grant agreement.
Recommendation
We recommend the Town implement policies and procedures to ensure individuals administering the grant
agreements are aware of the necessary reporting requirements.
Management's Response
The Town is working on implementing procedures to ensure reports are submitted on a timely basis.
• Current Status
Corrective action has been taken.
-71-